Follow

How to pay for Freight before the Merchandise is Received

Problem Details:

Freight has to be paid to the freight carrier before the goods are actually delivered.  Is it possible for the freight invoice be paid prior to the receipt of the goods, and still have the freight charges added to the cost of the items when they are received?

 

Solution:

There are two ways to pay for freight or any other additional charges before the merchandise arrives and is received into PO. They are both valid and will produce the same results. 

Method 1

Create an AP invoice for freight, against the Accounts Payable Clearing account. This is the GL account that is setup in your system in IC Setup - Account Sets - Payables Clearing.

A payment can now be issued from AP for the Freight. This However, will not add the cost of freight to the total cost of the item in IC. Follow the steps below to make sure your items cost reflects all additional charges. 

Once the merchandise arrives, Receive them into PO as normal and put the freight charge into Additional Charges. This will make sure that the freight cost is added to the total cost of the items.

Create a PO invoice for both the items and Additional charge as normal, and run Day End from IC Periodic Processing.

Go to AP Batches and delete the invoice for the freight. This is a duplicate of the AP Invoice that you have already created and paid.enter invoice in AP to The clearing account defined in Account set code - payable clearing 

Method 2

Create a prepayment from AP's Payment Entry for the freight invoice. In the Prepayment entry screen there are two fields:

"Apply By" and "Apply To"

Select 'Document Number' in the Apply By field.

Type in the invoice number from the freight invoice.

Add the prepayment, print cheque as normal, and post the AP Payment batch.

Once the merchandise arrives, Receive them into PO as normal and put the freight charge into Additional Charges. This will make sure that the freight cost is added to the total cost of the items.

Create a PO invoice for both the items and Additional charge as normal. At this point, make sure that you put the invoice number for your freight invoice exactly the same way as you entered it in the AP prepayment "Apply To" field. This will ensure that the invoice and prepayment get applied to each other automatically.

Run Day End from IC Periodic Processing and post the AP Invoice Batch.

Go to AP Vendor Activities to make sure that the invoice and prepayment have been applied.

Was this article helpful?
0 out of 0 found this helpful
Have more questions? Submit a request

Comments

Powered by Zendesk