The Freight Adder System allows you to track inbound freight and other product related costs (such as duty and customs fees), and to include them in the cost of the products that you receive into your inventory.
Both StreamV and Stream II support the “Freight Adder” option. The Freight Adder option allows you to specify a percentage (%) or fixed unit cost ($) for the items being received. If this cost or percentage is specified, the system automatically adds the amount or percentage to the po price or cost of the product during the PO/Inventory Receiving process.
When the Freight Adder system is being used, the amount of the supplemental cost to be added to each item can be stored at the Manufacturer level, the Product Line level or at the Inventory (Catalog/Inventory) level.
The Freight Adder System will always use the most specific freight add information for each item being processed, so the system searches for the freight information in the Manufacturer file, then in the Product Line file, and then in the Inventory file. The system uses the most detailed record found (which will be the inventory record if the freight addcode and rate have been specified in the Catalog or Inventory records for the item).
The Freight Adder can be maintained at the Catalog Level when the add on amount does not vary by warehouse location, and it can be maintained at the Inventry level if the add on amount varies substantially by location. Your ability to access the freight adder fields in the Catalog and Inventory records, and where the fields are maintained, can be adjusted using System Security options (field security) and the Inventory Normalization Control Files. The default behavior for the system is to maintain the item level freight adder information at the Catalog level. The system will then normalize or copy any changes that you make to the Catalog Freight Adder information to any Inventory items that exist for the catalog record.
The Freight Adder system allows you to specify the supplemental cost or the add on as a fixed cost or as a percentage at all levels where the freight adder information can be maintained (manufacturer, product line, catalog/inventory). There are two fields which are used by the Freight Adder System and which can be maintained in the Manufacturer, Product Line, Catalog and Inventory files.
• The Freight Addcode field is used to determine what value is being stored in the Freight Addrate field. Valid entries for the Freight Addcode field include $ (meaning the Freight Addrate is a fixed amount that should be added to the cost of the item), and % which indicates that the Freight Addrate is the percentage of the po price that should be added to the cost of the item being processed.
• The Freight Addrate field stores the amount or the percentage (ie 20 for 20%) that is used for the item and it should be loaded based on the value in the Freight Addcode field. If an amount is stored in the Freight Addrate, this amount should be specified in local currency. If a percentage is stored in the Freight Addrate field, this percentage will be applied to po price after the price has been converted to local currency.
Local Currency Logic
When the Freight Adder code is used for a local currency po or inventory receipt, the system first checks a system parameter to determine if the Freight Adder option is enabled (see technical notes). If the Freight Adder option is enabled, the system then checks the freight addcode field in the manufacturer, product line, and inventory records for the item to determine if a freight adder should be added to the item cost.
If the Freight Addcode for the item is set to $, and the receipt being processed is in local currency the system adds the freight addrate amount to the new cost of the item.
If the Freight Addcode for the item is set to % and the receipt being processed is in local currency, the system will multiply the po price by the percentage to determine the amount to be added to the po price, then add this supplemental cost or add on amount to the new cost of the item.
Foreign Currency Logic
When the Freight Adder code is being used, any add on amount that is specified for an item should be specified in your local or house currency. This amount will be added to the cost of the item after the cost has been converted to your local currency (if necessary). The system first calculates the cost of the item in your local currency using the most recent exchange rate for the currency and then it adds the freight adder amount from the inventory record to this cost to get the new average cost for the item.
If you have specified a percentage freight adder for an item, this percentage is also applied to the po price after the po price has been converted to local currency. This ensures that the actual item cost is adjusted by the add on percentage specified.
During the receiving process, as the receipt is saved, the freight adder is recorded in the first supplimental cost field (SUPCOST1) in the inventory transaction record.
The inventory transaction record also stores the po price from the receipt (in the PO_PRICE field) and the new cost for the item (which includes the freight addon).
Once the inventory receipt is complete, the transaction is posted to the general ledger by the system. As the receipt is posted, the system performs the following process:
1. The Inventory Control Account in the general ledger is debited with the cost of the received goods including the freight adder. (the extended cost from the transaction).
2. The Inventory Liability control account is credited with the amount of the received goods without the freight adder in local currency. This is calculated by subtracting INVTRAN.SUPCOST1 from the INVTRAN.COST. The Inventory Liability Account and the Unvouchered or Inventory Liability Subledger are used to track the liability for shipments that have been received from vendors and for which no vendor invoice has been received (or input into the system).
3. The Freight Liability account is credited with the amount of the freight adder as recorded in the INVTRAN.SUPCOST1 field. The Freight Liability Account is used to track the amount of supplemental costs that have been applied at receiving, and which have not been offset by a vendor invoice for the supplemental or add on costs (ie invoices for freight, duty, customs, etc).
A/P Invoice Entry
In many cases, when the Freight Adder code is being used, you will receive more than one invoice that is associated with a single shipment. An example would be where you receive one invoice from the vendor from whom you purchased the product, and another invoice from the freight vendor who delivered it, or the customs broker who paid the duty and cleared the shipment.
When the A/P invoice is received from the vendor for the items, the ap invoice may only include the cost of the items, or it may include the item cost and a charge for the freight (the freight may be billed by the vendor you purchased the items from or it can be billed by a third party vendor depending on the situation).
When the Vendor invoice is processed, the amouunt of the invoice for the cost of the goods (the po price) should be posted (debited) against the Inventory Liability account using the tagging or 3 way matching option. This process verifies the po prices and quantities received against the invoice amount and allows any variances to be spotted and corrected before the error affects other areas of the system.
If the Vendor invoice for the goods also includes a charge for freight or another cost included in the Freight Adder Amount, this amount can be posted (debited) against the Freight Liability account.
If invoices are received from other vendors for the freight charges, duty or customs associated with the shipment, these invoice amounts are also charged against the Freight Liability account.
On a periodic basis reports may be generated from the inventory transactions to reconcile the amount of inbound freight included in the inventory receipts verses the amount actually paid to bring the goods inhouse.
Since the freight adder logic is based on percentage or amount estimates, the freight adder amounts in the items may need to be adjusted on a regular basis.
The Freight Adder System is enabled or disabled using the System Parameter F248:PRFRTADD. If this parameter is set to Y, the system will apply the freight add on at receiving. If the parameter is blank or missing, the system will not apply the freight add on at receiving. The default setting for this system parameter is Y or enabled. If you are using the Freight Adder option, you should also ensure that the Manual Supplemental Cost Allocation option is disabled by setting the system parameter IRSUPCST to N.