Landed Costs in Sage Intacct

In Sage Intacct, landing costs refer to the additional costs incurred when purchasing goods, which are necessary to bring the goods to their destination. These can include transportation, customs duties, taxes, insurance, handling fees, and other costs related to getting the goods into your warehouse or business. These costs need to be allocated properly to the items being purchased to accurately reflect the total cost of inventory or goods sold. Sage Intacct allows you to handle landing costs within the Accounts Payable and Inventory modules by allocating these costs to the specific items received during the purchasing process.

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Landed Costs in Sage Intacct

Understanding Landed COsts

Landed costs refer to the total expenses associated with shipping a product. These costs include: 

  • Product price
  • Transportation costs
  • Customs duties & taxes
  • Other regulatory fees
  • Insurance costs

Effectively managing landing costs is essential for determining product pricing, ensuring profitability, and maintaining competitive advantage.

Challenges in managing Landed Costs

Several challenges arise in managing landing costs:

1. Complexity of Calculation

  • Multiple Components: Landing costs are not just limited to shipping charges. They include duties, taxes, insurance, handling, storage, and any other costs incurred before the product reaches the business. Calculating all of these components accurately can be complex.
  • Exchange Rates: For international shipments, currency fluctuations can impact the cost of goods, requiring constant monitoring of exchange rates and their effect on overall costs.

2. Customs and Import Duties

  • Varying Regulations: Different countries have different customs duties, taxes, and import regulations. Keeping up with these variations can be time-consuming and error-prone.
  • Delays and Uncertainty: Customs delays and the unpredictability of clearance procedures can affect the timing of product arrivals, which can be critical for businesses that rely on just-in-time inventory systems.

3. Shipping and Freight Costs

  • Fluctuating Rates: Shipping costs can vary depending on fuel prices, seasonal demand, and geopolitical factors. This can lead to unexpected increases in landing costs.
  • Modes of Transportation: Different modes of transportation (air, sea, road) have different cost structures, and choosing the optimal one requires balancing speed, cost, and reliability.
  • Shipping Consolidation: Sometimes, businesses may need to consolidate shipments, which adds to the complexity in calculating landing costs. There is also the challenge of knowing when consolidation will provide cost savings.

4. Inventory Management and Storage

  • Warehouse Costs: The cost of storing products before they are sold (including warehouse rental, handling, and maintenance) can impact overall landing costs.
  • Stock Holding Risk: In the case of imported goods, businesses may need to hold inventory longer, which can result in higher storage costs or the risk of holding obsolete stock.

5. Demand Forecasting and Budgeting

  • Forecasting Errors: Poor demand forecasting can lead to over-ordering, resulting in higher storage costs and an inefficient supply chain.
  • Unexpected Cost Changes: Variations in demand or supply chain disruptions (e.g., global shipping delays) can cause sudden increases in landing costs that businesses may not have planned for.

6. Supplier and Vendor Coordination

  • Supplier Inconsistencies: Different suppliers may charge differently for shipping, handling, and customs processing. Some may offer discounts for bulk orders, while others may have hidden costs.
  • Lack of Transparency: Suppliers or third-party logistics providers may not provide transparent breakdowns of landing costs, making it difficult to track and verify expenses.

7. Regulatory and Compliance Challenges

  • Changing Regulations: Changes in trade policies, tariffs, and international agreements can alter landing costs unpredictably. For instance, tariffs imposed by governments or new environmental regulations can impact shipping and manufacturing costs.
  • Compliance Risks: Failure to comply with the customs rules and regulations could result in fines, penalties, or shipment delays, further complicating the cost structure.

8. Technological Integration

  • Inconsistent Systems: Managing landing costs across various systems (e.g., procurement, logistics, and financial software) can lead to inconsistencies, errors, and inefficiencies.
  • Automation Challenges: While automation tools can help, integrating them with current financial and operational systems often requires significant upfront investment and proper alignment.

9. Lack of Standardization

  • Varied Definitions: Different companies or departments may define and categorize landing costs differently, making it difficult to compare and standardize data across operations.
  • Industry Practices: Various industries may have differing standards for what constitutes landing costs, making benchmarking difficult.

10. Impact on Profit Margins

  • Overestimated Costs: Businesses may overestimate landing costs, leading to excessively high product prices or misinformed decision-making.
  • Undercosting Risks: Underestimating landing costs, on the other hand, can lead to underpricing and profit loss.

How Sage Intacct simiplifies landed cost management

When it comes to managing landing costs, Sage Intacct provides several features that streamline the tracking, calculation, and analysis of these costs, ensuring businesses can maintain profitability and optimize their supply chain operations. Here’s how Sage Intacct helps with landing costs:

1. Comprehensive Cost Tracking

  • Cost Allocation: Sage Intacct allows businesses to allocate costs across different categories, including transportation, customs duties, taxes, and handling. This helps ensure that all elements of landing costs are accurately tracked and recorded.
  • Multi-Currency Support: For businesses engaged in international trade, Sage Intacct offers multi-currency functionality, which allows users to track exchange rate fluctuations and accurately calculate landing costs when dealing with foreign currencies.

