Managing Freight Charges (Sales & Purchasing)

Freight charges describes both methods for and the costs associated with freight costs related to the acquisition of goods or products from Vendors, as well as shipping goods or products to Customers. From an accounting perspective, sales freight is generally considered an expense. However, under generally accepted accounting rules, if the freight is considered part of the cost of an asset, it is recorded as part of the value of the asset on the Balance Sheet.

Freight charges can be added in various ways and at different times during both the purchasing and sales process. The tables below list the different options together with links to obtain additional information. The information may be contained on this page, or, in some cases, on separate pages.

Purchasing Freight Charge Options

The table below lists all possible methods for processing freight charges in the purchasing process. Click on link in the "Entry Method" column for additional information and steps.

Entry Method	Included in Value of Inventory	Avaialble in Standard Cost Mode	Available in Actual Cost Mode	Increase Amount Due Vendor	How To Enter	When To Enter
"Freight Cost" field on Edit Purchase Order Line form	Yes	Yes	Yes	No	"Freight Cost" field on the Edit Purchase Order Line form *Notes: In Standard, or Actual Cost Mode, the source/default value of the "Freight Cost" field will be provided by a Vendor Part Cross Reference or the "Standard Freight" field on the Item Master. This can also be entered manually, but only in Actual Cost Mode. In Actual Cost Mode, the source/default value of the "Freight Cost" field can be provided by a Vendor Part Cross Reference or manually entered.	During Order Entry, Prior to Receipt
"Total Freight Cost" field on Purchasing Order Entry form	Yes	No	Yes	No	"Total Freight Cost" field on Purchasing Order Entry form. Note that this field represents the freight for the entire order (for all lines on the order), not the freight per unit.	During Order Entry, Prior to Receipt
Separate Line on Purchase Order	No	Yes	Yes	Yes	Manually enter line on Purchase Order and ensure "Total Freight Cost" field is updated correctly	During Order Entry, Prior to Receipt
"Freight PO" button	No	Yes	Yes	No	"Freight PO" button in Purchasing Reporting. Beginning in version 17.01.016, the "Automatically Receive Linked Freight PO" , via Purchasing > Options was added. If this field is checked, and a freight purchase order is linked to another purchase order when using the "Freight PO" button, and that purchase order is received, the system will automatically receive the Freight PO on the same date.	After Order Entry, Prior to Receipt
Expense Purchase Order	No	Yes	Yes	Yes	Create an expense purchase order	After Order Entry, Prior to Receipt
Purchase User Calculation	No	Yes	Yes	Yes	Via a User Calculation	During Order Entry, or After Receipt, but Prior to Invoicing
Order Adjustments	No	Yes	Yes	Yes	Order Adjustments transaction	After Receipt, Prior to Invoicing

Sales Freight Charge Options

The table below lists all possible methods for processing freight charges in the sales process. Click on link in the "Entry Method" column for additional information and steps.

Entry Method	Reduce Sales	Standard Cost Mode	Actual Cost Mode	Increase Amount Customer Owes	How To Enter	When To Enter
"Freight Cost" field on Edit Sales Order Line form	Yes	Yes	Yes	No	Three options: Pricing Orders Deal Pricing Manual Entry	During Order Entry, Prior to Shipment
Separate Line on Purchase Order	No	Yes	Yes	Yes	Manually enter line on Purchase Order and ensure "Total Freight Cost" field is updated correctly.	Anytime prior to Invoicing
Freight Purchase Orders	No	Yes	Yes	No	"Freight PO" button in Sales Order Reporting (Security exists top control access to this button) Beginning in version 17.01.016, the "Automatically Receive Linked Freight PO" , via Purchasing > Options was added. If this field is checked, and a freight purchase order is linked to another purchase order when using the "Freight PO" button, and that purchase order is received, the system will automatically receive the Freight PO on the same date.	Anytime prior to Invoicing
Order Adjustments	No	Yes	Yes	Yes	Order Adjustments transaction	After Shipment, Prior to Invoicing
Fed Ex, UPS, and EasyPost sales integrations	No	Yes	Yes	Yes	Two options: Manual Entry when using Fed Ex, UPS, and Easy Post Automatically via integration configuration	During order entry or shipment, not after shipment
"Add Freight" button on Ship Sales Order form	No	Yes	Yes	Yes	Via the "Add Freight" button on the Ship Sales Order form	During Shipment, not after
Sales User Calculation	No	Yes	Yes	Yes	Via a User Calculation	Prior to Invoicing

Purchasing Freight Processes and Configuration

Configuration

Facility Part Cross References - Optional. Used to define unique MRP criteria, costs, and prices for specific Facilities by using Facility-specific parts.
Vendor Part Cross References - Optional. Used to define unique Part Numbers, Descriptions, Purchase Units, and Pricing for individual Vendors by using Vendor-specific parts.
Non-stock Freight Part - DEACOM uses a non-stock Freight Part when adding Freight lines to Purchase Orders. The item may be called anything, but once it is setup, it must be selected as the "Freight In Part" in Purchasing Options.

