Below-Cost Sales Orders in IFS Cloud: Find and Fix Them

A below-cost order is a customer order line whose net amount is lower than the cost of the goods on it, so the line has a negative contribution margin. The IFS Cloud documentation describes contribution margin on the Analyze Contribution Margin page: it is the difference between the sales price and the inventory value, calculated per sales unit, and the page shows it per unit, as a total per order line and as a total per order.

Customer discounts and the order discount are part of the calculation, and an Extra Discount field lets you test a further discount. The documentation pages I fetched do not name a Cost or Margin column on the Customer Order Line page, so I cannot give its exact label in 25R2 or 26R1. An IFS Community thread mentions a COST field on the line, but it is a user post, so check which fields your release exposes.

A below-cost order gets through because the documented price entry and margin analysis include no stop. The Pricing page describes a source ladder for an order line (agreements excluded from auto-pricing, campaigns, agreements, price lists, the sales part price) and states that a manually entered price on the line has the highest priority. It describes no warning or block for a price below cost or below a margin threshold. That is a statement about the page, so test your own release.

Reading the documented pricing behaviour, I see these routes to a low or negative margin.

• Manual price - a price typed on the line wins over every automatic source, according to the Pricing page.
• Manual or stacked discount - a manually entered discount percentage overrides automatic discount fetching. With the multiple-discounts strategy set per site, up to two sources can apply to one line.
• Stale price source - prices are tied to valid-from dates, and the Pricing page warns that prices retrieved by order date may be out of date today. The cost moves, and the price list or agreement may not.
• Price effective date - with the Delivery Date pricing method and automatic update enabled, changing the wanted delivery date updates the price effective date after confirmation, and discounts are updated per the price sources. In my reading, this can also re-price the line, so test it on your configuration.
• Frozen price - the documentation says Recalculate Price/Currency reruns the price logic, including the current valid price list, and is not available when Price Freeze is enabled on the line. So a frozen line cannot be recalculated after the list or the cost has moved.

The documentation I fetched does not say whether a cost change updates base prices, price lists or open order lines. In my view, assume it does not until you have tested your configuration.

You find below-cost order lines by comparing the net amount of each open line with its total cost and listing the lines where the result is below your threshold.

My illustration extends the documentation's quotation example (price 300, part cost 150, a 50% margin). Apply a 55% total discount and the net is 135, the contribution is minus 15 and the margin is about minus 11%. This is arithmetic, not system data, and the line looks like an ordinary discounted line until net is put next to cost.

Cut the list by price source: the BI fact exposes Price Source, Price Source ID and Price List No. If a cluster of lines shares one agreement, start with that agreement. If your release also records manual prices as a price source, which I could not confirm, a cluster there points to the entry process.

The cost figure needs care. A 2023 IFS Community thread, written by users with no IFS reply, says the line cost is an average of current inventory cost buckets and can disappear for a used-up lot under cost per lot batch. I treat that as a hypothesis to test. Write the cost basis into the report definition.

You fix a below-cost line by first finding out which of the causes in section 2 produced it, because the correction differs. These are the levers; the first, second and fourth rest on the documentation, and the third is my advice.

1. Stale price list or agreement. Correct the source. The Pricing page advises changing price lists, current and old ones, with great care, and it lets you enable review of base price updates so that lines wait in Planned status until reviewed. For expired agreements, see customer price agreement expiry.
2. Recalculate the open line. Recalculate Price/Currency reruns the price logic and checks the current valid price list, and it requires a saved line with Price Freeze disabled. A frozen line needs a decision on whether the price is an agreed commitment.
3. Manual price or discount. This is a commercial decision. Ask the account owner whether the price was intended and record the answer on the order.
4. Price already confirmed to the customer. Changing it after confirmation has its own consequences, covered in orders changed after confirmation.

A below-cost order is stopped by a written margin rule, a scheduled comparison of net amount with total cost, and an owner for each exception. The approach below is my own practice, not an IFS procedure.

1. Write the rule down. Decide what counts as an exception: below cost, below a floor margin by product group, or below a floor for a customer segment. Keep the cost basis in the definition.
2. Name the deliberate cases. Free of Charge lines, samples and approved loss leaders get a recorded reason.
3. Measure on a schedule. Compare net amount with total cost on every open line daily, and again after any change to a price list, agreement or cost set.
4. Route to the person who can act. A line created from a manual price goes to the sales owner. A line created from a price source goes to whoever maintains that source. The argument is in exception routing instead of reporting.
5. Review the order types. If lines pass release without a human stop, the check takes the place of that stop; see customer order types and the order flow.

One limit applies: the check shows a line is below your threshold, and the account owner decides whether the price was wrong. Measure the share of alerts that proved true and tune the rule on it.

The primary sources are the IFS Cloud documentation pages Analyze Contribution Margin (25R2) and Pricing (25R2). Check the pages for the release you run.

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Dariusz Myśliwiec brings 18 years of hands-on work with IFS (Apps 7.5–10 and IFS Cloud). IFS Certified Associate Consultant. PRINCE2® 7. Based in Kraków, delivering remotely across Europe and globally as an independent practice, so you talk to the consultant who builds it.

Selected clients: Fugro · LGC · BVI Medical · Betafence (PRÆSIDIAD) · Barlinek · NGK Ceramics · Newag · Oleofarm.

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