When pricing an item, your company may want to consider freight, duty, customs, etc in the cost of the item. This may include not only physical components but any cost associated with obtaining the parts or material for producing the part. If you’re importing items or having an outside service do some of your production you need to capture additional costs, which is essential for pricing your items correctly. After all, the lowest priced items may not be the best deal when adding other factors such as shipping. All the other costs need to be evaluated when deciding on making a purchase. Landed Cost screen can be used to track and calculate the total cost needed to get that product from a supplier to your organization. Capturing these expenses gives your company the opportunity to evaluate and analyze the value of a buy. Some of these additional costs can include:
- Shipping and/or Freight costs.
- Customs costs such as taxes, tariffs, or brokerage frees.
- Handling charges or fees.
To begin you need to setup SAP Business One for Landed Costs. From the Main Menu select Administration → Setup → Purchasing → Landed Costs.
Code – Code for the Landed Cost.
Name – A label referencing the Landed Cost.
- Allocation By – This tells how to distribute the Landed Cost.
- Cash Value Before Customs – Distributes costs for the share of the item for the FOB price of delivery less customs.
- Cash Value After Customs – Distributes costs for the share of the item for the FOB price plus customs.
- Quantity – Distributes costs based on the quantity of the item in relation to the total quantity of the delivery.
- Weight – Distributes costs based on the weight of the item in relation to the total weight of the delivery.
- Volume – Distributes costs based on the volume of the item in relation to the total volume of the delivery.
- Equal – Distributes costs equally among all delivered items.
Landed Costs Alloc. Account – Specify the G/L clearing account for non-customs expenditures between the A/P invoice (service type) and the Landed Costs document. **Only for companies using perpetual inventory.
SAP Business One uses the Goods Receipt PO as the basis for calculating Landed Cost, however an A/P invoice or another landed costs document can also be used. It is imperative that information be as accurate as possible, such as item prices and quantities. You create the Landed Costs document from the Main Menu select Purchasing → Landed Cost.
SAP Business One allows applying a single or multiple goods receipts to the Landed Costs screen. You begin the process by entering a Vendor and selecting your documents. SAP Business One also allows you to receive items from multiple vendors allowing you to land the costs from multiple vendors on one Landed Costs document.
In a perfect world you would receive your invoices upon receipt of material. This, however probably doesn’t happen especially with overseas vendors. Since Landed Costs updates your item’s cost which affects the inventory valuation, gross profit or any other inventory calculations, you have the option to enter the Landed Costs before you receive an invoice. You can enter all the necessary information based on estimates and process your Landed Costs transaction. Once you receive your invoice SAP Business One allows you to create a new Landed Costs transaction from your original document and the System creates the transactions affecting the inventory value if necessary.
- Knowing the exact costs of your items is essential to keeping your pricing competitive and your organization successful. SAP Business One gives you the tools needed in capturing Landed Costs as well as other functionality necessary to keeping your business progressing into the future. For a more comprehensive look into Landed Costs or any other feature in SAP Business One your team at LBSi is here to support your needs now and in the future.