Process

Using the "Freight Cost" field on the Purchase Order Line

This field can be configured to add the freight cost automatically, and then, if necessary with the proper security, this field may be modified. To have the field populate automatically, the "Acct. Freight" field from the Item Master Costs tab may be configured on a per item basis. The "Acct. Freight" field is used to store the freight cost associated with the item. When that Part is added to a Purchase Order line, the "Acct. Freight" value is used to populate the "Freight Cost" field on Purchase Order line(s) containing that Part. These values are then summed and the total is populated in the "Total Freight Cost" field on the Purchase Order header's Pricing tab. If using Facility Part Cross References and/or Vendor Part Cross References and the necessary fields and flags are populated, freight from the cross reference will be used in place of the base Item Master. Note: if entering freight costs in the "Freight Cost" field on the vendor cross reference part, be sure to enter the freight in terms of the pricing unit specified on the vendor cross part. As mentioned previously, the "Freight Cost" field is populated by the Part's Item Master. If needed, this field can be manually modified. This requires the user making the modifications to have the "Purchase orders -- edit freight cost" security set to Yes.

"Total Freight Cost" field

Alternatively, available in versions 15.03.017 and above, if a lump freight cost should be used for the entire order, it may be entered directly into the "Total Freight Cost" field on the PO header. This value will then be allocated across the PO lines using the logic detailed in the "Total Freight Cost" field description on the Order Entry page.

Creating a separate line on the Purchase Order

Using a part number representing freight charges, or without a part number, and a description indicating the line on the PO represents freight.

"Freight PO" button

Viewing the order via a Purchase Order report allows the use of the "Freight PO" button, which is used to select a Vendor and specify the freight amount for the selected order. This will create a new PO and allocate the freight costs to the lines of the original PO.

Expense Purchase Order for Freight

Expense Purchase Orders are created in much the same way as a regular Purchase Order, but do not require receipt.

Sales Freight Processes and Configuration

Configuration

Parts - Parts will need to be created and have the "Freight Expense" field populated with the correct account.
Chart of Accounts - accounts representing Freight Expense will need to be created.
Ship Via Methods - The Ship Via Method is the desired shipping method used on Purchase Orders and Sales Orders.
- Beginning in version 17.04, when using a Ship Via Method of UPS, and shipping a sales order with freight added, the system will get the necessary freight charge from UPS an add it as a line item to the order.
Deals - Deals may contain freight costs, which will be defaulted to Sales Order lines if the Deal is used during Sales Order entry.
"Sales Orders -- enter freight PO" - This security setting must be set to "Yes" in order to create Freight Purchase Orders in the system.
Non-stock Freight Part - DEACOM requires a non-stock Freight Part to be used whenever adding Freight to a Sales Order. Refer to the Designing a Part Numbering System and Creating Parts page for process information. The item may be called anything, but once it is setup, it must be selected as the "Freight Out Part" in Sales Options. Additionally, there is a "Freight Margin" field that may be used to add to the freight cost quoted. If this field is populated, shippers will add the freight cost to the freight cost form and DEACOM will automatically calculate the freight charge to the customer. The calculation is:
- Freight Cost / (1 - "Freight Margin").
- Example: $100 in freight cost with a 10% Freight Margin will yield a freight charge to the customer of $111.11. This applies to all shipments for all customers when freight is added during Sales Order shipping. Lastly, in Sales Options, check the "Add Shipping Freight Charges to Sales Order" flag to automatically add freight on shipments sent via FedEx and/or UPS.
Freight Types - Define the freight terms that will be used for both Purchase Orders and Sales Orders in DEACOM. The purpose of these terms is to identify the party responsible for the payment of freight costs. In DEACOM, customer and vendor records are assigned a Freight Type that acts as the default during order entry. When adding Freight Types, Collect, Prepaid, and Prepaid and Add are all pre-existing choices that are loaded during the initial DEACOM installation. If desired, click "New" to create a new Freight Type or select an existing record and click "Modify" to make edits. Next, name the Freight Type and select if it applies to AP only, AR only, or both. If this should be the default selection for AP, AR, or both, mark it as such. If the company will be retaining ownership of the material while it is in-transit, check off the flag. Finally, click "Next" to add/modify more records or "Save" and "Exit" to save the changes.

