[beadfountain]

For some time now, I've been using Excel to add the shipping expense proportionally to each line of my invoices before I create a Purchase Order or Receive the items to Retail Edge. This, I believe, gives me a more accurate reflection of my cost of goods than just lumping everything in the Freight category in Quickbooks, and it helps me in determining Price based on margin over cost.

When my accountant-type husband observed my process, he said that there must be a way to do this in Retail Edge, that I just haven't found it yet.

Well, is there a way to do that automatically? If so, please let me know. If not, then please educate me on how other retailers address this issue.

Thanks so much,
Jennifer Fountain
College Station, Texas

[RetailEdge Moderator]

Jennifer,

There might be a solution to your question. We do get this question a lot. Shipping is an expense that we typically recommend be calculated separately as an accounting adjustment in your accounting program. But put 10 accountants in a room and you will probably get ten different answers on how it should be done.

It has always been our opinion that shipping is like any other expense and adding the shipping to your items costs raises the following concerns:

1. Adding shipping will change the last cost of an item making it harder for someone next time to create a purchase order with the correct costs.

2. If you are truly calculating the cost of an item with shipping this should be based on the weight of the item. If we do this automatically, we would have to have some mechanism of spreading the cost across the order based on weight and/or quantity. This would probably be more confusing to most of our customers and add a level of complexity that would make it more difficult to use.

3. Many people don't know the cost of the shipping until after the items have been received and the vendor actually sends the invoice (one customer does not get these invoices for 3 months! after the items comes in).

4. Then you have the issue of a special order. If this is a rush shipment or Saturday overnight, should I build it into the cost or just deal with the cost of shipping separately and charge for shipping on the front end as an additional charge and balance these cost out in the accounting.

That being said, we do have a mechanism to discount costs on purchase orders. This is typically done so that businesses that receive a discount on pre-season orders don't have the discounted prices effect their last cost and create problems with re-receiving the items.
The discount PO function will discount the costs of items on a PO by a certain percentage but uses a seperate field for these costs. So the actual cost of the item shown in inventory will be correct for re-receiving the items, but the average cost of the items are properly calculated (with the discounted price).

So I guess you could use this function with a negative discount. To do this:

1. Add the items you are ordering onto a Purchase Order.
2. Choose Discount PO from the Inventory | Purchase Orders menu item.
3. Calculate the shipping cost as a percentage of the total order. Say $20 on a $200 order would be 10%.
4. Apply the negative discount to the Purchase Order. This can be done by pressing the minus (-) key a number of times.
5. Receive the items off the Purchase Order as you normally would.

Bear in mind this will "discount" each item's cost for this receiving session only and the percentage will be applied to each items cost equally.

Hope this works for you.

For some time now, I've been using Excel to add the shipping expense proportionally to each line of my invoices before I create a Purchase Order or Receive the items to Retail Edge. This, I believe, gives me a more accurate reflection of my cost of goods than just lumping everything in the Freight category in Quickbooks, and it helps me in determining Price based on margin over cost.

When my accountant-type husband observed my process, he said that there must be a way to do this in Retail Edge, that I just haven't found it yet.

Well, is there a way to do that automatically? If so, please let me know. If not, then please educate me on how other retailers address this issue.

Thanks so much,
Jennifer Fountain
College Station, Texas