Last updated 04/10/2017
Cin7 calculates landed costs very accurately. The process outlined in this article removes the need to manually calculate landed costs, and - when linked to your Accounting Software - prevents double entry.
To apply Import Costs to a Purchase:
Step one is simple, just create a Purchase Order for your products as usual.
Create a Purchase Order (or Purchase Orders) for your import costs.
We recommend creating non-stock products for line items such as Freight and Customs Duty. You will find two non-stock products pre-loaded in your account, one for 'Freight' and one for 'Customs Duty'. Feel free to create additional non-stock products if you require additional line items. For more information on how to do this see the Non Stock section of our article Stock Control Methods.
To create a Purchase Order for import costs:
Once your 'import costs' Purchase Order has been created, you now need to apply specific lines back to the original 'products' Purchase Order. To do this:
Please note that the freight Purchase Order must have been saved before Transactions can be linked.
If your import costs Purchase Order relates to more than one product Purchase Order, you may wish to divide the costs between multiple Purchase Orders. To do this:
This method will divide the import costs evenly between the two purchases. However if you wish to apply a greater amount to one Purchase Order than the other, you will have to decide on the correct percentages to do this.
Once the costs have been applied, returning to the original Purchase Order will reveal some new fields:
These fields will correlate to the costs applied to the Purchase Order. Any product with 'customs' in the name will be treated as Duty. All other costs including Freight will appear in the Freight/Other box.
The total costs are allocated to products as follows:
Freight costs can be distributed in three different ways:
|Value||This is the default method used. Freight costs are distributed by value, so the more expensive items receive a larger portion of the freight cost. This method is most appropriate if all your items have similar weights and dimensions.|
|Weight||This method uses weight - the heavier items receive a larger portion of the freight. The weight of each product is specified in the product details page. This method is most appropriate if the weights of your products vary significantly.|
|Cubic Metres||The method uses volume - the larger items receive a larger portion of the freight. The dimensions of each products are specified in the product details page. This method is most appropriate if the size of your products vary significantly.|
Customs Duty is distributed over the entire order by value of the products, i.e. the more expensive goods receive a larger portion of the Duty.
If you are using the Perpetual method of accounting, then those line items that have been applied to other Purchase Orders will be imported as Inventory, and all other items imported as expenses.
If using the Periodic method, all line items will be imported as expenses.
We can't change the field description, however if you were to enter weight as pounds or ounces, there is no technical reason why cost distribution shouldn't work, provided you enter the unit consistently across all your products, and the weight is in whole units. The same goes for dimensions.
Yes, this is possible. To do this, create a new purchase order for the landed costs, click in Transaction Links column and link it to the original purchase order. The landed costs will be applied accordingly.