Every once in a while, Business Central hands you a mystery that refuses to make sense — until it does.
I was reviewing a client’s Work in Process (WIP) balances that kept growing, even after production orders were finished. There were no posting errors, no warnings, and nothing obviously wrong. Yet the Inventory Valuation – WIP report told the truth: WIP wasn’t clearing.
Tracing the Trail
When I drilled into the Item Ledger Entries, Value Entries, and General Ledger Entries, the pattern became clear.
Each component was correctly posted to WIP, but no offset appeared when the output was recorded. The finished items had Standard Cost = 0, so Business Central had no value to credit WIP when production finished.
The Adjust Cost – Item Entries routine can’t create cost — it can only adjust what already exists. The result? WIP keeps accumulating forever.
The system wasn’t wrong. The configuration was.
Why Zero-Cost Items Exist
It might sound like a setup mistake, but sometimes it’s intentional.
Manufacturers that process or assemble customer-owned materials (often called ADMAT) don’t actually own the base inventory. Their cost is in what they add like labor, packaging, or consumables and not in the finished goods themselves.
In those cases, finished items properly carry a zero cost. The key is making sure Business Central’s posting setup reflects that reality:
- Zero-cost or customer-owned outputs should post directly to an expense account for applied materials, not through WIP. Assign direct cost applied account in to WIP Account in Inventory Posting Setup. Assign this Inventory Posting Group to ADMAT items.
- Only company-owned production should flow through WIP, since it represents true internal manufacturing cost.
That design keeps the books clean: WIP represents what the business owns, not what it simply processes.
Finding the Proof
To confirm this, I exported transaction details from Business Central including Item Ledger Entries, Value Entries, and G/L Entries and built an Excel workbook to visualize how each cost moved.
Then, I worked collaboratively with ChatGPT as an analytical partner, testing theories, verifying Microsoft Learn references, and refining the findings until everything lined up.
It took hours of analysis, but far fewer than traditional trial-and-error troubleshooting. More importantly, it resulted in a complete, auditable explanation of what was happening and how to fix it.
AI didn’t replace experience; it expanded it.
The Lesson
In more than twenty years of working with Business Central, I’ve learned that the system almost always does what it’s told to do.
If WIP doesn’t clear, the question isn’t “What’s broken?”, it’s “What is it doing right, given the configuration?”
For manufacturers and accountants alike:
- Review your posting group combinations.
- Confirm which items should enter WIP and which should not.
- Remember that WIP should only ever represent costs the company actually owns.
That’s the Righter Way™: understand before you adjust.
