Set up a landed costs workflow

Landed costs is a workflow that enables you to ensure that your inventory valuation reflects the total cost of acquiring products. The total cost is the original purchase price plus any additional expenses incurred to purchase the product, such as freight, insurance, customs, duties, and handling fees. Several tasks are required to set up this feature to work in your organization.

To use the landed cost feature, your organization must be subscribed to Inventory Control and Purchasing.

Set up landed costs

The following sections outline the steps for setting up landed costs.

1. Ensure one or more Purchasing transaction definitions exist

The following table explains the Purchasing transaction definitions you need to set up landed costs and their requirements.

Transaction definition requirements

If you plan to use ...	Then ...
Actual costs only	You need at least one Purchasing transaction definition to set up actual landed costs only. This transaction definition is for creating the purchase transactions to enter actual landed costs. In another step, you'll define which transaction definitions can be used to enter actual landed costs. The transaction definition, which is typically for a vendor invoice, must post to Accounts Payable or the General Ledger.
Estimates and actuals	You need at least two Purchasing transaction definitions to set up estimates and actuals. A transaction definition for including estimated landed costs on the purchase of the items. It has these requirements: Must have the effect of increasing inventory value (ONHAND Value or Value & Quantity) Must post to Accounts Payable or the General Ledger A transaction definition for creating the purchase transactions to enter the actual landed costs and link them back to the estimates in the original purchase. The transaction definition, which is typically for a vendor invoice, must post to Accounts Payable or the General Ledger (the same requirement for Actual costs only). In another step, you'll define which transaction definitions can be used to enter estimated and actual landed costs.

Learn how to create or edit a Purchasing transaction definition.

2. Configure Inventory Control

You enable landed costs and specify other basic settings on the Configure Inventory Control page.

In a multi-entity environment, enable landed costs at the top level.

1. Go to Inventory Control > All > Setup, and select Configuration.
2. In the Enable functionality section under Advanced settings, select Enable landed costs.
3. Select Actual costs only or Estimates and actuals.
   If you enable estimates, users don’t have to enter estimates on every purchase transaction. Similarly, users do have to link every actual landed cost back to an estimated landed cost. For example, if an actual cost arrives that doesn't have an estimate, the actual can just be linked back to the original purchase without matching it to an estimate.
4. Select which accounts to use as clearing accounts to balance the journal entries that get created for landed costs.

   Clearing accounts for landed costs

   If you selected ...	Then ...
   Actual costs only	Select an account from Landed costs account dropdown list. This account serves as a clearing account to balance the journal entries for the actual landed costs.
   Estimates and actuals	Select an account from each of the following dropdown lists: Landed costs account. This account serves as a clearing account to balance the journal entries for the actual landed costs. Estimated landed costs account. This account serves as a clearing account to balance the journal entries for the estimated landed costs.
   Best practice: Using an accrued liabilities account to place the account in the most appropriate section of the balance sheet is recommended.

5. Select the applicable transaction definitions for the transactions you want to use to enter landed costs. Only purchase transaction definitions that post to Accounts Payable or the General Ledger appear in the transaction definition dropdown lists.

   Transaction definitions for landed costs

   If you selected ...	Then ...
   Actual costs only	Select a transaction definition from the dropdown list. Select the Use to enter actual landed costs checkbox. Repeat Steps a and b for each transaction definition you want to use to enter actual landed costs.
   Estimates and actuals	The same transaction definition can’t be used to enter estimates on the original purchase of goods and to enter actual landed costs. Select different transaction definitions for entering actuals and estimates. Select a transaction definition from the dropdown list for entering actual landed costs. Select the Use to enter actual landed costs checkbox. Repeat Steps a and b for each transaction definition you want to use to enter actual landed costs. Select a transaction definition from the dropdown list for entering estimated landed costs on the original purchase of goods. Select the Use to enter estimated landed costs checkbox. Repeat Steps d and e for each transaction definition you want to use to enter estimated landed costs.

   In a multi-entity environment, you can select additional transaction definitions at the entity level.

   The transactions for the transaction definitions for entering actual costs will have extra fields in the details area for each line item. These fields enable users to select the original purchase to distribute an actual landed cost to. And, if estimates are enabled, to match an actual cost to its estimate.

   The transactions for the transaction definitions for entering estimated landed costs will include a Landed costs estimates section. The section is for entering estimates of the anticipated landed costs on the purchase of goods.

   These added fields and sections do not have to be used.

