When selling products to customers, many companies also include the cost of freight needed to get the product to the customer. Unlike some other ERP products, Business Central (BC) does not include freight as a separate field on the sales header. Companies are therefore forced to include the freight as a line on the sales document. This post will discuss three methods for getting the freight line onto the sales document.
Manual Entry
The first method is often the easiest. This method involves manually adding a line to the sales document and posting the freight to a G/L account. This method will post the credit for the freight amount directly to the G/L account specified on the line. The amount does not impact the sales value of the product(s) being sold. It is strictly a financial transaction against the freight G/L account.
Item Charges
The second method involves using Item Charges to add the freight amount AND allocate the freight cost to the products sold. That is the key difference when using this option. Posting the Item Charge against the sales lines will result in a higher sales amount reported on the Item Ledger Entry and Value Entry tables.
Using this option requires a little more setup. You would first need to create a new Gen. Prod. Posting Group code for the freight. Then, you need to create a line in the General Posting Setup page for this new Gen. Prod. Posting Group and the Gen. Bus. Posting Group code used for the customer. Enter the freight G/L account as the Sales Account on this page. Lastly, create a new Item Charge and add the new Gen. Prod. Posting Group code to that new Item Charge. Now it is ready to use.
On the sales document, add a new line with Type = Charge(Item) and enter the Item Charge code in the No. Field.
Next, from the Lines section, click on Line / Related Information / Item Charge Assignment to assign the freight amount to the sales document lines. The amount can be allocated based on Amount, Weight, or Equally. Select the desired method and allocate the freight. For more information on how to do this, see my previous post titled “Working with Item Charges in Business Central”.
As previously noted, this method allocates the freight amount to the sales of the product. It will still post the freight to the selected freight account, but the amount is included in the sales amount on the item ledger and value entry tables.
In reviewing the item ledger in the example below, you will notice a sales amount for the product sales of $842.22:
But if you drill into the value entries for that amount, you will see two entries. The first for the product sale itself, the second for the allocated freight.
Be warned that the added freight to the item ledger sales amount may impact any sales reporting you have created based on the item ledger. So, test any report if using this method to ensure you get the desired sales amounts.
Sales Order Shipping
The last method is seldom used and is similar to the manual entry of the freight amount. The benefit of this approach is that it allows users who do not have access to the sales document to enter the freight amount.
One setup step is required. Navigate to the Sales C Receivable Setup page and locate the Freight G/L Account No. field. Enter the desired G/L account into this field.
Now navigate to Sales Order Shipping. This page should be available to the shipping personnel and provide a list of all the sales orders that need to be shipped. Click on the desired order to open the Sales Order Shipment page for that order. This page allows the shipping personnel to see information concerning the shipment without any prices or costs. This may be desirable if concerned about the confidentiality of that information.
On the Shipping fast tab, locate the Freight Amount field. The shipping personnel can enter the freight amount directly for this order.
After entering the freight amount and adjusting any quantities to be shipped, the shipment can be posted. Returning back to the sales order, you will note that the freight line has been inserted directly as a sales line with the desired G/L account and the order is ready for invoice posting.
Summary
While posting freight for sales orders may be a minor issue, selecting the correct method for posting that freight will depend on how the amount is shown. Understanding the methods described above can help with that analysis.
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