Allocating freight-in to the cost of inventory items when purchasing

When purchasing inventory items, freight-in represents the transportation cost associated with the delivery of goods from a supplier. For accounting purposes, the recipient adds this cost to the cost of the goods received.

Let’s say you purchase an inventory item which has a $20 delivery fee. Rather than posting the $20 delivery fee to an expense account, you can add this cost to the cost of the inventory item.

By not entering anything into the Qty field of the second line item, the cost will be added to the inventory item without increasing its quantity.

If you purchase multiple inventory items, you don’t have to manually calculate the cost per inventory item. If your freight-in cost is to be allocated to all inventory items purchased, select the Inventory on hand account, then select Freight-in item.

This will allocate the freight-in cost to all inventory items purchased.


Kindly guide me where I can get input the inventory as you have indicated?

The screenshots shown are now outdated due to a feature change.
Now you should see the following in the Purchase Invoices tab instead - Item then Account

Otherwise, follow the instructions as above when completing the Purchase Invoices

Yes exactly, Thankyou :slight_smile:

I understand that if the delivery cost comes from the supplier, but if delivery is from several other means, as in our case, we have delivery to the wharf, in Australia, sometimes FOB, we have the ship cost, we then have a lighterage charge to bring from ship to shore and then cartage from wharf to us.
I understand that all those costs could be added to individual inventory simply by dividing the per kilo into total. But do raise a purchase order from the shipping agent etc. and spend money, and allocate to ?

There is actually a way how to use Freight-in functionality even if shipping costs come on different invoice. There will be new guide covering that.

Thank you

Facing difficulty to add freight cost to previously purchased inventory from different Freight supplier.
The new update only allows Freight-in feature to the same invoice while purchase of goods occur and valid if it’s cost is paid to the same supplier of inventory, which is not always real business practice. In my case, inventory needs multiple movements and have to pay for extra freights to different transport companies.
In order to resolve, there should be a feature to select specific inventory after Freight-in is selected, in that way I think we would be able to add extra freight cost to old inventory and of course to different Freight supplier or please suggest any better way. Thanks.

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The solution is to add the extra Freight ins to the original Purchase Invoice with a contra (negative value) to a Freight Clearing account - this will correctly adjust the inventory values. The extra Freight In Purchase Invoice would then be posted to Freight Clearing

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Good trick but unprofessional. This method solves the problem anyway, but creates extreme confusion and leads to humanly error. Admin should look into this matter seriously. In the long run this method should create problems only and won’t be appreciated by audit firms.

@raJ, how else do you suggest this problem should be addressed? You don’t have to use Freight-in item. When you pay for freight-in, you can allocate the cost to inventory items directly.

In the previous updates, I used to choose the inventory where the freight cost should effect and input the cost directly without the quantity field. That way I was able to maintain clean statement of each supplier and allocate the extra freight costing to specific inventory without raising confusion.

I would suggest a roll back to be honest. You can add a feature to choose the inventory right after we choose built in Freight-in on every purchase invoice. At this moment, we are unable to choose any inventory right after we choose the built in Freight-in feature. That is what causing the problem in my sense.

You can still do that. As I said, you don’t have to use Freight-in item at all. Just select specific inventory item and don’t enter anything into Qty column. That will allocate the cost to that inventory item without increasing its quantity.

As per @ludos suggestion

Inventory remains

thanks guys. Understood how to deal with this now.

One more question, how would I show freight cost separately in Summary Expense column under Inventory-cost? I mean breakdown of cost of good sold, such as, direct labor, freight, production loss, etc.

You can’t, once a cost has been amalgamated into the Average Cost of an Inventory Item, it can’t subsequently be un-amalgamated.

does it mean , we have to create an item as ~ freight-in

No. Read this Guide: You either use the inventory item as described under the manual allocation portion of the Guide or use the built-in Freight-in that will appear when you have multiple items, as described for automatic allocation.

I do not get Freight -in , automatically on purchase invoice …what could be issue?

If you are using Inventory Item tab, then Freight-in appears as an item automatically under the Item section field in the Purchase Invoice and the Spend Money - see below.

0 Invent Freight In