Landed Costs

Publicado el
Published on
September 6, 2023
Actualizado en
Updated on
December 20, 2023


Landed costs represent the total cost involved in acquiring goods from a supplier to the final destination location. These costs include not only the purchase price of the product but also all additional expenses such as duties, taxes, insurance, transportation, and other charges related to the importation.

In a business context where accuracy in accounting is crucial, correctly recording landed costs in a system like Cashflow is essential. Properly accounting for these costs provides a clear and accurate view of the cost structure of purchased products, directly influencing the selling price, profitability assessment, and compliance with tax and customs regulations.

In Cashflow, importation documents consist of three main elements:

  1. Purchased Items
    These are the items from the purchase that are being imported.
  2. General Costs
    These are additional costs/expenses that apply to the entire landed cost document, not to a specific item. These may include fees such as duties, taxes, insurance, and transportation expenses.
  3. Individual Costs
    These are costs/expenses that apply only to a specific item within the landed cost document. These may include special costs like handling fees or specific taxes that do not apply to other items in the same landed cost document.

These three components together form the complete structure of settlement documents, providing a detailed view of the importation. In this article, we will guide you through the process of recording these costs in Cashflow, ensuring that you can manage importations efficiently and in accordance with accounting best practices.

2. Create a Landed Cost Document

2.1 Create a landed cost document

To record a new importation document, follow these steps:

  1. In the main menu, select Expenses/Purchases and then click on Landed Costs.
  2. Within the list of Landed Costs, click the (+) button.
  3. In the pop-up window, choose the purchase document in the field labeled From and click Generate.
  4. On the Landed Costs screen, set the date, select the employee, define the status, and add any relevant notes for the landed cost document.
  5. In the Items section, you will find the items included in the purchase, along with all their details.
  6. By clicking the arrow next to each item, you can view the costs associated with that item, how they are distributed, and you will have the option to add individual costs.
  7. After incorporating all the costs, which will be described in the next steps, you should set the Price and Profit Margin for each item in the landed cost document.
  8. Continue with the next steps...
Price, Cost, and Profit Margin
Please note that the cost of an item, including all landed costs, will be the value recorded in inventory. The price you set for each item will be applied in future sales of that product. It is important to ensure that you set a price that not only covers all associated costs, including landed costs, but also provides you with an adequate profit margin.
Automatic Relationship between Price and Margin
The Price and Margin fields are linked to each other, so when you set one, the other will adjust automatically. You can specify a specific price, and the corresponding margin will be calculated, or you can enter a margin percentage, and the price will adjust accordingly.

2.2 Add General Costs

General costs refer to additional expenses that apply to the entire landed costs document, not to a specific item. These may include fees such as duties, taxes, insurance, and transportation expenses. In the General Costs section, you can add all the costs associated with the landed cost document.

To apply general costs to the landed cost document:

  1. In the General Costs section, click the "+ Costs" button.
  2. In the pop-up window, define the Cost Type and and  and Activate the costs associated with this importation. You can use the search field to find specific costs.
  1. Click "Return to Landed Costs" to continue.
General Costs
Please note that the distribution of a general cost is divided among the number of items present in the landed costs document. This is because general costs are designed to be evenly distributed among all the products within the same landed costs documents, without being assigned to a particular item.
Cost Distribution by Cost Type
The distribution of a general cost among the items in a landed cost docuement is based on the "Cost Type" you choose when adding it. Each type uses a specific metric to divide the expense. For more details on how to define and configure these types, please refer to the article Cost Types (Landed).

2.3 Add Cost by Item

To add Costs by Item, also known as individual costs, which apply only to a specific item within the landed costs document, follow these steps:

  1. In the Items section, click the arrow at the end of the line for the item you want to add costs to.
  2. Click on the option + Add line costs.
  3. In the window that appears, define the Cost Type.
  4. Activate the costs associated with this importation.
  5. You can use the search field to find specific costs.
  6. Click "Return to Landed Costs" to continue.
  7. You can delete/unlink line costs by clicking the Delete button (trash icon).
Cost by Item Distribution
Please note that the distribution of a cost per line is 100% applied to the item, even if there are other items in the landed costs document. This is because line costs are exclusively applied to the specific item they are assigned to, without being divided or affecting other itmes within the same document.

2.4 Upload Documents

You can attach documents related to an importation, such as the settlement sheet or customs receipts. To do this, follow these simple steps:

  1. Click on the Upload Document option.
  2. Browse and select the documents from your computer and click Open.
  3. Once all the documents have been uploaded, click Close to return to the landed cost document.