Note: DEACOM offers the ability to exclude the freight costs when calculating Sales Commissions and Rebates.

Process

Using Freight Purchase Orders to expense Sales Order freight costs

This is a two step process and requires that on the Item Master for the Freight Part, an expense account must be selected in the "Purchase To" field of the Accounts tab. First, the Vendor must be added to the appropriate Ship Via Method, then a Freight Purchase Order is created against the desired Sales Order(s).

Adding a Vendor to a Ship Via Method

Navigate to Purchasing > Maintenance > Ship Via Methods.
Click "New" to create a new Ship Via or select an existing record and click "Modify".
Fill in the required fields, in blue, identify the "Load Unit" (usually pounds) from the pick list, and select the Vendor that will be paid for the freight from the pick list.
- Note: The "Load Unit" field is also used to control the maximum size of a Purchase Order using this Ship Via Method, if the "Load Size" field is not zero.
Mark the record as default, if desired, then click "Save" and "Exit".

Creating a Freight Purchase Order for one Sales Order

Navigate to Sales > Sales Order Management, fill in the pre-filter as desired then click "View".
Select a Sales Order from the list and click "View Detail".
To expense freight on the Sales Order, click the "Freight PO" button in Sales Order view mode.
The system will prompt the user for the Vendor and Freight amount, then generate a Purchase Order with the cost distributed to the Freight Expense accounts of the lines on the Sales Order and pro-rated by the Ship Via's "Load Unit" field.
- The system will calculate the total weight ordered for each line. ((unit weight + tare weight) * the quantity ordered).
- Next, the system will sum the total weights and divide each line's total weight by the order's total weight to get the weight percentage for each line.
- The system takes the quantity shipped, if the order is shipped, less the quantity ordered of each line, and converts it to the Load Unit from the Ship Via Method. Ratio this per line over the total size of the order. Finally, multiply this ratio per line by the total freight bill amount to get the amount for each Purchase Order line.

Note that Customer GL Overrides are used when creating Freight POs. In addition, when generating a Freight PO via the Freight PO button the following information/fields are copied to the purchase order.

The pr_codenum (part number) field from the SO line is copied to the pl_orid (Sales Order Line) field on the Linked Sales Order tab of the Purchase Order line so the system will know remember the part number that the charge is for.
The to_ordnum (sales order number) field from the sales order header is copied to the pl_ordnum (Sales Order ) field on the Linked Sales Order tab of the Purchase Order line so the system will know the sales order that the charge is for.
The bi_id (bill-to company ID) field from the sales order header to the pu_biid (bill-to company listed on the PO line) field so the system will know the customer that the charge is for)
The system will now also ensure that the resulting PO is for the amount that was entered in the original form (vendor/cost). If not, the system will adjust the largest line on the order so that it is. These fields that are copied are useful for variance reporting outside of the General Ledger. The to_ordnum - pl_ordnum linkage can be used to compare the freight bill to the revenue collected. Pu_biid can be used to show the freight bill in the SO Profit Summary report.

Creating a Freight Purchase Order for multiple Sales Orders

Navigate to Sales > Order Reporting.
Select a "Report Type" of "Order Detail."
Fill in the pre-filter as desired then click "View". Multiple Sales Orders may be filtered.
Click the "Freight PO" button.
The system will prompt the user for the Vendor, Facility, and Freight Amount.
Enter the appropriate information and click the "Apply" button.
The system will create and display a Purchase Order for the entered freight amount. The information is compiled and factored by the system during the creation of the Purchase Order as follows:
- The number of lines on the PO will be the same number of lines on the filtered SO Detail report.
- Each line is expensed to the Freight Expense account from the item on the corresponding SO line, and will be overridden by the customer's GL override if applicable.
- The dollar amount on each line is the total invoice amount multiplied by that line's weight percent of the weight of all the sales orders. (Calculation: Gather the to_totwgt from all orders on the SO detail report and convert them to the ship via's load unit, then SUM to get the total weight for the freight bill. Next, divide the line item's weight (converted from the sales unit to the ship via's load unit) by the sum of the total weight for the freight bill to get the line item's weight percent. Finally, multiply the total invoice amount of each line item by the line item's weight percent to get the total $ of the line item.)

