Supplier Invoices and Landed Costs

The final stage of the buying flow is recording what the supplier actually charged you, and making sure the true cost of your goods (including freight, duty and other extras) flows through to stock and margins.

Creating a supplier invoice from a purchase order

In the purchase order’s invoicing section, click Create Invoice:

1. Select the lines to invoice. Each shows the quantity available (received but not yet invoiced) and the amount.
2. Adjust the quantity to invoice if the supplier billed partially.
3. Confirm to create the supplier invoice, linked back to the purchase order.

Lines that are not received or already invoiced are flagged. This matching (only invoice what you’ve received) is your protection against paying for goods that never arrived. If you legitimately need to bill a line twice (for example after a supplier credit), tick Allow Reinvoice.

Suppliers that bill in instalments are handled the same way as partial receipts: create multiple supplier invoices against the order as the bills come in.

How the invoice affects your costs

The price on the supplier invoice line overrides the purchase order price for costing. The PO price is what you expected to pay; the invoice is what you actually paid, so if the supplier’s price changed between order and bill, your stock cost reflects reality, not the estimate.

Tip

The Purchase Price Variance report shows where invoiced prices differed from ordered prices, so creeping supplier price changes don’t go unnoticed.

Landed costs

The supplier’s item price is rarely the whole story. Landed costs are the extras that it takes to get goods onto your shelf:

• Freight and shipping
• Customs duty
• Insurance
• Handling and other charges

These can be attached to receipt lines, and shipment freight can be allocated automatically during receipting (by quantity or value; see Receipting Goods).

The final cost written to your stock records is:

Landed cost = supplier invoice line price (or PO price until invoiced) + allocated landed costs

This landed cost is what stock transactions carry, what product costing uses, and what your sales margins are measured against. Skipping landed costs makes imported goods look more profitable than they are. If freight and duty are material to your business, allocate them.

Where the costs surface

• Product cost: used as the default cost on sales documents and work orders
• Margins: shown on sales order and quote lines
• Reports: purchase and sales price variance, work order cost-vs-sell

Related articles

• Understanding Purchase Orders
• Receipting Goods