[Mike Zerr]

So I know there is a landed cost feature in purchasing but if you have ever worked with it you know its poorly designed and really was designed for a VAT tax vs actual shipping or USA taxes.

Just wondering if any of you have found any good work around that actually work?  My customer does food processing and buys raw materials and on their invoice they have the individual items , shipping cost and tax and of course they just want to distribute that on their inventory costs.

My suggestion was just manually figure it out and manipulate the item costs but they think that is too error prone and hard to validate.

My biggest problem with landed cost is by default you have to setup a landed cost code per vendor because in this case my customer pays the tax and shipping to the vendor they bought the goods from and not a separate company. As well as a number of posting issues, and it makes any returns an absolute pain to do.

Just seeing what others have done in these cases or if there are any 3rd parties designed for the USA.

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Mike Zerr
Application Consultant
DFC Consultants, Ltd.
Fargo ND
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[Kristen Hosman]

Hi Mike.  

I have also found some pain points with Landed Cost.  Below I will outline a couple scenario’s that I’ve seen within my organization.

#1.  Invoice is received by AP and when the product was received by materials management (MM) they forgot to add Landed Cost (LC) to the receiving document.

In cases like this I just do as you suggested and manually figure out the cost per item and enter that into the Enter/Match transaction.  This method really isn’t that hard to do and I created a spreadsheet for my AP team to use to calculate this out; they just have to enter in specific information regarding item quantities, item costs per unit and freight/tax/misc charges.  

#2.  Invoice is received by AP and when the product was received by MM they added LC to the receiving document.  

In cases like this I do have LC setup for specific vendors/items.  Within the Enter/Match transaction you can then Auto-Invoice for the lines being invoiced then you can also add the LC charges to the same invoice as shown below in my screen shot.  

The BIG issue is when MM forgets to add LC to a receiving document and the LC is getting paid to a different vendor than the product is.  Then I have to enter the invoice for LC as a transaction entry and code it to my inventory adjustments account.  I then adjust the cost within the inventory module to make it correct and an entry is made then to offset the expense in the  inventory adjustment account that was made when I entered the invoice.

Long story short…LC is a pain!  And there could be a better way if Microsoft did some things different however I don’t see them changing anytime soon.  If you need more ideas just let me know I’m an open book at this point when it comes to LC.

The biggest issue you will have will be training…training…training.  And getting people to follow the right processes.  

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Kristen Hosman
Accounting Manager
PlatinumCode
Pine CO
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[David Clayton]

Hi Mike,

We do quite a bit of work with landed costs.   It works quite well for our customers.

you know its poorly designed and really was designed for a VAT tax vs actual shipping or USA taxes.

Landed costs is a good way to apportion additional charges over the cost of the items in a shipment.  These charges could be taxes, trucking fees, freight, etc.

My biggest problem with landed cost is by default you have to setup a landed cost code per vendor because in this case my customer pays the tax and shipping to the vendor they bought the goods from and not a separate company.

A typical purchase of inventory may result in invoices from a number of vendors.   (cost of the inventory items, taxes, trucking fees, freight, etc.)  Landed costs allows you to match a debit to inventory with credits to the payables accounts of several vendors.

If the amount payable consists of several charges from a single vendor, the landed cost charges can be included as separate line items on a single invoice.

Setting up the landed cost record is a one time task for each vendor/landed cost combination.

If you have a specific example, we could work through the process.

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David Clayton
DMC Consultants Limited
Kingston, Jamaica
http://www.dmcjm.com
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