SAP Business One How To: Landed Cost

In this SAP Business One How To article are instructions on how to set up and create documents to include landed cost. When you have materials coming from overseas or want to add third party freight costs to an item's overall cost you use the landed cost feature.

Use the Landed Cost functionality in SAP Business One to:

  • Add the cost of 3rd party freight to items in SAP Business One
  • Add customs, broker or insurance costs incurred to items in SAP Business One

A landed cost document will update the cost of the item(s) purchased with these types of additional costs, and allocate it across the items in the manner you choose.

The landed cost document is based on a goods receipt PO. Since SAP Business One uses the goods receipt PO as the base reference for the entire import process, be sure to enter the item prices and quantities correctly at the time you create the goods receipt PO. After you post the landed costs document, the price of the items is updated. And since it also contains all the costs that were allocated, the landed costs document creates a journal entry to reflect the additional import costs in accounting.

If your final costs are not known yet, you can post landed costs as an estimate, and at a later stage post an adjusted landed cost document with the final numbers, by copying the first landed cost document to a new one.

Here's how to set up and and create landed cost documents in SAP Business One:

Step One:  Set up Landed Cost Allocation accounts.  In order to enable automatic journal entries you must define the appropriate G/L accounts.

Go to Administration > Setup > Purchasing > Landed Cost to define the landed cost's allocation account. Go to Administration > Setup > Inventory > Customs Groups to define the customs allocation and expense accounts.

The landed cost document does not change quantity levels in inventory. It does however update the item unit cost, based on the Goods Receipt PO original cost plus the additional expenses identified in the landed cost document. The journal entry will debit the inventory account and credit the Customs Allocation account for the customs amount.  If you prefer that customs does not affect inventory cost, the amount will be posted to the Customs Expenses account instead. As for the landed cost expenses, the journal entry will debit the inventory account and credit the landed costs allocation accounts.

The final step of recording landed cost is to post a service A/P invoice to your vendor which represents the broker you paid the additional expenses to. Here you would credit the vendor, and debit the corresponding allocation accounts so the amount is cleared.

Step Two:  Creating a Landed Cost Document

First create a goods receipt PO (or multiple goods receipts POs) for the order of the items.  Then you create a landed costs document.  Go to > Purchasing > Landed Cost.  Search for the vendors of the original items.  Choose Copy From Goods Receipt PO.  Select the goods receipt po for which items need landed costs added.  To add multiple goods receipts from this vendor choose copy from again.

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Items appear in the landed costs document window.

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Then you enter actual costs into the landed cost document.  Enter costs into Actual Customs field.  The system asks if you want to divide costs among each item number defined in the rows proportionately.  Choose yes.

You enter fixed costs such as shipping costs via the Costs Tab of the Landed Costs Document.  Click on the Shipping Row and Enter the cost in the Amount field.  By choosing allocation by quantity, you decide how you want to allocate the shipping costs across items.

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You can add new landed cost categories that allocate in different ways by choosing the New Landed Costs button.  Add your code and name and allocation by (there are multiple choices on how to allocate) and select OK.

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When you are done adding costs, the Items tab will update the rows for each items with allocated costs and total costs by item.  When you are satisified, choose Add to add the document.  This adds the appropriate costs to the GL accounts.

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The final step of recording landed cost is to post a service A/P invoice to your vendor which represents the broker you paid the additional expenses to. Here you would credit the vendor, and debit the corresponding allocation accounts so the amount is cleared.

For more tips, tricks and how to articles for SAP Business One, visit the Seidor Help Docs website.

 

Seidor is the global #1 SAP Platinum Partner of SAP Business One.  We sell, install, implement, train and support

our customers for this software solution from our offices in Houston, Detroit, New Jersey, Miami and California. 

 

 

Seidor is the global #1 SAP Platinum Partner of SAP Business One.  We sell, install, implement, train and support

our customers for this software solution from our offices in Houston, Detroit, New Jersey, Miami and California. 

 

 

Seidor is the global #1 SAP Platinum Partner of SAP Business One.  We sell, install, implement, train and support

our customers for this software solution from our offices in Houston, Detroit, New Jersey, Miami and California. 

 

 

Seidor is the global #1 SAP Platinum Partner of SAP Business One.  We sell, install, implement, train and support

our customers for this software solution from our offices in Houston, Detroit, New Jersey, Miami and California. 

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