2. Automated Cost Entry and Integration

  • Automation of Cost Entry: By integrating with third-party logistics providers and vendors, Sage Intacct can automatically pull in data related to shipping, customs, and other costs, reducing manual entry errors and ensuring more accurate landing cost calculations.
  • Integration with Procurement and Supply Chain: Sage Intacct integrates with procurement and inventory management systems, allowing landing costs to be seamlessly captured and associated with specific products or shipments. This integration ensures that landing costs are factored into product pricing and inventory valuation.

3. Real-Time Visibility

  • Dashboard Reporting: Sage Intacct offers real-time dashboards and customizable reports, which provide visibility into landing costs across the supply chain. These dashboards can display key metrics like shipping expenses, taxes, duties, and total landed cost per item or shipment, helping managers make informed decisions.
  • Cost Breakdown: Users can drill down into specific cost categories (e.g., shipping, customs duties, storage), giving them a detailed view of where landing costs are incurred and enabling them to optimize or renegotiate costs where possible.

4. Vendor and Supplier Management

  • Cost Negotiation Tracking: Sage Intacct helps businesses manage vendor agreements by tracking contract terms and agreed-upon shipping costs, tariffs, and other terms. This can aid in managing supplier relationships and ensuring that landing costs align with vendor agreements.
  • Supplier Cost Comparisons: If businesses work with multiple suppliers for the same goods, Sage Intacct allows them to compare landing costs, helping to identify the most cost-effective options or negotiate better terms.

5. Inventory Valuation and Costing

  • Landed Cost Calculation: Sage Intacct can automatically include landing costs into inventory valuation, ensuring that the cost of inventory reflects not only the purchase price but also all associated costs (transportation, taxes, duties, etc.). This is critical for accurate cost of goods sold (COGS) reporting and profit margin analysis.
  • FIFO, LIFO, and Average Costing Methods: Sage Intacct supports various inventory costing methods (e.g., FIFO, LIFO, weighted average), allowing businesses to account for landing costs according to their preferred methodology, and ensuring accurate financial reporting.

6. Advanced Reporting and Analytics

  • Customisable Reports: With Sage Intacct’s advanced reporting tools, businesses can create customised reports that provide detailed insights into landing costs. These reports can show trends over time, breakdowns by region, product type, or vendor, and help identify areas where costs can be reduced or optimized.
  • Forecasting: Sage Intacct’s forecasting capabilities can incorporate landing costs into cash flow predictions and budget planning, giving businesses the ability to forecast future landing costs and assess their impact on profitability.

7. Regulatory Compliance

  • Tracking Compliance Costs: For businesses dealing with international trade, Sage Intacct helps ensure compliance with import duties, taxes, and tariffs by providing accurate cost tracking and reporting features. Businesses can stay updated on changing regulations and avoid costly compliance errors.
  • Audit Trails: Sage Intacct offers comprehensive audit trails that track all financial transactions, including landing costs. This ensures that businesses can verify their cost calculations and demonstrate compliance with regulations during audits.

8. Supplier Payment and Invoice Management

  • Invoice Matching and Payment Automation: Sage Intacct can match supplier invoices with the corresponding purchase orders and shipping receipts, ensuring that all costs are accounted for accurately. It also supports payment automation, reducing administrative overhead and improving cash flow management.

9. Scalability and Customization

  • Adaptability to Business Growth: As a business grows, its landing cost complexities might increase. Sage Intacct is scalable, meaning it can handle an expanding number of transactions, suppliers, and cost components, allowing businesses to scale operations without losing control over their landing costs.
  • Customisable Costing Rules: Sage Intacct offers customisation options to set specific rules for cost allocation and handling of landing costs, ensuring that businesses can adapt the software to their unique needs.

10. Streamlined Workflow and Collaboration

  • Collaboration Across Teams: With its cloud-based platform, Sage Intacct enables real-time collaboration between finance, procurement, logistics, and inventory teams. This helps ensure that landing costs are communicated and managed across departments, resulting in more accurate cost tracking and decision-making.

IN a nutshell…

Sage Intacct helps businesses manage landing costs by automating and streamlining the process of tracking, calculating, and analysing these costs. The platform’s ability to integrate with procurement, logistics, and financial systems, combined with its advanced reporting and real-time visibility, allows businesses to make informed decisions about cost optimisation, supplier management, and inventory pricing. This functionality is critical for businesses involved in international trade and logistics, helping them reduce errors, control costs, and maintain profitability.

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