How to account for logistics and customs: 3 scenarios for distributing additional costs

How to account for logistics and customs duties: allocation of additional expenses when purchasing goods in Torgsoft

For importers and distributors, purchasing goods is never limited to just the price set by the manufacturing plant. Container shipping, customs duties, brokerage services, cargo insurance, loader services — all of this forms a huge layer of hidden expenses.

If these additional expenses are not included in the cost of each unit of продукции, the company risks facing margin erosion. You may think that you are selling goods with a 100% markup, but after paying all operating and logistics bills, the real profit will approach zero.

The Torgsoft accounting software has specialized tools to solve this problem. All markups, discounts, and additional expenses are entered directly in the header of the goods receipt note on the «Invoice Expenses» tab. The program interface allows you to enter expenses as a percentage (for example, customs duty 10%) or in a fixed currency amount (for example, container freight $3000).

Let us take a detailed look at how the Torgsoft interface allows you to allocate these expenses using three key scenarios.

Scenario 1. Include in the cost of goods

This scenario is used most often when you pay logistics or customs duties to third parties (a transport company, customs authorities), but these expenses are an inseparable part of the value of the goods themselves.

How does it work in Torgsoft?

When adding an expense (for example, in foreign currency), you choose the accounting type «Include in the cost of goods». In this case, the expense amount is allocated across all items in the invoice and recorded in the special column «Additional Cost». This means that the cost of your inventory will increase proportionally, but your debt to the supplier of the goods themselves will not. The selling (retail) price will be calculated based on the new, increased cost.

Mathematical example: 

You import 100 jackets.

• Purchase price from the manufacturer: $20 per unit (Total: $2000).

• Delivery by the logistics company: $500.

• Your store markup: 50%.

You create an expense of $500 and click the «Allocate Automatically» button. The program proportionally divides $500 among 100 jackets = $5 per unit.

• Purchase price (debt to the supplier) remains: $20.

• Additional cost: $5.

• Accounting price (base for markup): $20 + $5 = $25.

• Retail price: $25 + 50% = $37.5.

Your margin is protected, and inventory assets are valued correctly.

Scenario 2. Include in settlements with the supplier

This scenario is used when the supplier of the goods pays for delivery, insurance, or packaging on their own and simply includes these expenses in your total invoice as a separate line item. In other words, you owe this money specifically to the supplier of the goods.

How does it work in Torgsoft?

You add an expense and choose the accounting type «Include in settlements with the supplier». In this case, the amount is not just included in the total cost of the goods, it is added directly to the «Purchase Price» column. This automatically increases your accounts payable (your debt) to this specific counterparty.

Mathematical example:

You order 50 pairs of shoes.

• Purchase price of the shoes: $30 per pair (Total: $1500).

• The supplier adds the service «DHL Delivery» to your invoice: $100.

• Total invoice amount payable to the supplier: $1600.

• Your markup: 100%.

You enter an expense of $100 with the type «Include in settlements...». The program allocates $100 among 50 pairs = $2 per pair.

• New Purchase Price (debt to the supplier): $30 + $2 = $32.

• Balance with the partner: your debt to them is now exactly $1600.

• Retail price: $32 + 100% = $64.

Scenario 3. Do not include (General corporate operating expenses)

This scenario is needed for related expenses that you incurred when receiving a batch, but which you do not want to «spread» across the cost of goods, so as not to artificially overstate the estimated value of inventory as an asset. However, these expenses must affect the formation of the retail price and be reflected in the final profit and loss report.

How does it work in Torgsoft?

You choose the expense accounting type «Do not include». In addition, when creating a Financial Invoice Expense, you uncheck the box «Included in Cost» and choose an expense item for financial analysis (marked in red). In this case, the expense amount is recorded in the «Additional Purchase Value» column. The inventory cost does not increase, the debt to the supplier does not grow, but this amount serves as the basis for calculating the selling price. The expense itself is deducted from the total profit at the end of the month.

Mathematical example:

You received a batch of 10 televisions.

• Price per television: $400 (Total: $4000).

• You paid the loaders $50 in cash for unloading the truck.

• Markup: 25%.

You add a financial expense of $50 (analysis item: «Loader Services»), uncheck the «Included in Cost» box. The program allocates $5 per television.

• Purchase price: $400 (remains unchanged).

• Inventory cost in stock: $400 (inventory value is not overstated).

• Additional purchase value: $5.

• Base for calculating the retail price: $400 + $5 = $405.

• Retail price: $405 + 25% = $506.25.

In the «Analysis — Period» report, you will see the gross profit from the sale of televisions, from which the $50 loader expense will be deducted as a separate line, forming the company’s net profit.

Questions — Answers