Maximizing Profits with Empress Landed Cost Voucher

Guides & Tutorials
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Introduction

Introduction

In business, it’s crucial to understand the full cost of getting a product to the buyer — this is known as the Landed Cost. It includes the initial cost of the item, shipping fees, customs charges, taxes, insurance, currency conversion fees, and more. However, only 45% of businesses fully utilize Landed Cost in their operations due to factors such as lack of data or appropriate tools, time constraints, and uncertainty about its application.

This guide will walk you through the Landed Cost Voucher feature available on Empress, showing you how to effectively incorporate Landed Cost into your business decisions.

Accessing the Landed Cost Voucher

To get started with the Landed Cost Voucher, navigate through the following steps:

Home > Stock > Tools > Landed Cost Voucher

The Preparation

Before you can create a Landed Cost Voucher, ensure you have:

  • A Purchase Receipt or Purchase Invoice with the Update Stock option enabled. This receipt is your record of goods received.
  • A Purchase Invoice for the additional costs associated with landed costs, such as Freight or Insurance.

With these in place, you’re ready to create a Landed Cost Voucher. This will reduce the costs recorded via the second Purchase Invoice and increase the value of your stock.

Creating a Landed Cost Voucher

Here are the steps to create a Landed Cost Voucher:

  1. Navigate to the Landed Cost Voucher list and click New.
  2. Select your Receipt Document Type, either Purchase Invoice or Receipt. You can select multiple documents.
  3. Choose the specific Invoice or Receipt. The system will automatically fetch the supplier name and Grand Total.
  4. Click on the Get Items from Purchase Receipts button to fetch the item details from the chosen Purchase Invoice/Receipt.
  5. Decide if the Distribute Charges Based On should be on quantity or Amount.
  6. Fill in the Expense Account and the Amount for Additional Costs in the Taxes and Charges table. The system will distribute the amount equally based on your selection in the previous step.
  7. Save and Submit.

In the document, you can select multiple Purchase Receipts/Invoices and fetch all items from those. Then, add applicable charges in the “Taxes and Charges” table. If a charge does not apply to an item, you can remove that item.

The charges added will be proportionately distributed among all the items based on their amount or quantity. If you choose to distribute based on the amount, the item with the highest amount will be allocated the most charges. If you choose quantity, the item with the highest quantity will receive most of the charges.

Additional Actions

Adding Landed Cost in the Purchase Receipt

In Empress, you can add landed cost-related charges in the “Taxes and Charges” table when creating a Purchase Receipt. Those charges for “Total and Valuation” or “Valuation” in the ‘Consider Tax or Charge for’ field. Charges payable to the same Supplier from whom you are buying the items should be tagged as “Total and Valuation”. If applicable charges are payable to a third party, it should be tagged as “Valuation”.

When you submit the Purchase Receipt, the system will calculate the landed cost of all items, considering those charges. This landed cost will be used to calculate the item’s Valuation Rate.

What Happens Upon Submission?

When you submit the Landed Cost Voucher:

  1. The Valuation Rate of items is recalculated based on the new landed cost.
  2. If you are using “Perpetual Inventory”, the system will post general ledger entries to correct the Stock-in-Hand balance.

Conclusion

Understanding and using landed costs is essential for business profitability. By accurately calculating the selling price of an item/product and maintaining accurate stock values, you can make informed business decisions. Empress’s Landed Cost Voucher feature makes it easy to incorporate landed costs into your operations, helping you drive your business towards success.