How supplier claims change your inventory value

When you report a defect, you choose where the goods are. That choice determines whether their value leaves inventory or remains there.

Choose Gone from my warehouse and the units leave as a movement with the reason Defective / Supplier Claim, reducing inventory value. Choose Still in my warehouse and nothing moves or is deducted: the units remain on hand at full cost.

Units that have left or are still held

When units have left, they are no longer stock you can sell or use. Their value moves to the claim as what the supplier owes you; continuing to count it in inventory would overstate what you hold.

When you keep the units, they remain in inventory value at full cost because they are still on your shelf. They are counted in on hand but not in Available, and nobody else's picking or production can take them.

How costs are calculated

The claim is valued at the unit cost inherited from the delivery the defective units arrived on. You see this as Inherited unit cost when you report the defect, and it is fixed on the claim from then on.

Under FIFO and LIFO, the claim takes units off that delivery's cost layer, not the layer the method would otherwise have picked. The drop in inventory value and the claim's own value therefore agree.

Under Average, the units come off at the average cost of the stock on hand at that moment, like any other departure. The inventory drop and the claim value will not agree: they are the same event valued two ways.

Check inventory valuation reports

Two reports show the effect of a claim whose units have gone.

1. Open Reports.
2. Choose Inventory Valuation.
3. Find the product on the Products tab. If the units were reported as gone, the value shown already excludes them. If you are still holding them, the value is unchanged and includes them at full cost.
4. Open Reports.
5. Choose Inventory Value History to see the effect over time.

A claim whose units left steps the value down in the month it was opened. Every month after starts from that lower point until a replacement arrives.

A claim still holding its units steps nothing down. The step appears only in the month you release them, dated the day you release them rather than the day you reported the defect.

See claimed and held units

To see claimed units separately from ordinary consumption, open the product's page. Its Stock-out Breakdown lists them under Defective (claim), and the Inventory list shows the same split in its breakdown tooltip.

These breakdowns do not show units you are still holding, because nothing has left. For those units, switch on the Available column in the Inventory list, or read Held in your warehouse on the Supplier Claims page. Available subtracts both claim holds and units assigned to an open assembly.

Cost of goods sold and product turnover

Cost of Goods Sold never charges defective material. It counts material you actually used or sold, and a claim's own movement is not that. Charging it there would overstate the cost of what you sold and understate your margin.

The report's reconciliation, How the stock value moved, shows the value that left separately under Other outflows as Defective (supplier claims). The total written off in short-closed claims is on the Supplier Claims page only.

Held units affect the report differently. Under FIFO and LIFO, units held under a claim cannot have been sold, so sales are costed from other layers. Under Average Cost, holds are not considered and sales leave at the average. Clearing a claim as a false alarm warns you that the cost of what you sell will change because the units rejoin the pool and can be costed again.

Product Turnover also leaves claimed units out: a claim is not customer demand, so it will not inflate a product's apparent usage.

Check outstanding claim value

The Outstanding value card shows what suppliers still owe you: claimed value, less replacements received, less anything written off. It is not value that left inventory.

1. Open Inventory, then Supplier Claims.
2. Read the Outstanding value card at the top of the page.
3. Compare it with Inventory Valuation, reading it per claim rather than in aggregate.

For claims whose units are gone, the outstanding value and the drop in inventory value are the two sides of the same event. For claims still holding their units, there is no inventory drop: both the outstanding figure and inventory value carry those units. This is correct until the supplier sends the replacement, because the supplier owes it either way.

Releasing held units does not reduce Outstanding value. A replacement or short-close reduces it, while clearing a claim as The material is fine removes it altogether because a withdrawn claim owes nothing.

Outstanding value covers every claim not yet Settled, Rejected or Withdrawn. It ignores the tab, the Supplier picker and the page you are viewing, so it will not add up to the claims listed underneath it: it answers how much value is tied up in claims overall. If your access is limited to certain departments, it covers the claims you can see.

Three cards always appear at the top of the page: Outstanding value, Units to resolve and Held in your warehouse. Held in your warehouse gives the value of units held under claims, how many units for how many days, and Show to list each claim's held quantity, value and age (or No units held).

A written-off line appears below the cards once anything has been short-closed. When a replacement has arrived for units you are still holding, an amber reminder above the cards shows how many claims and units are waiting for you to record what happened. It carries no amount because nothing is counted twice.

Purchase order price corrections

A claim's unit cost is fixed when you open it. Editing the original purchase order months later does not change the claim's value, the outstanding total or the written-off total, so later price corrections cannot disturb a settled claim.

Held units are different: they are part of inventory value, which is re-priced from the purchase order each time it is calculated. Correcting that order changes the held units' inventory value but not the claim's figure, so Held in your warehouse and your valuation report can disagree.

Replacement deliveries

A replacement returns value to inventory only when the claim is linked to the purchase order the replacement is arriving on, and that order must be a zero-value one. Receiving against it brings units back at the cost inherited from the original order line rather than the document's zero price.

The claim moves to Partially Replaced, or to Settled once nothing is left to resolve, and the outstanding figure falls. If the delivery brings more than the claim owes, the excess enters at no cost on a line of its own.

If you are still holding the defective units when the replacement arrives, there is no value to return because they never left. The part of the replacement that stands in for them enters at no cost, and what happens next depends on what you record for the held units. Returned or scrapped, their cost stays in stock with the replacements; kept, the replacements stay at no cost.

Short-close and write-offs

Short-closing a claim moves value but not stock. No movement is created because the units have already left inventory; taking them out again would reduce on-hand twice for one physical departure. The value is recorded against the claim, and the Supplier Claims page totals it as written off in short-closed claims for your accounts.

You cannot short-close a claim while it is still holding its units, because their value is still on your shelf and writing it off would book a loss you have not taken. Release them first, clear the claim if the material turned out to be fine, or, once the replacement has arrived, record what happened to them. A write-off is a dated accounting event and cannot go into a locked financial year.

Access to supplier claims

Supplier Claims appears under Inventory only for users whose role can view or manage supplier claims. On the Free plan, it shows with a lock.

Held in your warehouse needs only the view permission. This lets someone notice a pallet held for three months even if they cannot act on the claim.

Short-Close is shown only to those who can manage claims, while the claim still has units to resolve and is not closed. It is not shown while the claim is holding its units.