Landed costs – overview

Landed costs, which can be linked to purchase transactions, are the total of all costs that are associated with the procurement of an item until delivery and receipt in a warehouse. Landed costs typically include freight costs, insurance costs, customs duties, and handling costs. For specific landed costs, separate business partners can be involved. Landed costs give you insight into the real procurement costs of an item.

Landed costs in the procurement process

During the entire procurement process, landed costs must be taken into account:

  • Purchasing
    When purchase orders, warehouse transfer orders, purchase schedules, or ASNs are created, landed costs can be added. These costs are defaulted, but they can be changed.
  • Receiving
    During the receiving process, all landed costs are defaulted and added to the inventory value of the received item.
  • Purchase invoice processing
    Users can receive, match, approve, and pay a purchase invoice for landed costs. Therefore, the inventory value of the received items will be updated. A purchase invoice can also be processed before the goods are received.
Cost basis for landed costs

Variable landed costs

Depending on the quantity, variable landed costs can be calculated using one of these methods:

  • By Quantity
  • By Volume
  • By Weight
  • Percentage Value
  • By Freight Management
  • By Distance
  • Surcharge Percentage

Fixed landed costs

Fixed landed costs are calculated using the Fixed Amount method. In that case, landed costs can be specified per:

  • Purchase order header
  • Purchase order line
  • Shipment notice header
  • Receipt header
  • Receipt line

If a fixed amount is specified on header level, this amount is apportioned to the order lines, ASN-lines, and receipt lines.

Landed costs setup

Before landed costs can be linked to purchase transactions, you must define the master data.

Landed costs on purchase transactions

Landed costs are linked to an order, schedule, ASN, or receipt by landed cost lines.

A landed cost line can be:

  • Automatically generated, based on a landed costs scenario
  • Copied from the origin to which the landed cost line was initially linked
  • Manually specified or modified
Matching and approving of purchase invoices

Purchase invoices for landed costs can be received, registered, and paid in Accounts Payable, just as regular purchase invoices.

  • During the warehouse receipt, invoice receipt lines are created for the regular purchase lines and for the landed cost lines.
  • Purchase invoices for landed costs will be registered as Invoice Related to Landed Costs.
  • Based on a purchase number or packing slip number, purchase invoices can be matched with the landed cost receipt lines, and then approved.
  • Matching can be done individually and by range.

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