How to Set Up Services as Items in Dynamics Business Central

Companies that sell inventory sometimes also provide related services, which should be reflected on sales documents as well. Transport services are the most readily available example. In accounting, services are usually posted directly on the ledger account, so they follow a different accounting posting flow than inventory posting.

In Dynamics 365 Business Central (and in more recent versions of Dynamics NAV – starting with NAV 2016), “service” type items can also be defined, which are non-inventory items but behave similarly to a standard item and can be used to post services in purchasing or sales. The use of such an item generates several advantages, of which the most important is probably that those operating on purchasing or sales documents do not need to know the general ledger accounts on which the services are posted.

Also, the inventory area in Business Central is the most developed in terms of functionalities and reporting, which means that service-type items can benefit from these too. For example, price and discount policies can be set at the item level, differentiated based on customers, customer groups, or quantity.

Defining a service-type item is done similarly to a standard item, the difference being in the setting of the “Type” field, where the default value is “Inventory”, it will be changed to “Service”:

For service-type items, the Inventory Posting Group is disabled, and for the General Product Posting Group, care must be taken to define a group specific to the service and to associate it with the item. Usually, the specific product group is associated with an implicit VAT Product Posting Group, and then this will be filled in automatically.

The service-type item can then be used on sales and purchase documents, just like any item.

Of course, there will be no stock movement associated with this type of item, but the financial and profitability information regarding transactions with it are available and can be analyzed in various specific inventory reports. For example, in the “Sales by customer/item” report: