Profit21 NL

Sales

Profit Exception

Order lines from the last 90 days where gross margin falls outside the expected range (20%–80%). Every row here warrants a look.

What This Report Flags

The Profit Exception report surfaces order lines where the gross profit percentage falls outside the expected operating range. Three types of exceptions appear:

Below CostMargin is negative — you sold the item for less than your cost. Investigate immediately; common causes are price overrides, PO cost errors, or data entry mistakes.
Low MarginMargin is between 0% and 20%. May be intentional (promotional pricing, key account discount) or a missed pricing update.
High MarginMargin exceeds 80%. Could be a legitimate premium product, or it could indicate a COGS error (zero cost on file, wrong moving average).

This report is most useful reviewed daily by sales managers before orders ship. Catching a below-cost line at order entry is far cheaper than reversing an invoiced transaction.

How P21 Calculates Profit %

P21 uses this logic per order line, preferring the PO cost over sales cost when available:

-- Cost source: PO cost if set, else sales (moving avg) cost

cost = CASE po_cost = 0

THEN sales_cost_home

ELSE po_cost_home

-- GP% calculation

gp_pct = CASE unit_price = 0 THEN 0

ELSE (unit_price - cost) / unit_price × 100

The PO cost preference matters: if you have an open PO for an item at a specific cost, P21 uses that cost for the margin calculation rather than the item's moving average. This gives a more accurate picture for drop-ship or direct-ship orders where the actual landed cost differs from inventory cost.

Below-Cost Root Causes

When an order line has negative margin, the cause is almost always one of:

  1. 1Price override — a rep manually keyed in a price below cost. Check the Taker column; identify who placed the order.
  2. 2Customer contract — the customer has a job price or contract at a below-cost rate. Verify the contract terms are intentional.
  3. 3COGS error — the item has an inflated moving average cost, making a fair-market price appear to be a loss.
  4. 4Free-of-charge line — the item was priced at $0 intentionally. These should use a specific price code, not a blank price field.

High-Margin Root Causes

Lines above 80% GP are flagged because they are often data quality issues:

  1. 1Zero cost on file — if an item has no moving average cost set, P21 may compute 100% margin. Investigate in Item Maintenance → Cost tab.
  2. 2PO cost not yet received — the PO cost on the line is zero (no receipt matched), so the calculation falls back to sales cost which may be stale.
  3. 3Legitimate premium item — some specialty or proprietary items do carry very high margins. Confirm the cost is accurate before acting.

In P21: Approving Exceptions

P21 can be configured to require approval before an order with a profit exception can be released. The approval flag (shown in the approved column of the original query) tracks whether a manager has reviewed and signed off on the exception.

To configure profit limits in P21:

Company-wideSetup › Company Maintenance › Order Entry tab → Profit Exception
Per customerCustomer Maintenance → Profit Limits tab → override_profit_limit = Y
Report in P21Reports › Order Entry › Profit Exception Report

Order Lines — Last 90 Days (sorted lowest margin first)