Landed Cost In ERPNext

ERPNext is a  powerful and versatile Open Source Enterprise Resource Planning Software that provides us with a wide range of Modules and Functionality  with respect to various industries like education, Healthcare, Manufacturing, Trading, etc.

And amongst the list of the various functionalities, one of the unique functionality is the Landed Cost Feature.

This feature allows businesses to accurately calculate and allocate additional charges related to the landed cost of goods.

Landed Costs generally refers to the total cost of a product once it  has arrived at its destination and the add-on cost that is incurred before reaching the Buyer's Premises.

This Cost includes the Original cost, Custom duty, Taxes, Insurance, handling fee, etc.

The Keys features of the Landed cost are:

1) Accurate Inventory Valuation

The landed cost Voucher allow the business to include the addon charges in the Valuation of the inventory thus getting an accurate valuation of the assets leading to the better financial reporting and decision making.

2) Expenses Tracking

The expense tracking helps in tracking the landed cost voucher through the sum of additional cost incurred on handling or the cost of carrying the goods before it reaches the premises.

3) Cost Analysis

By Including the landed cost, the business gets an accurate and clear understanding of the Cost related to the product therefore it is beneficial in setting the pricing. 

Creating the Landed Cost Voucher in the ERPNext 

1. From the Awesome bar go to “Landed cost Voucher” or Stock >Tools > Landed cost Voucher.

2. Click on “ Add Landed Voucher Cost”.

3. Select the “Company” (If there are Multiple Companies).

4. Select the “Receipt Document type” . You can choose either of the below documents.

a. Purchase Receipt (Ensure the “Update Stock” field be checked in Purchase Receipt chose for creating Landed cost Voucher).

b. Purchase Invoice (While Creating against purchase invoice ensure to check “update stock” fields tab as the Items will not be displayed when you click Get items from Purchase Receipt if this field is not checked).

5. Select the “ Receipt Document”.

6. “Supplier” and “ Grand total ” will be displayed by default based on the Document Receipt.

8. In “ Applicable Charges” (Add the Expenses incurred as landed cost ).

a. Select “Expenses account ”.

b. Add the “Description” of the charges. 

c. Enter the “Amount” of the Expenses Incurred.

9. The “Total Taxes and Charges” (Sum of amount applicable charges ).

10. Distribute Charges based on:

a. Qty

b. Amount

c. Distribute Manually 

The Additional Charge is to be added to the Item Valuation of the Item Rate 

The landed cost voucher can be Traced in the Purchase receipt >select the Purchase receipt > view > Accounting ledger.

We hope with this blog, we have helped you understand and manage the landed costs in your ERPNext database. If you wish to explore what all possibilities ERPNext can help you unlock, contact us and connect with our experts today!

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