Negative inventory showing in the On-hand page

Negative inventory showing in the On-hand page

If you're seeing negative quantities in the on-hand inventory in Dynamics 365 Finance and Operations (D365FO), it's typically a sign of a timing issue, posting issue, or system configuration allowing negative inventory.

Common Causes of Negative On-Hand Quantity

1. Negative Inventory Allowed

  • D365FO can be configured to allow negative inventory per item and site/warehouse.

Check:

  1. Go to Product Information Management > Released products

  2. Select the item

  3. Go to Manage inventory > Warehouse items

  4. Look at the field "Negative inventory"

    • If set to Yes, the system allows stock to go negative

This is often intentional for backflushing or fast-moving goods, but it can create accounting and planning issues.

2. Timing Difference Between Issue and Receipt

  • This happens when an issue (sale, pick, consumption) is posted before the corresponding receipt (purchase, production).

Example:

  • Sales order ships before PO receipt is posted.

  • Production consumes materials before they are received.

The system shows a temporary negative balance.

3. Incorrect Reservations or Pickings

  • Inventory is physically picked or reserved more than what's available, possibly due to:

    • Overpicking

    • Manual reservations

    • Faulty batch jobs or work creation in WMS

4. Inventory Journals Posted Incorrectly

  • A movement journal, adjustment journal, or counting journal may have removed stock unintentionally.

5. Inventory Closing or Costing Issues

  • If inventory closing hasn't been run, financial quantities and physical quantities might not align.

  • Especially in weighted average or FIFO costing models.

How to Identify and Fix

Step 1: Use "On-hand" by Dimension

  • Go to Inventory management > Inquiries and reports > On-hand

  • Filter by:

    • Item number

    • Site / Warehouse / Batch / Serial (depending on tracking)

  • Check which dimension shows the negative (location, batch, etc.)

Step 2: Run Inventory Value Report or Transactions

  • Go to Inventory management > Reports > Transactions > Transactions

  • Filter by item and warehouse

  • Look for unexpected issues (like a sales issue before a receipt)

Step 3: Review Recent Journals

  • Go to Inventory management > Journals

  • Check recent movement, adjustment, or counting journals for errors

Step 4: Lock Down Negative Inventory if Needed

To prevent future negative inventory, disable the setting:

  1. Product Information Management > Released products

  2. Under Warehouse items, set Negative inventory = No

  3. (Optional) Use the Default order settings > Inventory > Prevent negative inventory

This will stop transactions that would drive stock negative, forcing corrections before postin

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