The warehouse report says one thing. The inventory balance in the accounts says another. Your finance manager needs to close the month, but nobody can explain the difference.
This is a problem worth investigating before anyone posts an adjustment. A difference does not automatically mean stock is missing. The reports may cover different dates, locations or stages of a transaction.
We are giosoft, a Microsoft partner in Ilupeju, Lagos. When discussing inventory reconciliation with Nigerian businesses, we recommend starting with the documents behind the balances. An adjustment should follow an explanation, not replace one.
First, agree what you are comparing
A stock quantity report and an inventory account balance answer different questions.
The first tells you how many units the records show. The second tells you the value recorded in the accounts. Correct quantities do not, by themselves, prove that the financial value is correct.
Take a distributor with goods held in Ilupeju and at another warehouse in Ogun State. Before comparing reports, finance and operations need to agree whether both locations are included. They also need the same reporting date and a clear position on goods moving between warehouses.
Write down the comparison before investigating it: the stock valuation report, the inventory accounts, the reporting date and the locations included.
[CHECK: Confirm the appropriate Business Central inventory valuation report, account filters and date settings for the installed version and configuration.]
Without that agreement, teams can spend hours explaining a difference created by their report filters.
Separate physical movement from financial value
Goods arriving at the warehouse and the supplier invoice reaching finance are separate events.
A manufacturer may receive packaging materials before the supplier sends the invoice. Operations records the receipt because production needs the materials. Finance later processes the invoice, which may contain a different price or an extra charge requiring review.
The reconciliation therefore needs more than a list of purchase invoices. It needs the receipt records, invoice status and any remaining differences between the documents.
The same applies to outgoing goods. A dispatch note, a recorded shipment and a sales invoice may represent different stages of the sale.
[CHECK: Confirm how received but uninvoiced purchases, shipped but uninvoiced sales and expected costs are treated in this Business Central configuration.]
A useful question is: "Which stock movements had not completed their financial processing at the reporting date?"
That question gives both teams something specific to investigate.
Look for costs that arrived after the goods
The purchase price may not be the only cost associated with stock.
For a Nigerian importer or distributor, freight and other purchase-related charges may arrive on separate documents. Their accounting treatment needs to follow the company's approved policy.
Suppose a supplier invoice records goods at ₦2 million, while a separate freight invoice records ₦150,000. These are illustrative figures. Finance must establish how the freight was treated before deciding what value should appear against the stock.
Was it assigned to the relevant items? Was it posted elsewhere? Was it still awaiting approval when the reports were produced?
[CHECK: Confirm the company's inventory cost policy and the configured treatment of item charges in Business Central.]
Do not assume that every cost difference requires a warehouse correction. Sometimes the quantity is right and the cost processing needs attention.
Trace the difference through the records
Once the scope is clear, investigate by item and document rather than discussing one large unexplained balance.
Start with an item that has a material difference. Identify the purchase receipt, purchase invoice, stock movement and related financial postings. Record the document numbers so another person can follow the same trail.
In Business Central, the review may involve Item Ledger Entries, Value Entries and General Ledger Entries.
[CHECK: Confirm the relevant entry pages, cost adjustment process and inventory cost posting setup in the installed Business Central version.]
The purpose is straightforward: establish what moved, what value was recorded and what reached the accounts.
Also review postings made directly to inventory accounts. A general journal entry may change the account balance without representing a physical stock movement. Each such entry needs an explanation and supporting evidence.
Give stock counts their own review
A physical count addresses quantities. It should not become a convenient way to clear every financial difference.
Before posting count adjustments, operations should check the counting scope and movement controls. Were all storage areas covered? Were goods dispatched during the count? Were returns or damaged goods recorded separately?
Finance then needs to review the value attached to the proposed quantity adjustments.
For a retailer, counting cartons while the records use individual units can create an apparent shortage. For a manufacturer, materials issued to production but still sitting beside a machine may complicate the count.
These are possible causes to test, not explanations to assume.
[ADD: Insert an anonymised example of a counting or unit-of-measure issue our team has investigated, including the records used to resolve it.]
Keep the count sheets, recount evidence and adjustment approval together. The next reviewer should be able to understand the decision without relying on someone's memory.
Make reconciliation part of the month-end close
A reconciliation becomes easier when each unresolved item has an owner and a next action.
Finance should own the account comparison. Operations should explain physical movements and count differences. Purchasing should help resolve missing invoices or disputed charges. IT should support checks on configuration and processing.
A short month-end sequence can keep the work focused:
Agree the reporting date, locations and inventory accounts.
Review incomplete receipts, shipments and invoices.
Confirm the required cost processing has completed.
Compare inventory valuation with the relevant account balances.
Document differences, corrections and approvals.
[CHECK: Confirm the required processing order and checks for this Business Central implementation.]
Keep an unresolved item open until the supporting evidence explains it. Posting a balancing figure may make the reports agree today while leaving the underlying problem for next month.
Start with one difference you can explain
Choose one inventory account and one reporting date. Ask finance and operations to prepare the comparison together, using the same scope.
Then trace the largest unexplained difference back to its documents. Record the cause, the correction and who approved it. That gives your team a practical starting point for a repeatable month-end reconciliation.
