Landed costs: freight, duties and import costs

What you pay to bring the goods in is part of their cost. A landed cost spreads those expenses over the lines of one or more goods receipts and raises the average cost of what's still in the warehouse.

Set up the cost types

In Purchasing › Landed cost types create one for each expense: international freight, general import duty (IGI), DTA, insurance, customs broker fees… For each one choose:

• Allocate by: quantity, weight, volume, line value or equally. You can change it on each document.
• Service item: the service the customs broker or forwarder bills that expense with.

To allocate by weight or volume, items need their weight or volume per unit.

Enter a landed cost

1. Open the goods receipt and use Copy to › Landed costs (or in Purchasing › Landed costs › New, Copy from one or more receipts). Lines come in whole even if they were already invoiced.
2. Enter the Customs declaration (pedimento) and its date.
3. In Costs to allocate add each expense with its amount and how it's allocated. If you already recorded the broker's or forwarder's invoice, enter its internal number in Supplier invoice.
4. Save.

After saving you'll see How it was allocated for each cost on each line.

What happens to the cost

For each item and warehouse:

• The part of the goods still in the warehouse raises its average cost.
• The part that already left (sold, adjusted or transferred) goes to cost of sales, because there's no stock left to revalue.

For example, if you received 10 valves at $100 and already sold 5, out of $300 in expenses $150 raises the cost of the 5 left (from $100 to $130) and $150 goes to cost of sales.

The customs broker's invoice

The broker's or forwarder's invoice is recorded separately as a supplier invoice, with the cost type's service item. That line goes to the Landed costs clearing account and the landed cost moves it into inventory, so the account is zero once both documents are in. This is how SAP Business One does it.

With accounting

Cancel

You can cancel it while the revalued goods are still in the warehouse; the cost goes back to what it was. If they already left, correct it with another landed cost or an adjustment. A receipt with a landed cost in force can't be canceled.

With an ERP

With SAP Business One it goes up as LandedCosts based on the receipts, with the pedimento as its reference. NetSuite keeps landed costs inside the item receipt when it's created, so landed costs aren't sent to NetSuite.