2.5 Save and/or Complete the Landed Costs

While the landed cost document is in the Open state, you can continue working on it. This allows you to make adjustments or add information as needed. However, once you change the state to Closed, the landed costs document is considered completed, and you can no longer make additional changes. It's a way to ensure that all details are finalized before considering the process as finished.

  1. To Save and Continue working on an landed cost document, leave the state as Open and click Save.
  2. To Complete a landed cost document, change the state to Closed and click Save.

2.6 Warehouse Receipt

Once the landed cost document changes to the closed state, the inventory is not yet updated. This is because the cost calculations for these items need to be processed, and the items must be received in the warehouse before it reflects in the inventory.

To receive the inventory items in the warehouse, follow these steps:

  1. In the main menu, select Inventory, and then click on Goods Receipt.
  2. On the Goods Receipts page, press the (+) button.
  3. In the pop-up window, select the landed cost document you want to receive in the From field, and then click Generate.
  4. Note: In this list, you will find both regular purchase documents and landed costs.
  5. Follow the steps on the screen to complete the Goods Receipt process.

3. Edit a Landed Cost Document

While the importation document is in an open state, you can edit it to continue working on it. To edit an importation document, follow these steps:

  1. In the main menu, select Expenses/Purchases, and then click on Landed Costs.
  2. In the list of Landed Costs, find the one you want to modify.
  3. Click on the action menu (three horizontal dots).
  4. Click on Edit.
  5. Make the necessary adjustments.
  6. Click Save to save the changes.
Edit Landed Cost Document
While the landed costs document is in the Open state, you can freely edit it. However, once it has changed to the Closed state, it will no longer be possible to make changes. If you need to modify a closed document, you will need to void it and recreate it.

4. Void a Landed Cost Document

To void a landed cost document:

  1. In the main menu, select Expenses/Purchases, and then click on Landed Costs.
  2. In the list of Settlements, find the one you want to cancel.
  3. Click on the action menu (three horizontal dots).
  4. Then click on Void Document.
  5. You will be asked to confirm the action.

5. Landed Cost List and Action Menu

The Landed Cost module provides a list of all recorded landed cost documents and a set of options in the action menu (three horizontal dots) for each document, making it easier to manage and track each stage of the landed cost tracking process. The options in this menu include:

  1. Preview
    This option allows you to view the import in a printable format.
  2. Edit
    This option allows you to make changes to a landed cost document that is still in the Open state.
  3. History
    This option allows you to view all transactions associated with this landed cost document.
  4. Upload File
    This option allows you to add files related to the landed cost document, such as backup documents or attachments.
  5. Audit
    The audit option shows the changes made to the document, allowing for a detailed tracking of modifications.
  6. Void Document
    If for any reason you need to void an landed cost document, you can do so using this option. You can only see this option if the document is in the Open state or if it is Closed but has not yet been received in the warehouse.

These menu options are designed to facilitate the management of your landed costs and provide greater flexibility and control in handling your entire process of acquiring and receiving goods.

Tips & Best Practices

To make the most of the landed costs module in Cashflow and ensure an efficient and smooth process for recording and tracking landed costs, consider the following tips and best practices:

  1. Organize All Information Before Starting
    Before registering any landed costs, make sure you have all the necessary documentation and details at hand. This includes invoices, receipts, transportation details, and any other relevant documents.
  2. Maintain Documentation
    It's essential to keep landed costs documentation in a consistent format and structure. This makes it easier for review and auditing in the future.
  3. Continuously Monitor
    Regularly review the landed costs module to keep track of pending landed cost documents, closed , and those received in the warehouse.
  4. Assign Costs Accurately
    Ensure that you allocate general and individual costs accurately. Incorrect cost distribution can affect the accuracy of the selling price and profit margin.
  5. Digital Backup
    Take advantage of the file upload function to maintain digital copies of all related documents. It's a good practice to keep a digital copy in addition to physical documents for quick reference and in case of loss of the original documents.
  6. Regular Auditing
    Use the audit function to review changes made to landed cost documents. This helps identify errors and ensures data accuracy.
  7. Receive Goods to Update Inventory
    Once an landed cost document has been recorded and closed, don't forget to process it for receipt in the warehouse. This ensures that the inventory is always up-to-date.
  8. Set Realistic Profit Margins
    When setting selling prices based on landed costs, consider all additional expenses and set a profit margin that reflects the true value of the product and the market.
  9. Continuous Education
    Import regulations and practices can change over time. Stay informed about the latest regulations and best practices to ensure that your import process is always efficient and compliant with the law.

