How to Reverse a Physical Count in Sage 100

Understanding Physical Count Impact

Before diving into the reversal process, it's important to understand what happens when a physical count is posted. When you update the Physical Count Variance Register, several critical changes occur:

• The quantity on hand in the Inventory Item Warehouse file gets updated
• Average costs are recorded in Inventory
• Lot/Serial and LIFO/FIFO items are updated in the Item Cost file
• Physical Count details are recorded in the Item Transaction History file
• A GL Transaction Register is created with cost amounts associated with adjustments

Available Solutions

Method 1: Using System Backup

The most straightforward solution is to restore from a backup taken before the physical count was posted. This approach:

• Maintains data integrity
• Preserves historical transaction records
• Eliminates the need for manual adjustments
• Ensures all related modules remain in sync

Method 2: Manual Adjustment Process

If a backup is unavailable, you'll need to perform manual adjustments to reverse the count. This process requires:

Step-by-Step Reversal Process

Initial Preparation

Before starting the reversal process, ensure that:

• All users are logged out of the inventory module
• No inventory transactions are in process
• You have documentation of the original quantities before the physical count

Transaction Entry Process

1. Navigate to Inventory Management > Main > Transaction Entry
2. Configure the transaction:
   • Select "Issue" as the Transaction Type
   • Click the Next Entry No button
   • Verify the Transaction Date matches the original count date
   • Select the appropriate Warehouse using the Lookup button

Quantity Adjustment

For each item affected by the physical count:

1. Access the Lines tab
2. Select the Item Number that needs adjustment
3. Verify the Warehouse location
4. Calculate the difference between:
   • The quantity shown after the physical count
   • The desired correct quantity
5. Enter the adjustment quantity as a negative number to reduce inventory or a positive number to increase it

Best Practices for Future Physical Counts

To prevent accidental posting and ensure accurate counts:

Pre-Count Preparation

1. Post all pending transactions affecting inventory, including:
   • Inventory Management
   • Sales Order
   • Purchase Order
   • Return Merchandise Authorization
   • Bill of Materials
   • Work Order modules
2. Clear existing data:
   • Preview and clear the Physical Count Variance Register
   • Run the Negative Tier report
   • Execute the inventory balancing utility

During the Count

• Choose a quiet period for counting
• Use multiple counters for verification
• Document all counts thoroughly
• Review entries before posting
• Maintain clear communication between team members

Preventive Measures

To avoid future incidents:

System Controls

• Implement user permission restrictions
• Create approval workflows
• Use test companies for training

Process Controls

• Establish standard operating procedures
• Require supervisor review before posting
• Document all inventory adjustments

Recovery Verification

After implementing the reversal:

1. Run inventory reports to verify:
   • Quantity on hand
   • Item valuations
   • Cost layers
2. Check related modules:
   • General Ledger postings
   • Purchase Order status
   • Sales Order availability
3. Verify system balance:
   • Run the Inventory Balancing Utility
   • Check for negative tiers
   • Review inventory valuation reports

Impact on Related Modules

The reversal process affects multiple areas:

General Ledger

• Adjustment entries create corresponding GL entries
• Period balances may need review
• Financial statements should be verified

Sales Orders

• Available quantities update
• Allocations may need review
• Customer commitments should be verified

Purchase Orders

• On-order quantities may need adjustment
• Receipt processing might require review
• Vendor commitments should be checked

Documentation Requirements

Maintain detailed records of:

Adjustment Process

• Original physical count data
• Reversal transaction details
• Reason for reversal
• Authorization for changes

System Changes

• Transaction numbers
• Date and time stamps
• User activities
• Module impacts

Technical Considerations

When performing the reversal:

System Performance

• Schedule adjustments during off-peak hours
• Monitor system resources
• Plan for adequate processing time

Data Integrity

• Verify database backups
• Check audit trails
• Maintain transaction logs

Long-term Solutions

To improve inventory management:

Process Improvements

• Implement cycle counting
• Develop better control procedures
• Enhance staff training

System Enhancements

• Consider additional modules
• Upgrade to newer versions
• Implement additional controls

Conclusion

While reversing a physical count in Sage 100 requires careful attention and multiple steps, following these detailed procedures ensures accurate inventory records and maintains system integrity. The key is to act methodically, document all changes, and verify results at each step of the process.

Remember that prevention is always better than correction. Implementing proper controls, training staff adequately, and maintaining clear procedures will help avoid the need for future reversals. Regular system maintenance and careful attention to detail during physical counts will minimize the risk of errors and the need for complex corrections.

Citations: [1] https://www.bcsprosoft.com/how-to-complete-a-physical-count-with-sage-100-erp-mas-90-200-v4-40/ [2] https://www.acutedata.com/how-to-reverse-an-inventory-issue-in-the-inventory-module/ [3] https://communityhub.sage.com/us/sage100/f/core-financial-modules/160710/physical-inventory-count-posted-accidently [4] https://communityhub.sage.com/us/sage100/f/distribution-manufacturing-and-internet-modules/135294/resetting-physical-count-entry-data