NAV Posting Groups

There are some real benefits to Microsoft Dynamics NAV as an ERP solution but sometimes these seem to get lost in translation between Sales and Implementation.  The sales pitch is perfect and the pre-sales consultant seems to convey a very good idea of how the system works but when it comes to the actual set up I have seen some real doozies when it comes to Posting setups.

Microsoft describes posting groups as follows:

You use posting groups to specify which general ledger accounts are affected when you post transactions with customers, vendors, items, and bank accounts.

Most of the time the strange setups are not due to a lack of understanding from the NAV consultant doing the setups but a distinct lack in the knowledge transfer to the Accounting Manager or said responsible person on the significance of Posting Groups and how they work with the system.  The same goes for Dimensions which I will cover in later posts but for now I want to share an easy way of explaining posing groups that never fails for me…

There are many different types of Posting Groups in NAV –

  • General Business Posting Groups
  • General Product Posting Groups
  • VAT Business Posting Groups
  • VAT Product Posting Groups
  • Specific Posting Groups such as Customer or Item Posting Groups (I will cover these off in another blog post)

The first four are quite significant as they work together to determine how the system will post and to which accounts in the ledger.  Often the General and VAT posting groups are seen as completely separate things but I like to think of them as working together.

For this example I am going to use a Furniture business based in the UK that manufactures chairs.  Your business may not strictly be the same but the same principles can be applied.  I will concentrate on this example on a business dealing with inventory but your business may post directly to G/L accounts.  I will expand further on G/L Accounts once the initial principles have been laid out…

First let’s break down the General Business Posting Group.

Essentially this is the WHO we deal with.  This is who we buy from or sell to, such as local customers/vendors or those overseas in the USA or Europe.  Where in the world our customers are also determines the rules for VAT.

Next we have the General Product Posting Group.

This is the WHAT we deal with, as in our products.  These could be Finished Goods, Raw Materials and Specialised Goods.  Let’s lay it out in a table to make it easier to understand.

General Product Posting Groups (WHAT we sell/buy)
Finished Goods Raw Materials Specialised Goods
General Business Posting Groups.  (WHO we buy from/sell to) Domestic (UK)
EUR
US

One thing to remember now is where the Business Posting Groups and Product Posting Groups will feature in NAV.  For example:  G/L Accounts hold information for both Business and Product Posting Groups while Customer and Vendor Cards only hold information for Business Posting Groups only and Item Cards for Product Posting Groups only.

I always tell my customers to think of the posting groups in terms of WHO and WHAT.  It will do no good to have a discussion regarding the price of an item with the item in question (the WHAT), unless you are very gifted in communication with inanimate objects, so it is best done with the Business Owner (the WHO).

Often users encounter setup issues with Customer and Vendor Cards when trying to post invoices because of missing Posting Groups, users should simply need to understand that a missing Business Posting Group means they must look at the Customer or Vendor card and a missing Product Posting Group means they must look at the Item Card.

Let’s expand on this further using the same table to illustrate now the VAT Posting Groups behave.  Once again we have the same Business and Product split.

Let’s say for example that our VAT Business Posting Groups will remain the same as is often the case with these kinds of setups.  Once again we are looking at the Business Posting Group to represent the WHO so that fits in nicely with what we already have in our table – UK, EUR and US.  The VAT Business Posting Group gives us and indication of the type of VAT that will be charged depending on the transaction type (purchase or sale) – Normal VAT, Reverse Charge VAT, Zero or Exempt VAT.

The VAT Product Posting Groups give us and indication to the amount of VAT we will charged/be charged depending on the product bought or sold.  E.g. 20% for Finished Goods, 5% for Raw Materials and 70% for Specialised Goods.  Let’s plot that on the table we started above:

General Product Posting Groups (WHAT we sell/buy)
Finished Goods Raw Materials Specialised Goods
  VAT Product Posting Groups (Determine the rate of VAT on a product)
  VAT20 (20%) VAT5 (5%) VAT70 (70%)
General Business Posting Groups.  (WHO we buy from/sell to) Domestic (UK) Normal 20% VAT Normal 5% VAT Normal 70% VAT
EUR Normal/Reverse Charge 20% VAT Normal/Reverse Charge 5% VAT Normal/Reverse Charge 70% VAT
US 0% VAT 0% VAT 0% VAT

I will add a note at this stage that this is not a guideline to VAT rules as most of you have probably already noticed.  When setting up your VAT Posting Setups, please refer to your local guidelines.  This example is to illustrate the relationship between General and VAT Posting Groups in NAV.

We can see from our table that if we Purchase a Raw Material product from a Vendor in the UK the combination of VAT Business Posting Group: UK and VAT Product Posting Group: VAT5 will result in a Normal VAT Charge of 5%.  However, the purchase of the same product from a US Vendor will show 0% VAT.

This is because regardless of the VAT Product Posting Group specified on an item card, the system looks at the VAT Business Posting Group that is set up on the Customer/Vendor card to determine the correct calculation of VAT based on the VAT Posting Setup combinations set up.

Now in the case of an invoice raised directly against a G/L Account (e.g. Cleaning or Stationery) that can hold both General and VAT Business and Product Posting Groups, the system will draw the Business Posting Groups from the Customer/Vendor Card (WHO) and the Product Posting Groups from the G/L card (WHAT).  I always tell my customers to remember the rule about having conversations with inanimate objects.  Talking to your ledgers may help relieve stress (depending on the language used) but you are better having a chat with your customer/vendor.  Once you start to understand the difference between Header and Lines in documents raised you will see that the Header will always hold information for WHO and the Lines for WHAT.

Advertisements
Tagged with: , , , , , , ,
Posted in Posting Groups, Uncategorized
One comment on “NAV Posting Groups
  1. ңi everƴone, it’s my first go to ѕee at this ѡeb site, and article is
    really fruitful for me, keep up posting such posts.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: