Efficient inventory management is essential for businesses to maintain profitability and financial clarity. In NetSuite, the Landed Cost subrecord is used to allocate additional costs to inventory items beyond the purchase price. Landed costs often include expenses like freight fees, import fees, insurance, taxes, shipping charges, handling charges and other fees incurred to bring goods into inventory.
Landed Costs are available in NetSuite’s Advanced Inventory Management.
Set up Landed Cost Categories associated with an expense account for proper allocation in the financials. Landed cost categories help to categorize different types of costs.
Landed costs can be allocated to items on the purchase order or vendor bill using various methods:
- Quantity: Allocates costs based on item quantity.
- Weight: Allocates costs based on the weight of the items.
- Value: Allocates costs based on the item’s value (price).
- Manual: Allows custom allocation as needed.
By correctly applying costs such as shipping, duties, and handling fees to inventory items, businesses can capture a more complete picture of product expenses. Landed costs improve the accuracy of inventory-related reports, including COGS, Inventory Valuation, and Profitability reports.