Cost Types (Landed Costs)

Introduction

The importation process involves various expenses that go beyond the simple purchase price of the product in the country of origin. Understanding the different costs associated with imports is essential for accurately calculating the total cost and effective planning. These costs can vary depending on factors such as the type of product, the country of origin, the mode of transportation, and more.

Below, we will break down common Types of Costs in imports and how they are distributed based on their measurement:

1. Product Cost
   ‍This is the base price of the product you wish to import. It's the initial cost before adding any other expenses associated with the importation process.
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2. Customs Duties
   ‍These are fees that the government charges for the right to import products into the country. They can be calculated as a percentage of the product's value or as a fixed fee based on the product category.
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3. Transportation Costs
   ‍Related to shipping the product from the country of origin to the destination. These costs can vary depending on the mode of transportation (maritime, air, land) and the distance between the country of origin and destination.
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4. Insurance: Provides protection against damages or losses that may occur during transportation. It is usually calculated as a percentage of the total value of the merchandise.
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5. Warehousing Costs
   These apply when products need to be temporarily stored before delivery or before going through customs. They may be charged on a daily, weekly, or monthly basis.
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6. Banking Charges
   ‍Some international transactions may incur banking charges for currency exchange or international transfers.
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7. Other Costs
   ‍These may include inspection costs, certifications, broker commissions, among others.

It is essential to understand how these costs are distributed and calculated to have a clear view of the total expenditure in the importation process. Each type of cost has its method of distribution, whether by weight, volume, product value, or other relevant metrics. By familiarizing oneself with these elements, one can engage in more informed and effective import management.

2. Create a New Cost Type

To create a new cost type, follow these steps:

1. In the main menu, go to Settings > Purchases > Landed Costs.
2. In the list of Cost Types, click the (+) button to add a new one.
3. In the window that appears, fill in the general information such as Code, Name, and Description.
4. In the Distribute By field (Equitable, Value, Volume, or Weight), select how this cost will be distributed among the items of an import.
5. In the Accounting Account field, choose the accounting account that this cost will affect. It's recommended to select the account "Goods in transit."
6. Finally, define whether it is a Global cost and whether it is in an Active state.
7. Click Save to save the changes.

3. Edit a Cost Type

To edit a cost type, follow these steps:

1. In the main menu, go to Settings > Purchases > Landed Costs.
2. In the list of Cost Types, locate the cost type you want to modify.
3. Click on the actions menu (represented by three horizontal dots) and then click on Edit.
4. Make the necessary adjustments.
5. Click Save to save the changes.

4. Delete a Cost Type

To delete a cost type, follow these steps:

1. In the main menu, go to Settings > Purchases > Landed Costs.
2. In the list of Cost Types, locate the cost type you want to delete.
3. Click on the actions menu (represented by three horizontal dots) and then click on Delete.
4. You will be asked to confirm the action.

5. Cost Types and Options

The options in the actions menu for each component are:

1. Edit: This option allows you to edit or make any necessary changes.
2. Delete: If, for any reason, you need to delete a cost type, you can do so using this option

Common Issues

When working with salary components in Cashflow, you may encounter some common challenges or problems. Below are descriptions of these problems and their possible solutions:

1. Use Pre-defined Cost Types in the System
   ‍The formula or scale for a salary component may be incorrectly configured, resulting in incorrect calculations. To correct this, review and verify the formulas and scales, ensuring they align with company policies and tax regulations.
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2. Assign Costs Accurately
   ‍Ensure that both general and individual costs are assigned accurately. Incorrect cost allocation can affect the accuracy of the selling price and profit margin.
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3. Incorrect Allocation of Overhead Costs
   ‍Incorrectly allocating costs can distort the final cost of imported products. It is essential to understand how Cashflow distributes these costs and ensure they are applied correctly to each product or item.

Each of these points highlights a common area where users may face challenges and provides guidance on how to address these challenges to ensure efficient and accurate management of salary components in Cashflow.