There are three different landed cost figures to understand:
- Estimated landed cost is the amount originally entered as the landed cost which was distributed across the purchase order items.
- Actual landed cost is the amount recorded in accounting, including any manual adjustments made.
- Invoiced landed cost is the true amount you have been invoiced for and must pay - the actual landed cost amount in Brightpearl must be brought inline with this figure.
Understanding differences between estimated & actual landed cost
Differences between estimated and actual landed costs occur in Brightpearl for the following reasons:
- Under/over receiving of goods
When landed costs are allocated it is calculated per unit, and every unit received will be uplifted by that amount. So if extra items are received or fewer items are received, then that unit cost will be posted more, or fewer, times than expected. For example, an order for 10 items costs £10 to ship, this works out at £1 per item landed cost. If 10 items are received then £10 landed costs are accounted for, but if only 9 turn up then only £9 landed costs are accounted for, or if 11 turn up the £11 landed costs are accounted for. So even though the landed cost estimate is for £10 what was actually posted to accounting can be different.
- Landed costs are rounded per item
Brightpearl needs to round landed costs to 2d.p. for accounting and this can lead to the actual landed costs not adding back up to the original estimate. For example, the following order details show how the estimated landed cost is distributed to each item and then how the accounting for each row is rounded to 2 decimal places, resulting in an overall discrepancy between estimated and actual landed cost of 0.01:
PO Row SKU Qty Actual total landed cost of £300 distributed by qty = unit cost Total landed cost accounted for = qty x unit cost 1 ITEM01 100 0.8571 85.71 1 ITEM02 100 0.8571 85.71 3 ITEM03 100 0.8571 85.71 4 ITEM04 50 0.8571 42.86 Total landed cost posted to accounting = 299.99
Understanding differences between actual & invoiced landed cost
Even if the estimated and actual landed cost in Brightpearl are equal, when the landed cost invoice is received you may identify differences which need to be accounted for. Ultimately, the actual landed cost figure in Brightpearl should be equal to the amount you are invoiced. You may identify differences for the following reasons:
- Foreign currency landed costs & exchange rate differences
When landed costs are allocated in a foreign currency an exchange rate is used to convert it into your base currency before distributing it across the items. When the invoice for the landed costs arrives the exchange rate could be different, in which case the charge works out at a different amount than was accounted for. For example, $15 at an exchange rate of 1.5 works out at £10, if this is allocated to 10 items that’s £1 uplift each, if all 10 are received then £10 landed cost is accounted for. When the invoice arrives for $15 and the exchange rate is 1.6 that now becomes £9.38 landed costs.
- Estimated landed cost
When landed costs are allocated it needs to be done early in the purchasing process so that the stock value is uplifted before they are sold. This means that estimated values may be used. For example, you order 10 items and estimate that you will be charged £10 landed costs, you receive all 10 items and therefore £10 landed costs is accounted for. However, when the landed cost invoice turns up you actually have to pay £12. This results in a £2 difference in the landed cost nominal code.
If discrepancies appear due to any of the above, you can enter manual journals into accounts.