NetSuite’s Landed Cost functionality offers businesses a solution to manage and track all expenses involved in importing goods, including tariffs, shipping fees, customs duties, and other related charges. With the ability to account for these costs, alongside NetSuite’s container management, businesses can gain a more accurate understanding of their total inventory expenses. To see how landed cost fits into the bigger picture, explore our Comprehensive NetSuite Cost Breakdown.
This comprehensive view of costs ensures that companies can make informed decisions when setting prices, maintaining profitability, and staying compliant with ever-changing trade regulations.
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The Importance of Landed Cost with Continuous Tariffs
By factoring tariffs directly into the Landed Cost, businesses ensure they have a more accurate picture of their total import expenses. This approach helps businesses avoid underestimating the cost of imported goods, which can have a significant impact on profitability.
By accounting for all costs related to bringing goods into the country, companies are better equipped to make data-driven decisions on pricing and profitability. As a result, businesses can refine their pricing strategies, accurately assess margins, and ensure better financial forecasting, ultimately improving decision-making.
Key Benefits of Using Landed Costs for Tariffs in NetSuite
Accurate Cost Tracking
NetSuite provides a complete view of total product costs by including tariffs and other related expenses in landed costs, ensuring no hidden fees are overlooked. This enables companies to have a more precise understanding of the true costs associated with each product, improving decision-making.
Improved Profitability Analysis
By integrating tariffs into the total cost of goods sold , businesses can better assess actual profit margins and adjust pricing strategies to reflect true costs. This detailed breakdown also helps in identifying areas where cost-saving measures can be implemented for higher profitability.
Easier Reporting for Customs, Taxes, and Accounting Purposes
NetSuite simplifies compliance by ensuring accurate tariff data is tracked and readily available for customs declarations, tax reporting, and audits. This not only improves accuracy but also helps prevent costly penalties due to errors or delays in regulatory filings.
Improved Cash Flow Management
NetSuite helps track the timing and impact of tariff payments on cash flow, allowing businesses to proactively manage their finances and avoid surprises. By having real-time visibility into tariff obligations, businesses can better forecast cash flow and manage working capital more effectively.
Enhanced Inventory Valuation and Costing Accuracy
Tariffs are factored into inventory valuation, ensuring that your financial reports reflect the true cost of goods on hand, leading to more accurate cost of goods sold calculations. This improved valuation helps ensure that margins are correctly calculated and that pricing is aligned with actual costs.
Customizable Allocation of Tariffs Across Multiple Products or Locations
Businesses can define custom allocation rules to distribute tariffs across products, locations, or warehouses, ensuring costs are assigned accurately. This allows for flexibility in how costs are distributed, ensuring fair and precise pricing for each product or location.
NetSuite will also have a markup item side to be used for contracts where tariffs are passed on to customers, or for businesses applying a surcharge. This setup ensures that the tariff cost is clearly visible to the customer and allows for easy adjustments if tariff rates change, maintaining transparency and flexibility in pricing.
Reduction in Manual Errors and Increased Operational Efficiency
Automation of tariff allocation reduces manual errors and streamlines procurement and accounting workflows, enhancing overall operational efficiency. With fewer errors, businesses can focus more on strategic tasks, resulting in increased productivity and cost savings.
The Potential Issues of not implementing NetSuite’s Landed Cost
Inaccurate Profit Margins
Without landed cost tracking, businesses may only account for the base price of goods, ignoring hidden costs like tariffs and shipping. This leads to overstated profit margins, causing pricing decisions that don’t reflect the true cost of goods sold.
Missed Financial Visibility
Not tracking all associated costs makes it harder for businesses to understand their actual financial position, leading to poor decision-making and lack of insight into the impact of tariffs or freight costs on overall profitability.
Inventory Valuation Issues
Failing to include tariffs and additional charges in inventory valuation leads to an underreporting of inventory costs, which can skew financial reports.
Customs and Compliance Risks
Not incorporating tariffs and related costs in the overall accounting system can result in non-compliance with customs regulations, potentially leading to penalties, fines, and delayed shipments.
Inefficient Cost Allocation
Without a system to allocate tariffs and other import-related costs, businesses may struggle to accurately distribute these expenses across products, leading to inconsistent or unfair cost assignments.
Difficulty in Scaling Operations
As businesses grow, not tracking all import costs can hinder scalability. Inaccurate cost tracking complicates decision-making, especially when expanding into new markets or sourcing from new suppliers.
How NetSuite Landed Cost Helps Businesses Stay Competitive and Compliant
By accurately tracking landed costs, businesses can make informed decisions, adjust pricing strategies, and maintain profitability despite tariff fluctuations. In a rapidly evolving trade environment, NetSuite’s Landed Cost functionality enables businesses to stay agile, ensuring compliance and optimizing supply chain efficiency.
Contact GURUS to optimize your tariff tracking and landed cost calculations. Discover how NetSuite can streamline your operations and improve financial visibility.
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