Hey everyone, I’m curious about how other Epicor users handle air-freight costs in their landed cost calculations and how they charge these ‘expediting fees’ to the customer. Do you include air-freight expenses in your Container Landed Cost Entry (CLCE) module, or do you have a separate process for allocating these costs? Additionally, how do you ensure these expedited costs are appropriately passed on to the customer?
Most of our CLCEs are sea-freighted, but there’re a few scenarios for inventory and BTO in which we need to air-freight. But I guess this can impact AVG costing if we talk about inventory.
Would you still use containerIDs for this?
Any insights or best practices you can share would be much appreciated! Thanks in advance!
I think the question you have to answer is whether you consider it part of your product cost or not. If you distribute it, then your average material burden is going to reflect those charges even in the case when the charge doesn’t exist for a particular order so its going to affect your margin calculation. If its an exception than I don’t think it makes sense to include it in product cost. The way to pass it through to the customer is via a misc charge on the order or shipment.
We created a part called “Freight” that we can add to a sales order. Since Epicor assumes anything appearing as a line item needs to be either MADE, or SHIPPED from inventory… we made it a non-stock/purchased part.
So, anytime we need to add freight to the order (outside of simple things like pre-paid and add) we use the “FREIGHT” part. This creates a buy-direct line item. We (internally) create a PO, receive against it, and process the freight invoice from the freight forwarder against it.
This approach works well when you want to show the Freight on the quote, order and/or order acknowledgement as a line item.
And like @aosemwengie1 mentioned, we’ve also done misc. charges as well on the order or the AR Invoice.
I think our CFO also wanted a place to record the Freight Forwarder charges. By using a PO, we can better capture the charges and payment.
Again, for small orders, we use a misc. charge. But for huge costly container shipments going overseas (for example) there is a lot of cost involved and I think he wanted a way to capture that and not just absorb it in overhead.
We do a lot of 'Freight Included" pricing when the customer wants us to deliver it. We do this by adding a field to Order Detail for the estimated freight cost and we altered the SO Ack/Invoice documents to show the Line Total to include that amount. That way it’s separate from the true line item cost and subsequent profit analysis. This also helps offset the freight account b/c the freight bills come in later and are never exactly the estimate but we apply that portion of the revenue to the freight account (it’s a profit center really).
For other freight related costs, or to pass-thru a true freight amount, we do a line item using the ‘part on the fly’ method using “Freight” as the part num. Doing it on the fly bypasses the PO/Receipt process and works for us the few times we do it.
Short answer is that we use this as a ‘smoke and mirrors’ kind of thing. We do not interfere with ANY of the core processing, until the excess ‘cash’ is received. That excess is coded to the freight expense account, but that is the same account that our AP invoices are coded to when we pay the freight.
We did this little UI customization to allow the entry person to indicate:
Line Total Incl Freight - the amount we’ll show on the paperwork
Freight Incl/hide - is the trigger to make the change on the paperwork.
Ignore the Freight Equalization checkbox - it’s for I/C reporting only.
NOTE - We also have a modified Sales Report to ‘remove’ the including freight. Effectively we create a new column called Revenue ADF (after deducting Freight) which account for all included or separate freight lines and Misc. Charges. This gives you a clear product sales report with NO freight included.
I came up with this about 20 years ago for my previous gig and is working great! I really need to put an Epicor Idea in for this since Epicor has NEVER considered ‘freight included pricing’ as an option. It’s a rabbit hole of landed costs, post receipt freight bills, post shipping freight bills, burden or pass-thru, blah-blah.
