Home » Unconfirmed Costs

Unconfirmed Costs

v22 Pop-Up Message

The v22 release includes a new warning screen that will open at start-up for specific Sage 200 settings that cause issues for BP’s and customers. The warning recommends that unconfirmed costs is not used unless really necessary, and that the update stock at invoice setting is not used if you use barcoding. There are links to the website for further advice on why we are suggesting these settings should be avoided. We are not saying they cannot be used, but if you do use them it is important that you and your customers fully understand the implications of these settings, and you will deal with any nominal reconciliation queries that occur as a result of them.

What is Unconfirmed Costs?

If you have clients who are raising purchase orders for goods or services and it is likely that the invoices will be received after the products have been consumed or sold, and that the prices are often likely to be different from the order, then you may have the option for un-confirmed cost switched on.

To make sure goods can still be used while invoices are outstanding Sage 200 gives the stock item in question an ‘Un-Confirmed’ cost price. When the invoice is recorded the system then updates various adjustments based on the ‘Confirmed/Invoiced’ cost.

This is a very clever feature and incredibly useful in certain circumstances. Each stock movement balance transaction is flagged to state that it is either confirmed or unconfirmed. It sounds straightforward but should you ever need to work out what happened and reconcile the transactions it is very complex.

Where should it be used?

This is a very clever feature and incredibly useful in certain circumstances. Each stock movement balance transaction is flagged to state that it is either confirmed or unconfirmed. It sounds straightforward but should you ever need to work out what happened and reconcile the transactions it is very complex.

The setting to allow this functionality can be found in Purchase Order Processing Settings, and is in actually the Default setting.

When can problems occur?

1. When using ‘Integrate stock management with the nominal Ledger’, nominal transactions are only made at the point of invoices being recorded, there can be months between goods being received and invoiced.
2. Sage 200 will try to value the goods while they are un-confirmed. Valuations will be based on the costing method of the product group. Historical cost price errors can then have an effect on the ‘Sage 200’ value of the stock causing variances. This makes reconciling the Stock Valuation report to the Stock Nominal incredibly time consuming and prone to error.
3. Built items (via Sicon Works Orders) can be booked into stock and consumed but can’t be completed with un-confirmed values in place. A utility is available to assist with this to allow ‘Estimated’ built item costs to be posted as a reversible journal. Confirmed values for WIP and Finished Goods Stock still won’t post to the nominal until Completion.
4. Once confirmed, costs will ripple through the transactions and update them, including the sales order and realised profit figures. Cost of sales postings will be adjusted using the same URN as the original transaction. There can be gaps of months between the original transaction and the updated version.
5. If you are using Sicon Barcoding and Warehousing you will have noticed how easy it is to move stock around the warehouse even if it is allocated. This may be moving from goods in to a warehouse bin, or moving from bulk storage to the pick bin. It’s so easy to do it is likely to happen quite a lot. This is not an issue for bins that are used for this stock item all the time, but if you ever want to delete a bin you must ensure that there are no ‘unconfirmed cost’ transaction in that bin. That means that if a Purchase Order is raised, received and booked into stock but the invoice is not yet posted you will not be able to delete ANY bin’s that this stock item has moved through.
6. The solution is to match the invoice to the purchase order and allow Sage 200 to clean up the transactions, but some clients choose to enter invoices directly to the Purchase Ledger and leave the order open. The implications are significant if you ever want to ‘clean-up’ bin’s for stock items in the warehouse.

Where the client may be using Unconfirmed Costs to manage bespoke product invoice variances it may be worth considering using traceable items instead to control the cost of each ‘batch’ of a generic item instead of implementing unconfirmed costs.

What is the alternative?

If Purchase Order and Invoice costs are usually the same then we would recommend the setting to update at goods received. This will use the cost on the purchase order to book in the stock item and any variance when the invoice arrives will be posted to the ‘Differences’ nominal account. In this example we have created an account called ‘Purchase Invoice Variance’ which is available on the Profit and Loss. At month end any material variances can be reviewed and dealt with by adjusting or revaluing stock (where possible) or accepting the variances as a cost of sale.