ERPNext Landed Cost Voucher: Freight, Duty & Costing

An item you import never costs what the supplier invoice says. Add sea or air freight, insurance, customs duty, port and clearing charges, and the real cost per unit is higher, sometimes by a wide margin. If your system carries only the invoice price, your selling price, your margin report and your stock value are all wrong. In ERPNext, the tool that fixes this is the Landed Cost Voucher.

This guide explains how it works, step by step, with a worked example using illustrative numbers. It is written for accounts managers, purchase managers and ERPNext administrators at importers, traders and manufacturers who buy abroad. If you run a trading business in the Gulf, our post on ERP for a trading company in the UAE and GCC shows where landed cost fits in the wider flow.

Tax note: which charges are part of item cost and which taxes are recoverable (for example GST input credit in India or recoverable VAT in the GCC) depends on your situation. Confirm the treatment with your accountant before you configure charges.

What landed cost means in ERPNext

ERPNext defines landed cost as the final total cost of a product to reach your doorstep. It includes the original item cost, shipping, customs duties, insurance, currency conversion fees and other charges that are part of getting the stock in. The ERPNext documentation says all applicable landed cost charges should be included in the item's valuation rate, because that rate drives cost of goods sold and profit.

In practice this changes three numbers you care about: the stock value on your balance sheet, the cost of goods sold when you sell, and the margin you see on each sale.

Two ways to add landed cost

Option 1: Charges inside the Purchase Receipt

You can add charges in the Taxes and Charges table of the Purchase Receipt itself. Set the "Consider Tax or Charge for" field to Total and Valuation if the charge is payable to the same supplier you buy the goods from, or to Valuation if it is payable to a third party such as a freight forwarder. This works when you know every charge on the day of receipt.

Option 2: A Landed Cost Voucher after the receipt

Most real shipments do not behave that way. The transporter may invoice a month later, and customs documents often arrive after clearance. You do not want to hold back the Purchase Receipt and your stock until then. The Landed Cost Voucher lets you receive the goods now and add the extra charges whenever the bills arrive.

What you need before you start

• A Purchase Receipt, or a Purchase Invoice with Update Stock ticked. If Update Stock is not ticked on the invoice, it will not be fetched into the voucher.
• Items with Maintain Stock enabled. Non-stock items do not appear when you fetch items from a Purchase Receipt.
• A Purchase Invoice for each landed cost bill (freight, insurance, clearing agent), booked to an expense account that you will reuse in the voucher.
• Perpetual inventory turned on if you want ledger entries for stock value to correct themselves automatically.

Step-by-step: create a Landed Cost Voucher

1. Go to Stock, then Tools, then Landed Cost Voucher, and click New.
2. Choose the Receipt Document Type (Purchase Receipt or Purchase Invoice). You can select more than one receipt for the same shipment.
3. Select the receipts. The supplier and grand total are fetched.
4. Click Get Items from Purchase Receipts to load the item rows. Delete any item that a charge does not apply to.
5. Choose Distribute Charges Based On: Qty or Amount. There is also a Distribute Manually option, where you enter the applicable charge on each item yourself and the total must match the total of the charges.
6. In the Taxes and Charges table, add each charge with its Expense Account and amount.
7. Save and submit.

If the charges are already booked on a vendor invoice, you can link the vendor invoice in the voucher. ERPNext then checks that the landed cost matches the total of that invoice, and the vendor invoice must not contain stock items.

Worked example (illustrative numbers)

You import two items on one Purchase Receipt:

Item	Quantity	Rate	Value
Item A	100	Rs 200	Rs 20,000
Item B	50	Rs 600	Rs 30,000
Total	150		Rs 50,000

Three charges arrive later: freight Rs 5,000, customs duty Rs 7,500 and clearing agent Rs 2,500, a total of Rs 15,000. Here is how the choice of distribution changes the cost of each item:

	Distribute by Amount	Distribute by Qty
Share to Item A	Rs 6,000 (40% of value)	Rs 10,000 (100 of 150 units)
Share to Item B	Rs 9,000 (60% of value)	Rs 5,000 (50 of 150 units)
New rate of Item A	Rs 260 per unit	Rs 300 per unit
New rate of Item B	Rs 780 per unit	Rs 700 per unit

Neither method is always right. Customs duty and insurance usually follow the value of the goods, so Amount fits them. A per-unit handling or freight charge follows quantity, so Qty fits it. When one voucher mixes both kinds of charges, either run two vouchers or use Distribute Manually. Ask your accountant which basis your tax and costing policy requires.

