Provision Rates allow you to gradually reduce the value of your slow-moving stock based on how long it has sat. For example, you may want to reduce that value by 20% every year until the parts haven’t moved for 5 years, so you set your provision rates as 0%, 20%, 40%, 60%, 80%, and 100%.
When you run the report, it will show your total “reserve” amount based on the provision rates. That gives your Finance team an easy way to see what the inventory reserve and reserve charge for the month or quarter should be. You may also set the rates so you are prioritizing stock that has sat longer from an operations perspective. By setting the rates on the older buckets higher, those values jump to the top when sorting by slow moving $$.
If you’re looking for a report that shows the total slow-moving amount, you would want to leave the rates all at 100% so you see the total amount of stock you have on-hand which hasn’t moved in your time period. This is one reason why there are multiple stock provision codes: the Finance team may want to set a gradual provision schedule but your Ops team might want to see a total amount so they can work toward that.