Remember, efficient and accurate import management not only improves accounting accuracy and regulatory compliance but also enhances profitability and competitiveness in the market.

Common Issues

Landed costs tracking can present certain challenges and common issues that may arise during the process. Below are some of these problems, along with guidance on how to solve or avoid them:

  1. Incomplete or Incorrect Records
    It's easy to forget certain associated expenses or enter incorrect data. Constantly maintaining and reviewing all documents related to the import can mitigate this. Before finalizing any record, it's vital to review all entered values to ensure accuracy.
  2. Margin and Pricing Issues
    Setting prices without considering all landed costs can impact profits. Familiarize yourself with the pricing calculation in Cashflow and make sure to account for all expenses when determining your margins.
  3. Incorrect Allocation of General Costs
    Incorrect cost allocation can distort the final cost of the purchased products. It's essential to understand how Cashflow distributes these costs and ensure they are applied correctly to each product or item.
  4. Disorganization of Attached Documents
    Without a clear file structure, document management can become chaotic. Adopt a naming convention and use Cashflow's tools to organize and centralize documentation related to imports.
  5. Warehouse Receiving Errors
    Discrepancies between what is recorded and what is received can lead to incorrect inventories. When receiving products, always perform physical checks and compare them with the records in Cashflow to ensure consistency.
  6. Open and Closed Status
    Changing the status of a landed cost document prematurely can introduce errors. Make sure all details and costs are correct and complete before marking a document as "Closed."
  7. Audit and Tracking Issues
    Lack of traceability complicates audits. Using Cashflow's tracking tools and training users in documentation and authorization will allow for a clear audit trail of operations.

By considering these common issues and their corresponding solutions, you can optimize your import management process and avoid many of the obstacles and challenges that may arise. Attention to detail, regular review, and clear communication are essential for a successful import process.

Problemas comunes

La gestión de importaciones puede presentar ciertos desafíos y problemas comunes que podrían surgir durante el proceso. A continuación, se describen algunos de estos problemas y se proporcionan orientaciones para solucionarlos o evitarlos.

  1. Registros Incompletos o Incorrectos
    Es fácil olvidar ciertos gastos asociados o ingresar datos incorrectos. Mantener y revisar constantemente todos los documentos relacionados con la importación puede mitigar esto. Antes de finalizar cualquier registro, es vital repasar todos los valores introducidos para garantizar precisión.
  2. Problemas de Margen y Precios
    Establecer precios sin considerar todos los costos de importación puede afectar los beneficios. Familiarízate con el cálculo de precios en Cashflow y asegúrate de tener en cuenta todos los gastos al determinar tus márgenes.
  3. Distribución Incorrecta de Costos Generales
    La incorrecta asignación de costos puede distorsionar el costo final de los productos importados. Es esencial entender cómo Cashflow distribuye estos costos y asegurarse de que se apliquen adecuadamente a cada producto o partida.
  4. Desorganización de Documentos Adjuntos
    Sin una estructura de archivo clara, la gestión documental puede volverse caótica. Adopta una convención de nomenclatura y utiliza las herramientas de Cashflow para organizar y centralizar la documentación relacionada con las importaciones.
  5. Errores en la Recepción de Almacén
    La discrepancia entre lo registrado y lo recibido puede llevar a inventarios incorrectos. Al recibir productos, realiza siempre verificaciones físicas y compara con el registro en Cashflow para asegurar consistencia.
  6. Confusión entre Estado Abierto y Cerrado
    Cambiar el estado de una importación prematuramente puede introducir errores. Asegúrate de que todos los detalles y costos estén correctos y completos antes de marcar una importación como "Cerrada".
  7. Problemas de Auditoría y Rastreo
    La falta de rastreabilidad complica las auditorías. Utilizar las herramientas de seguimiento de Cashflow y capacitar a los usuarios en documentación y autorización permitirá un rastro claro de las operaciones.

Al tener en cuenta estos problemas comunes y sus soluciones correspondientes, podrás optimizar tu proceso de gestión de importaciones y evitar muchos de los obstáculos y desafíos que podrían surgir. La atención a los detalles, la revisión regular y la comunicación clara son esenciales para un proceso de importación exitoso.