6. Select Save.

When you enable landed costs, Sage Intacct automatically:

• Generates one or more inventory adjustment transaction definitions. Intacct uses these transaction definitions to generate the underlying inventory control transactions to manage the value of inventory items when actual landed costs are entered and, if enabled, estimated landed costs.
• Adds fields to inventory items for enabling the item's valuation to be updated with landed costs and defining the landed cost distribution values for the item.
• Adds fields to non-inventory items so they can be enabled as landed cost items.

3. Edit the system-generated inventory adjustment transactions

The number of system-generated inventory adjustment transaction definitions that are created depends on whether you’re using Actual costs only only or Estimates and actuals. Each transaction definition needs to be updated with a numbering sequence and GL posting information.

Transaction definition descriptions

Transaction definition	Description
SYS-LC Actuals Adj Incr	The transaction definition for the underlying transaction Sage Intacct automatically creates when an actual landed cost is posted. It adds the value of the actual landed cost to the purchase cost of the items.
SYS-LC Estimates Adj Incr	The transaction definition for the underlying transaction Sage Intacct automatically creates when an estimated landed is posted on the purchase of inventory items. It adds the value of the estimate to the purchase cost of the items.
SYS-LC Estimates Rev Adj Incr	The transaction definition for the underlying transaction Sage Intacct automatically creates when an actual landed cost is linked to an estimate and posted. It removes the value of the original estimate from the purchase cost of the items.

1. Go to Inventory Control > Setup > More > Transaction definitions.

2. Find the transaction definition you want to edit.

3. Select Edit at the end of the row.

4. From the Numbering sequence dropdown list select the desired numbering sequence or add a new sequence.

5. On the Posting configuration tab, enter the applicable GL accounts to be adjusted.

   The following table provides examples.

   Posting configuration tab GL accounts examples

   Transaction definition	Example GL posting entries
   SYS-LC Actuals Adj Incr	Debit: One or more inventory accounts Credit: The account selected for the Landed costs accounts in the Configure Inventory Control page
   SYS-LC Estimates Adj Incr	Debit: One or more inventory accounts Credit: The account selected for the Estimated landed costs account in the Configure Inventory Control page
   SYS-LC Estimates Rev Adj Incr	Debit: The account selected for the Estimated landed costs account in the Configure Inventory Control page Credit: One or more inventory accounts that mirror the accounts in SYS-LC Estimates Adj Incr

6. Select Save.

1. Go to Inventory Control > Setup > More > Transaction definitions.

2. Find the transaction definition and select Edit.
3. From the Numbering sequence dropdown list select the desired numbering sequence or add a new sequence.

4. On the Posting configuration tab, enter the applicable GL accounts to be adjusted.

   The following table provides examples.

   Posting configuration tab GL accounts examples

   Transaction definition	Example GL posting entries
   SYS-LC Actuals Adj Incr	Debit: One or more inventory accounts Credit: The account selected for the Landed costs accounts in the Configure Inventory Control page
   SYS-LC Estimates Adj Incr	Debit: One or more inventory accounts Credit: The account selected for the Estimated landed costs account in the Configure Inventory Control page
   SYS-LC Estimates Rev Adj Incr	Debit: The account selected for the Estimated landed costs account in the Configure Inventory Control page Credit: One or more inventory accounts that mirror the accounts in SYS-LC Estimates Adj Incr

5. Select Save.

Learn more about Inventory Control transaction definitions.

4. Update inventory items

A landed cost can only be distributed to the inventory items in the original purchase transaction that are enabled for landed costs and set up for the distribution method associated with the landed cost category that's selected. So, each inventory item that you want to distribute landed costs to needs to be updated.

The following steps assume that the items already exist. If any desired items do not exist, create them before proceeding.

1. Go to Inventory Control or Purchasing > Setup > Items.

2. Find the required item.

3. Select Edit at the end of the row.

4. On the Advanced tab in the Landed costs section, complete the following steps:

   1. Make sure the Enable distribution of landed costs to this item checkbox is selected.

      The Enable distribution of landed costs to this item checkbox appears only for inventory items and only if landed costs is enabled in the Configure Inventory Control page.

   2. Select the Active checkbox and enter a Value for each distribution method your organization plans to use. The Value you enter depends on the unit of measure (UOM) for the item in the General tab.

