Charges are used on customer and purchase orders. Examples are charges for transportation, insurance, customs, and service fees. Charges on customer orders are used when the supplier is charging the customer for some extra costs. These charges are entered on the customer order as a line on its own. Charges on purchase orders work in a similar way. The charges also are entered on the purchase order as a charge line. The difference is that these charges either can be invoiced by the same supplier that is delivering the ordered goods or by another supplier (such as a transport and logistics supplier, e.g., a forwarding agent). You also have the option to distribute the charges in four different ways, as described below.
When you want to invoice charges on a customer order, it works in a similar way to how you invoice sales parts, i.e., each charge line appears as an invoice line when the invoice has been created. Also, a charge does not need to be in delivered order status for you to be able to invoice it.
When you want to match invoices for purchase order charges, it works in a similar way to how you match normal receipts. Charges used on purchase orders that have been invoiced can be viewed in Invoiced Purchase Order Charges. If the purchase charge is included in the part cost, the value of the charge will be booked separately at purchase order arrival.
In IFS Applications you put the charges functionality into use through charge groups and charge types. A charge group is a way of dividing different charge types into categories. For instance, you can have a charge group called 'Freight' with different forwarding agents (charge types) connected to it. Of course, you can use charge groups and charge types in any other combination you find suitable.
Note that the information entered in the Purchase Charge Type and the Sales Charge Type windows are unique per site. This means that each site must have its own charges entered. In accounting, however, it is only possible to rule postings per company, not per site. Example: If Company A has registered the charge type Freight for Site 1, Site 2, etc., the charge type postings will be controlled in one common way for all sites. If Company A instead has registered charge type Freight1 for Site 1 and Freight2 for Site 2, the charge type postings can be controlled in different ways for the different sites. As mentioned above, if Company A has registered charge type Freight, and Company B has also registered a charge type called Freight, the charge type postings are independently controlled from each other.
There is a variety of ways to use the charges functionality. However, the ways to accomplish this differ in some ways depending on whether you want to add charges to customer orders or purchase orders. Of course, the main purpose is always to add charges.
Charges can be entered on purchase orders as charge lines. There are several alternatives for distributing charges to purchase order lines:
Optionally you can distribute charges on delivery by selecting the Distribute on Receipt check box in the Purchase Charge Type window.
It is possible to define some conditions like the maximum and minimum order amount for the given charges and also the valid date range.
For charges connected to a specific order line, you can use the unit charge option, which means that the value of the charge will be dependent on the quantity of the purchase order line.
Additionally, you have the option to enter a default charge line in Supplier for Purchase Part. By connecting a charge type to a supplier, you will not have to enter a new charge line each time a purchase order is created. The information entered here is used as default values as soon as you choose to use the specified combination of supplier and purchase part. However, you always have the option to change these values manually.
You also can enter charges that are connected to a specific supplier. This means that the charge is general for all purchase orders using that supplier, a kind of service charge. It is always possible to manually change the charges that are automatically entered.
Posting Types Used to Create Postings for Charges
Posting type M65 is used in supplier invoice when matching a charge line that is either not connected to any PO line,
connected or distributed for a PO line that refers to a no-part, non-inventory part or an inventory part where the inventory valuation
method set up is standard cost. Posting type M189 is used to book charge arrivals, and
posting type M187 is used in supplier invoice when the charge line is connected
to a purchase order line of a weighted average or FIFO/LIFO handled inventory
part. M185 and M186 are used for price difference postings.
M215 and M216 are used for non-deductible tax difference postings.
Note: M189 is not used for booking the arrival charges for transaction code ARRTRAN,
representing an internal stock movement between two sites belonging to a single
company.
Charges on customer orders work in a similar way. They also can be entered on customer orders as charge lines, and the lines can be connected to a specific customer order line. Additionally, you have the option of entering a charge on the Customer/Order/Charges tab, in which site specific charge types are connected to the customer. A charge type is used to enter various information that should be connected to a specific charge. By connecting a charge type to a customer, you will not have to enter a new charge line each time a customer order or sales quotation is created. The information entered will be used by default, as soon as you select the customer. However, these default values can be manually changed if required.
You can also enter charges connected to specific sales parts. By connecting a charge type to a sales part, you will not have to enter a new charge line each time a customer order line is created. The information entered here is used by default, as soon as you enter a customer order line. However, you always have the option of changing these values manually.
In a sales quotation, sales charge types can be connected to quotation lines. If the charge percentage is used and charge lines are connected to a particular quotation line, base for charge percentage becomes the net amount in the connected order line. Therefore when creating customer orders, the charge line will take the same base for charges percentage.
When the charge line is not connected to a quotation line and the charge percentage or the charge cost percentage is used, then the the base for charge percentage becomes the total net amount/curr in the sales quotation.
When customer orders are created from sales quotations, the charge lines included will have the charge percentage used in the sales quotation if they are not connected to quotation lines. However, if fixed charge costs are used with charge percentages in the sales quotation, then the fixed charge cost will be used in the customer order charge line. This means that each customer order created from the sales quotation will have the fixed charge as a whole, and therefore a collection of charge costs of such customer orders will not be equal to the initial fixed charge cost in the sales quotation.
When unit charges are used with a charge percentage or a charge cost percentage, base for charge percentage is calculated as given below:
Base for Charge% = (Net Amount/Curr) / Sales Qty
Charge Qty = Sales Qty of the Connected Customer Order Line
Net Amount = (Base for Charges% * Charge%*Charge Qty)
The landed cost can be described as the sum of the purchase price, less the discounts and including all charges relating to a specific line. The landed cost on the purchase order line will serve as an example on what the cost would be if all price, discount and charge components for a purchase order line was applied to the part, but it does not always reflect the transaction value to be used in receipts etc. Differences between landed cost calculation and transaction values used can be related to use of valuation method and also depending on if partial receipts are made or not.
The only valuation method that will consider the impact of purchase price, discounts and charges is Weighted Average. Implementing the above valuation method, an average cost is calculated each time a part is received into inventory. Charge types (freight, trucking, insurance etc.) are defined as either an amount or as a percentage of the amount and these charge types are grouped into charge groups. Each charge group is defined with a Level (which is used in the calculation of the landed cost). The purchase price is used as the basis of the calculation then charge group with level 1 is added to the calculation followed by charge group level 2 etc. A partial sum is calculated after each level.