What ERPNext posts when you submit

On submission, ERPNext does three things:

1. It recalculates the valuation rate of the items from the new landed cost, using your FIFO or moving average method.
2. With perpetual inventory, it posts ledger entries: a debit to the warehouse (stock) account and a credit to the expense account named in the voucher. This is why you reuse the same expense account that the freight or clearing invoice was booked to. The invoice created the expense, and the voucher moves it into stock value.
3. If some of the stock has already been delivered, the cost of goods sold was booked at the old rate. ERPNext reposts the ledger entries of the later outgoing transactions so the cost of goods sold is corrected.

To see the effect, open the Purchase Receipt and use View, then Accounting Ledger.

Customs duty, GST and VAT: what goes into cost

Only costs that make up the cost of the stock should go into the voucher. Taxes that you can claim back, such as GST input credit in India or recoverable VAT in the UAE and other GCC states, normally are not part of inventory cost, while non-recoverable duty usually is. The rules differ by country and by business type, so decide this with your CA or tax adviser first. Then configure separate expense accounts for freight, insurance, customs duty and clearing, so your management reports can show each cost line.

For the India side of invoicing and credits, see our GST setup guide. For the UAE side, see our UAE VAT and corporate tax guide.

What changes in ERPNext v16

• Landed Cost Voucher for Subcontracting Receipts: add freight, excise duty and similar charges to the finished goods a subcontractor made for you. Our subcontracting guide explains that flow.
• Landed Cost Voucher for Stock Entry (Manufacture): include extra costs such as electricity or rent in the valuation of a manufactured product.

If you are planning the move to the new version, read our ERPNext v16 features and upgrade guide.

Common landed cost mistakes

• Double counting. Putting freight in the Purchase Receipt charges and again in a voucher. Add each charge once.
• Different expense accounts. If the voucher credits a different account from the one on the freight invoice, the original expense is not cleared and your profit and loss shows the cost twice.
• Forgetting Update Stock. A Purchase Invoice without Update Stock never appears in the voucher.
• Manual distribution that does not add up. With Distribute Manually the item charges must equal the total charges, or the voucher will not submit.
• Waiting for every bill. You can create several vouchers against the same receipt as bills arrive. Do not hold the receipt for the last invoice.
• Ignoring items already sold. The voucher corrects cost of goods sold, so check your margin report after submitting a voucher on old stock.
• Mixing foreign currency carelessly. Book each charge in the currency of its own bill and let ERPNext convert, so exchange differences are traceable.

Set it up once, in this order

1. Create expense accounts for freight inward, insurance, customs duty and clearing charges.
2. Turn on perpetual inventory and confirm the stock account for each warehouse.
3. Agree a standard distribution rule per charge type with your accountant.
4. Train purchase and accounts staff on the receipt, invoice and voucher sequence.
5. Review the valuation rates and the margin report after the first three shipments.

Our post on ERPNext procurement automation and the guide on how purchase orders work in ERPNext show the steps that come before the receipt.

How Nexeves helps importers and traders

We set up purchase, stock and costing so that every shipment shows its true landed cost. That includes charge accounts, voucher templates, user permissions and reports for margin by item. See our ERPNext inventory management page and our implementation services for the approach.

Frequently asked questions

What is a Landed Cost Voucher in ERPNext?

It is a document that adds extra costs such as freight, customs duty and insurance to the cost of items already received, so the item valuation rate reflects the real cost of bringing the goods in.

Can I add landed cost after the Purchase Receipt is submitted?

Yes. That is the main use of the voucher. You can create it whenever the freight or customs bills arrive, and ERPNext recalculates the valuation rate.

Should I distribute charges by quantity or by amount?

Use Amount for value-driven charges such as customs duty and insurance, and Qty for per-unit charges. Use Distribute Manually when neither fits, and agree the policy with your accountant.

Why does my Purchase Invoice not appear in the voucher?

The Purchase Invoice must have Update Stock ticked, and the items must have Maintain Stock enabled. Otherwise they are not fetched.

Does a Landed Cost Voucher pay the freight bill?

No. It only moves cost into stock value. You still enter and pay the freight or clearing invoice through the normal Purchase Invoice and Payment Entry flow.

Does ERPNext v16 change landed cost?

Yes. In version 16 you can create a Landed Cost Voucher against a Subcontracting Receipt, and against a Stock Entry of type Manufacture.