NetSuite Landed Cost Management

Are you taking advantage of the NetSuite landed cost tools in your account? Calculating landed costs can be complicated, especially when you’re trying to ensure no expenses fall through the cracks. But with NetSuite, you can track and automate these expenses. Let’s take a look.

First, what is landed cost? Landed cost is the total cost of getting inventory or raw materials from your supplier to your warehouse or store. Wrapped up in landed cost are things like freight and shipping charges, import taxes, shipping insurance, etc. Knowing exactly what your landed costs are for each of your items gives you a clearer idea of how much you should be charging for those items to ensure you turn a suitable profit.

First, enable the Landed Cost feature. You’ll find it under the Items & Inventory tab in Enable Features.

Then you’ll need to create landed cost categories. These categories will appear as fields on item receipts, where you can enter specific costs against each category for that transaction. You’ll only need to create the categories that are relevant to your business, but common categories would be things like taxes, import fees, etc. To create a landed cost category, navigate to Setup > Accounting > Setup Tasks > Accounting Lists > New. From the list, select Cost Category. Here, name the category something like “Landed Cost: Freight Cost” and select “Landed” as the cost type. You’ll also need to select the expense account that will be used for these types of costs.

How would you configure item records for landed cost? Navigate to an item record that will need associated landed costs. Under the Purchasing/Inventory tab, select the Track Landed Cost checkbox. Now, the system knows to track landed costs whenever this item is purchased or received.

You may be thinking this is what we just talked about, but it’s different. We just looked at how to configure your inventory item records to track landed cost. But you also need to have separate item records that represent those landed cost expenses, like a “duty” item or a “shipping insurance” item. That way, you can add those items to your bills. When you create a landed cost item, navigate to Lists > Accounting > Items, and create an Other Charge type of item. Be sure to give this item a recognizable name for easy selection on transactions. Fill out the rest of the record and save it.

Now that you have landed cost item records, you can select them on vendor bills and associate them with the related item receipt records. Start by navigating to Transactions > Payables > Enter Bills. On the main line of the transaction, select the appropriate vendor and enter a reference number for this bill. You will use the reference number later on to associate the bill with the connected item receipt record.

On an item receipt record, scroll down to the Landed Cost tab. Your landed cost categories will appear here. You can either manually enter the landed cost amounts for each category (duty, shipping, tax, etc.), or you can switch the source to Other Transaction and select the reference number of the landed cost bill you just created. Now, your item expenses and the related landed costs are connected.

Using the NetSuite Landed Cost feature helps you track and manage all your landed costs. At SuiteRep, we focus on all things NetSuite so you can focus on better business results. If you’re interested in setting up your account to accommodate landed cost, contact us today to start the conversation!