Adding freight costs prior to Invoicing

Freight costs may be added manually or automatically during various times throughout the order entry/shipping process including during shipment, during order entry, and after shipment but prior to invoicing.

Using the "Freight Cost" field on Edit Sales Order Line

Navigate to Sales > Order Entry.
Create a new order or modify an existing one.
Click the "New" or "Modify" button on the "Lines" tab.
On the "Edit Sales Order Line" form notice the "Freight Cost" field. This field can be populated automatically via Pricing Order or Deal Pricing, or can be manually added by the user.

Adding freight during Sales Order shipment

Navigate to Sales > Ship.
Select the appropriate order in the "Sales Order" field and click "Continue". Users may also use the "Show Orders" button, select an order, and click the "Continue" button.
On the shipping form, click the "Add Freight" button to display the Add Freight form.
Enter the actual freight cost and the amount to bill the customer.
Click the "Save" button to have the system add a new line representing the freight charge to the Sales Order.
At this point, users can continue the shipping process as normal.

Using a Sales Order Calculation to add freight automatically

A more desirable option would be to create a User Calculation and tie the calculation to the configured Freight Part. Then, if the calculation evaluates to anything other than 0, DEACOM will add the Freight Part and rate to the Sales Order automatically.

Calculations can be simple or extremely complex depending on requirements. As items are added onto the Sales Order, the freight calculation will update automatically. Sales Calculations can be very flexible and work with existing DEACOM fields and user-defined fields. Simple calculations can be created, such as item quantity * some rate, or complex calculations can be created with multiple nested IIF() statements to evaluate values from multiple tables of data. For instance, a customer has a minimum freight charge of $50 per order set up on the Ship-to Company User Field. Then, a calculation may be created to tally the freight on any variable or variables desired. Then perform a validation on the calculation. If it is less than the minimum, charge the minimum or charge the result of the calculation. These calculations are only limited by the imagination of the user and ability to create the calculation in DEACOM. For example, a calculation of "or_quant * or_unitwgt * .1" would generate a freight charge of $.10 per pound shipped.

Manually adding freight after shipping but prior to invoicing

DEACOM allows users to add as many non-stocked parts onto a Sales Order after shipment but prior to invoicing as desired to add any freight or fees. To do this:

Navigate to Print Outs > Invoices to display a list of shipped Sales Orders ready for invoicing.
Highlight an order to invoice and click on the "Adjustments" button.
Once in the Order Adjustments form, users can add and edit as many non-stocked parts as they like. Click "Add" and choose the desired freight part.
Add a quantity of one and add the amount.
- Note: If a Pricing Order or Deal price is set up for the item, DEACOM will add that value to the "Amount" field.

Alternatively, the following steps may be used:

Navigate to Accounting > Order Adjustments, select "Sales Orders" as the Report Type, enter any other desired filters, then click "View".
A list of shipped, not invoiced Sales Orders will appear. Select the desired Sales Order from the list then click "Modify".
The Order Lines form contains the order number, the Vendor or Company name, the Facility on the order, the total order amount, and finally the amount due on the order. In situations where non-stock parts were added previously to orders, users can click the "Modify" button to make changes to the existing non-stock part lines on the order. Otherwise, if a non-stock part still needs to be added to the order, click "Add".
Fill in the required fields or make the necessary adjustments, then click "Save" and "Exit".

Adding freight costs via Fed Ex and UPS

Freight charges may be added when shipping via the Fed Ex integration available within DEACOM.

Deacom created the "Worldship Importer" External to import the DEACOM Sales Order Numbers, UPS Tracking Numbers, and Freight Charges back into DEACOM after Sales Orders for UPS Worldship have been sent and processed by UPS. This will allow companies to analyze orders that have gone through the UPS Worldship process and review original freight costs against actual freight cost as well as other criteria. Additional information is available by contacting the DEACOM API department.

Using EasyPost to add freight costs

DEACOM's integration with the EasyPost API allows companies to obtain shipping rates in real time and easily generate shipping labels and tracking information during order entry or when shipping orders.

Additional Options

Flat Rates - If flat rates are charged for freight on Sales Orders, the Freight Part can be used on a Pricing Order and manually added to the Sales Order. Once the Pricing Order is configured, a Sales Order can be created and the Freight Part added manually. The freight rate will pull from the Pricing Order and add to the Sales Order. Keep in mind, this is a rather manual way to enter freight and is not very flexible.