I agree, but when this option is checked…we must think the consequence on accounting side…so there must be a way-out to make inventory side and accounting value to be always equal/in-balance. If not, then this ‘allow negative stock’ is not working!
I don’t understand why erpnext has this option without clear purpose?
I’ll give a real example where this option can be utilized and helpful for businesses:
One of the biggest challenges when businesses decide to start using an ERP System is stock/inventory with huge-thousands of items qty, especially for retail, trading,supplier business where they are still doing manual works (may be only with excel) with no integrated ERP and the data is not accurate.
In this situation, to get accurate data…they have to do physical-check and count it manually per item per warehouse and input it into ERP system. Until all items are in the system, then they can start using it.
But can you imagine a business with thousands of items with multiple branches/warehouses…how long shall it take to count the whole stock items? On the other hand, the business must keep running…stock is going-in/out everytime.
So now… it’s very hard to start an ERP system for this business unless they already has accurate data from existing system…so they don’t need to do physical-checking again.
‘Allow negative stock’ should be the a way-out…in my opinion. They can just start using ERP even without accurate stock data. The items keep going-in/out and they can do physical check for e.g. 100 items, do stock recon…tomorrow do it again for another 100 items and so on…until all items are reconciled in the system. On the other hand, they can do book-keeping,calculate profit/loss, manage payable etc without a must ‘long-waiting’ until all items are completely reconciled in the system.
This way will make everything easier and giving a lot flexibility…
But on current erpnext, we’ll have mismatch on accounts side as the system doesn’t post accounting entry if the item is in negative (no valuation rate is found) when deliver or sell the items.
So my resolution is…quite simple:
When this option is checked (allow negative stock)…if no valuation rate is found (minus qty), just use last purchase/last valuation rate as the value…If still not found, then use buying price-list rate as its valuation rate until the qty turn to positive again to use FIFO,
Please other user comments and thoughts…