Hello everyone,
I am trying to understand the behavior of Negative Inventory Clearing in Manager.io.
When we sell an inventory item before it is available in stock, Manager.io records the cost in the Negative Inventory Clearing account under Assets. I understand this part.
If I want, I can manually pass a Journal Entry to move that amount from Negative Inventory Clearing to Inventory - Cost (Expense).
However, my confusion is this:
Even when I do NOT pass any Journal Entry, I notice that some amounts remain in Negative Inventory Clearing (Assets), while some amounts automatically appear in Inventory - Cost (Expense).
My questions are:
- Why does Manager.io automatically expense some negative inventory amounts without any Journal Entry?
- Why do some amounts remain in Negative Inventory Clearing while others move to Inventory - Cost?
- Is this related to purchase invoices, production orders, inventory receipts, or the average costing calculation?
- What is the recommended workflow to avoid this situation and keep inventory costing consistent?
I have attached a screenshot showing that Negative Inventory Clearing still has a balance under Assets, while Inventory - Cost also contains expense amounts.
I would appreciate an explanation of the logic behind this behavior.
Thank you.
This is very important aspect highlighted, but I am surprised no one has responded or even liked it 
Waiting Reply on this Topic 
I am repeatedly facing the same issue, out of blue negative inventory start piling up, so i have to run correction from settings. I could,nt understand the logic behind it.
I have found a glitch in the way the system works. I am going to test a theory. I have lots of production orders with higher costs of production on the older production orders due to additional items being used causing a discrepancy between the expected cost of goods from the invoice and the actual cost of goods used.
This is resulting in amounts being left in my negative inventory clearing account. I will test this out later tonight to find out if this fixes my issue. If using the ‘inventory write off’ fixes this issue then there is a major bug in the manager system in the handling of the averaging of the cost of sales versus the cost of goods.
I will keep you posted as this may be causing significant issues for everyone. Even though the issue may be fixable for smaller books, this would be many hours of adjusting books that are massive and have millions of production orders.
I also would like to request a drop down list on the production orders so we can link the production orders directly to the invoices so the invoices calculate the cost of goods more accurately as then the system isn’t ‘guessing’ which invoice the costs are associated with.
After checking with an Inventory Write Off, the recalculate button fixed that particular incorrect valuation of the cost associated with the Sales Invoice.
That means there is a real issue with the allocation of the cost of goods being calculated incorrectly due to the ‘average’ of the costs being associated with too many invoices instead of them being directly linked.
To resolve this issue I would suggest having a drop down menu in the Production Orders Edit screen to associate a Production Order specifically to the Invoices so they calculate more accurately and remove the negative inventory clearing account issues associated with averaged out values instead of direct costs.
I will have to fix many of the costs in this account due to the update affecting 3 year old inventory costs. By making it set to the Balance Sheet even though the cost is already incurred for the year, it makes the calculations way out and it means the books are way off.
I hope that there is a quick resolution and people who have massive amounts of purchase invoices do not have to fix each one individually as I am having to create an Inventory Write Off and remove that Write Off from the Production Orders. This means adjusting 2 values when they should be working no problem.
I have been checking the costs associated with some of my inventory items and the recalculate doesn’t work properly. I have checked to make sure the actual qty of the items in the list of the production orders match the actual qty of the items on the sales invoices and it is not able to correctly calculate the cost of goods.
I have one scenario where it is saying there is more value associated with the sales invoice than the actual cost of goods even when the qty is exactly the same on both. I have many invoices and many production orders and the cost of goods on the production order is lower than the cost of goods on the invoice making this extremely hard to fault find the issue and it doesn’t seem to function as intended.
I need assistance to fault find further as the values between the invoice and the production orders should be the same. This aspect needs a thorough investigation.
If you can explain what I need to do to investigate it properly and isolate any potential issues I will try them out first before anything else. I have one Sales invoice saying the cost of goods on this particular inventory item is $0.85 but the associated production order is saying the cost of goods is $0.84. This is not a good thing.
