In Microsoft Dynamics 365 Business Central, item types play a crucial role in managing inventory and services efficiently, offering enhanced functionality and an intuitive interface for handling different types of items. Here’s a comprehensive guide to understanding and utilising item types in Business Central.
Types of Items
In Business Central, items are categorised into three main types: Inventory, Non-Inventory, and Service.
- Inventory Items: These are physical items such as bicycles, telephones, and desks, which you want to fully manage in inventory. Inventory items can also include non-physical items like software licenses and subscriptions if they have identification numbers such as serial numbers. You can track item values and availability comprehensively in inventory.
- Non-Inventory Items: Typically, these are physical items like bolts or pens that your business consumes but doesn’t fully track in inventory. They are often low-cost items used internally, and while you can manage their purchase and sales, you won’t track their quantities and values in inventory.
- Service Items: These represent labour time units, such as consultancy hours, used for limited business support. Service items do not allow inventory tracking but can be used in sales and purchasing transactions.
Managing Item Types
To manage item types in Business Central, navigate to the Item Card page. Here, you can select the type of item based on its usage in your business. This selection affects the degree to which you can manage the item in inventory.
- Inventory Items: You can use all inventory processes, including sales, purchasing, job consumption, assembly, production, location transfer, physical counting, inventory revaluation, costing, item tracking, reservation, warehousing, and planning.
- Non-Inventory Items: These support sales, purchasing, job consumption, and assembly consumption but do not support inventory tracking processes.
- Service Items: These support sales and purchasing but do not support inventory tracking processes.
Costing Methods for Item Types
When posting inventory transactions, the quantity and value changes are recorded in the item ledger entries and value entries, respectively. For inventory items, the cost is recorded in the Cost Amount (Actual) field on the Value Entries page. For non-inventory and service items, the cost is recorded in the Cost Amount (Non-Invtbl.) field.
To manage items, quantities and values, Business Central creates two types of item entries:
- Item Ledger Entries
- Value Entries
Item ledger entries are created when posting to an item impacts the stock level. For example, posting a purchase receipts, posting a sales shipment and posting a negative adjustment.
Item ledger entries also show amounts, like the sales amount, the cost amount, and so on. These amount fields are calculated on the basis of the value entries for that item ledger entry.
This means that every time you post to an item, Business Central does not only create item ledger entries, but also value entries. Furthermore, when posting to an item should only result in changing the value of an item, and not the stock level, only value entries are created, and no item ledger entries.
Catalog and Service Items
Business Central allows you to set up items that you offer to customers but do not manage until they are sold as catalog items. Although similar to non-inventory items, catalog items have distinct differences and should not be confused.