      What to enter for Value

      If the item's UOM is:

      • The same as the distribution method, enter 1. (The field defaults to 1 if it's left blank.)
      • Not the same as the distribution method, enter a number that represents the item in the base unit of the distribution method. For example, for Weight, if the item weighs 2 pounds and the base unit for Weight is Ounces, enter 32 (16 ounces in a pound x 2 pounds = 32). If the base unit for Weight had been Pounds, you'd have entered 2.
      When entering estimated or actual landed costs, the user selects the landed cost category, which indicates the distribution method the system uses (Count, Value, Volume, or Weight). To distribute landed costs to the item by Value, enabling the item for landed costs is the only required setup.

   3. Select Save.

5. Repeat steps 2 - 4 for each desired item.

1. Go to Inventory Control or Purchasing > Setup > Items.

2. Find the required item and select Edit next to it.

3. On the Advanced tab in the Landed costs section, complete the following steps:

   1. Make sure the Enable distribution of landed costs to this item checkbox is selected.

      The Enable distribution of landed costs to this item checkbox appears only for inventory items and only if landed costs is enabled in the Configure Inventory Control page.

   2. Select the Active checkbox and enter a Value for each distribution method your organization plans to use. The Value you enter depends on the unit of measure (UOM) for the item in the General tab.

      What to enter for Value

      If the item's UOM is:

      • The same as the distribution method, enter 1. (The field defaults to 1 if it's left blank.)
      • Not the same as the distribution method, enter a number that represents the item in the base unit of the distribution method. For example, for Weight, if the item weighs 2 pounds and the base unit for Weight is Ounces, enter 32 (16 ounces in a pound x 2 pounds = 32). If the base unit for Weight had been Pounds, you'd have entered 2.
      When entering estimated or actual landed costs, the user selects the landed cost category, which indicates the distribution method the system uses (Count, Value, Volume, or Weight). To distribute landed costs to the item by Value, enabling the item for landed costs is the only required setup.

   3. Select Save.

4. Repeat steps 2 - 3 for each desired item.

If you have many items to update, you can save time by using the Web Services API support to update your items for landed costs. Currently, the Web Services API only supports the use of Actual costs only.

5. Create landed cost items

A landed cost item is a non-inventory item that represents a landed cost expense, such as freight, insurance, customs, duties, handling fees, and so on. A landed cost item has an item type of "Non-Inventory" or "Non-inventory (Purchase only)" and needs to be enabled for landed costs.

1. Go to Inventory Control or Purchasing > Setup and select Add (circle) next to Items.

2. From the Item type dropdown list select one of the following values:
   • Non-Inventory
   • Non-inventory (Purchase only)
3. Enter an Item ID and Name for the landed cost.
4. On the Advanced tab select Enable as a landed cost.
5. Enter any other optional information, as needed.
6. Select Save.
7. Repeat steps 2 - 6 for each landed cost item you need.

6. Create landed cost categories

A landed cost is proportionately applied to all the applicable inventory items in an original purchase transaction by the distribution method associated with the landed cost category the user specifies. The distribution method can be by count, value, volume, or weight.

Landed cost categories make it easier to quickly identify how to distribute a landed cost to the applicable items in an original purchase. A landed cost might need to have more than one distribution method. For example, your organization might distribute freight costs by weight or by volume, depending on the items in the original purchase. In this case, you could create two landed cost categories with one named "Freight by weight" and the other named "Freight by volume".

1. Go to Inventory Control or Purchasing > Setup > More and select Add (circle) next to Landed cost categories.

2. Enter a Category ID and Name.

   Best practice: When landed costs are entered, the user selects the landed cost category at the line-item level to specify how the landed cost is to be distributed. Use a descriptive name that indicates the distribution method associated with the category. This makes it easier for users to select the appropriate landed cost category.

   See some examples of names

   • Freight by count
   • Freight by volume
   • Freight by weight
   • Insurance by value
   • Customs by value
3. Select the Distribution method from the dropdown list.
4. Make sure that the Status is set to active.
5. Select Save.
6. Repeat steps 2 - 5 for each landed cost category you need.

7. Optional: Create custom reports for landed costs

If your company is subscribed to Customization Services or Platform Services, you can use two report objects to create reports about your landed costs transactions.

In the custom report writer, for the primary data source in Step 1, select either:

• The Landed Cost History object, or
• The Inventory Control Transaction Detail object, selecting the SYS-LC Actuals Adj Incr transaction as the starting point

Then, select the desired columns, select the column sequence, and so on.

Learn how to create custom reports.

Turn off landed costs

You can turn off landed costs by clearing the Enable landed costs checkbox in the Configure Inventory Control page.