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Managing Freight Charges

SAP Business One enables you to manage freight so that you can track any additional costs in sales and purchasing transactions. Freight charges could include insurance, shipment, and other costs that apply to your goods. You can add freight in the document or row level. When you do, the total amount of the document is updated accordingly. If you manage your inventory using perpetual inventory, you can add the value of freight charges in purchasing documents to the cost of your goods. In addition, you can define whether the last purchase price of your items includes the freight charges that apply to your purchased goods. You can print freight and generate various reports for analyzing it.

Prerequisites

In the Freight - Setup window, you have defined the freight you plan to apply to your sales and purchasing documents. On the G/L Account Determination: Inventory Tab, you have defined an offsetting G/L account for the inventory account for clearing journal entries created by A/P invoices and goods receipt POs. On the G/L Account Determination: Purchase Tab, in the Expense Account: Variance Account field, you have defined a variance G/L account for clearing journal entries created by A/P credit memos based on A/P invoices or by goods returns based on goods receipt POs in which the freight charges amount was changed. In the Cash Discount window, by selecting or clearing the Freight checkbox for every cash discount defined in your company, you have decided whether the discount amount calculated on the invoice total includes freight. Country-specific fields, US and Canada: In the Sales Tax Codes - Setup window, by selecting the Freight checkbox, you have applied freight charges to each tax code. Country-specific fields, all Europe: For the Output Tax Group and Input Tax Group, you have chosen relevant tax groups and selected the WT Liable option to apply withholding tax on freight.

Process
Freight in Sales and Purchasing
You can apply freight to both sales and purchasing documents. However, only freight charges in purchasing documents may affect item cost and the last purchase price. You can apply freight on:

Row level up to three different types of freight charges on individual document rows Total level the entire document
NOTE

In India, freight uses the location of the marketing document when it was posted as a journal entry.

Drawing Base Documents with Freight Charges to Target Documents


When you draw a base document to a target document, the Draw Document Wizard appears and enables you to copy the required data. In different steps of the wizard, make the necessary settings for copying the row level and the total level freight.

Example
Prerequisites
1. You manage perpetual inventory by standard price. 2. The vendor, item, and freight charges are exempted from tax. 3. There is one additional freight charge at the total level. 4. The freight is defined as Stock Yes .

5. The standard price of the item and the price in the document are USD 100. 6. The freight amount is USD 10.

Goods Receipt PO
G/L Acc./BP Code 23000000-01-001-01 19200000-01-001-01 52300000-01-001-01 13500000-01-001-01 Name Allocation 1 Freight Clearing 1 Variance 1 Stock 1 USD 10.00 USD 100.00 Debit Credit USD 100.00 USD 10.00

USD 110.00

USD 110.00

Goods Returns and Goods Returns Based on a Goods Receipt PO


G/L Acc./BP Code 23000000-01-001-01 19200000-01-001-01 52300000-01-001-01 13500000-01-001-01 Name Allocation 1 Freight Clearing 1 Variance 1 Stock 1 USD -10.00 USD -100.00 USD -110.00 USD -110.00 Debit Credit USD -100.00 USD -10.00

A/P Invoice Based on a Goods Receipt PO


G/L Acc./BP Code V6970 19200000-01-001-01 23000000-01-001-01 Name Vendor Freight Clearing 1 Allocation 1 USD 10.00 USD 100.00 USD 110.00 USD 110.00 Debit Credit USD 110.00

A/P Invoice
G/L Acc./BP Code V6970 Name Vendor Debit Credit USD 110.00

52300000-01-001-01 13500000-01-001-01

Variance 1 Stock 1

USD 10.00 USD 100.00 USD 110.00 USD 110.00

A/P Credit Memo Based on Goods Returns


G/L Acc./BP Code V6970 19200000-01-001-01 23000000-01-001-01 Name Vendor Freight Clearing 1 Allocation 1 USD -10.00 USD -100.00 USD -110.00 USD -110.00 Debit Credit USD -110.00

A/P Credit Memo and A/P Credit Memo Based on A/P Invoice
G/L Acc./BP Code V6970 52300000-01-001-01 13500000-01-001-01 Name Vendor Variance 1 Stock 1 USD -10.00 USD -100.00 USD -110.00 USD -110.00 Debit Credit USD -110.00

A/P Credit Memo Based on A/P Invoice Changing the Freight Charge Amount
The scenario illustrates a situation in which the freight charge amount changes when you copy an A/P invoice into an A/P credit memo. The freight charge amount in the A/P invoice is USD 10. The freight charge amount in the A/P credit memo is USD 0.

G/L Acc./BP Code V6970 63500000-01-001-01 52300000-01-001-01 13500000-01-001-01

Name Vendor Variance Expenses Variance 1 Stock 1

Debit

Credit USD -100.00 USD -10.00

USD -10.00 USD -100.00 USD -110.00 USD -110.00

The variance expense G/L account is used to clear the differences, since the vendor account is not cleared.

Closing a Goods Receipt PO or a Goods Return


When you close a goods receipt PO or a goods return ( the allocation and the freight clearing accounts. Data Close ), no inventory posting is registered. However, a journal entry is created to clear

G/L Acc./BP Code 23000000-01-001-01 19200000-01-001-01 10000111-02-001-01

Name Allocation 1 Add. Expense Clearing 1 Goods Clearing 1

Debit USD 100.00 USD 10.00

Credit

USD 110.00 USD 110.00 USD 110.00

NOTE

The freight clearing G/L account clears the inventory account along with the allocation costs account. If there is a discrepancy between the amount recorded in the vendor account and that in the inventory account, the variance G/L account is used in the journal entry.

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