Inventory value in foreign prepayment scenarios
I have this client who operates in very specific conditions: majority of their vendors are foreign companies which invoice them in a foreign currency (USD) and almost invariably ask for at least 50% prepayment.
NAV can handle prepayments and foreign currencies like a charm—the issue lies elsewhere: the fluctuations of currency exchange rate can easily cause real and tangible losses.
Even though prepayment invoice is fully closed by a prepayment applied against it, the actual costs of goods is not calculated from prepayment invoice, but from the actual invoice. And if there was difference between currency exchange rate at prepayment and invoicing dates, the inventory value reflects the actual invoiced value (instead of the prepaid value), there is currency exchange gain/loss which is fictitious, but taxable.
Thankfully, there are ways to avoid this.
It’s official now, and it’s time I announce it here: after two years at Microsoft I’ve decided to take the helm of my career and venture into the realm of independent consulting. Two days into it, and all I can say about it is: what have I been waiting for this long?
One of the biggest absurdities about ERP systems springs from the very word we use so often when describing ERP: integrated.
You can’t avoid customizations. 
– “We need a report which groups our sales by product components.”