About freight calculation

With Visma Net, you can manage freight to better control any additional costs and revenues on sales transactions.
The freight amount you charge your customers may include not only the freight your company is charged by carriers, but also insurance, handling, and packaging fees defined by your shipping terms and premium freight. You can define for each sales order type whether freight will be calculated automatically by selecting the Calculate freight check box in the Order types (SO201000) window. Your company may use shipping services provided by various carriers or provide its own shipping services.
The freight amount you charge your customers is calculated as the sum of the following:

  • The freight amount, which is calculated by applying shipping terms to the freight cost
  • The premium freight amount (if any)

The actual amounts of freight and handling may differ from the anticipated cost; the actual cost becomes known only after the shipment is completed or the shipments (if the order may be split into multiple shipments) are completed.

If the goods for a sales order are shipped under a ship via code associated with a non-integrated carrier, the system estimates the freight cost based on the rates defined by the ship via code.
You specify rates for each ship via code based on a non-integrated carrier on the Freight rates tab of the Ship via codes (CS207500) window, refer to: Create a ship via code.

The number of decimal places for freight rates is defined by the value in the Price/cost decimal places field in the Organisations (CS101500) window. When a user enters a sales order to be shipped by a non-integrated carrier, the system estimates the freight cost for the order based on the ship via code, that is, the predefined rates you have specified for the carrier.
The weight of each order is calculated automatically in the same weight UoM that is specified in the Weight UoM field in the Inventory preferences (IN101000) window.
For details on setting up the order weight calculation, see: About automatic packaging for non-integrated carriers. By default, the currency of the freight is the currency of the sales order; however, you can manually change the currency of the freight or exchange rate for a particular shipment on the Delivery settings tab of the Shipments (SO302000) window. Rates are specified for shipping zones based on total shipment weight and, optionally, volume.
The weight of an order is compared to break points, and the first one that is less than the order weight gives the freight rate.
The system calculates the freight cost depending on the calculation method you have selected in the Ship via codes (CS207500) window for the carrier, Per unit or Net, with calculations as shown below:

  • For the Per unit calculation method:

    FreightCost = BaseRate + (FreightRate x Weight)

  • For the Net calculation method:

    FreightCost = BaseRate + FreightRate

    Here, FreightRate is equal to the rate defined for a specific range of shipment weight and volume, as specified on the Freight rates tab of the Ship via codes (CS207500) window.

For the ship via code of the carrier, if Manual is selected as the freight calculation method in the Ship via codes (CS207500) window, then when preparing a sales order, you should specify the freight amount in the Freight cost field on the Totals tab in the Sales orders (SO301000) window.

Once the freight cost to be charged for the sales order shipped under a specific ship via code is known or estimated (for the codes associated with non-integrated carriers), the system applies the shipping terms used for relations with the customer, as assigned in the Customers (AR303000) window, to calculate the full freight amount for the order to be paid by the customer.
The freight amount may include insurance, handling fees, or line handling fees. The account to be used to record freight for sales orders of a specific type is defined by the option selected in the Use freight account from field in the Shipping terms (CS208000) window.
The default freight account is also specified in the Order types (SO201000) window; this account is used when the Use freight account from option points to an unavailable account.
If the Subaccounts functionality is enabled in your system, the freight subaccount to record freight is generated according to the rule specified in the Combine freight sub. from field in the Order types (SO201000) window. To encourage larger orders, you can configure the shipping terms so that the customers will not pay freight on orders with amounts greater than a specified value.
In the Shipping terms (CS208000) window, the level of charges is defined by a sequence of break points based on shipping amount. For ship via codes with Manual selected as the freight calculation method, the freight amount is equal to the freight cost entered manually on the Totals tab in the Sales orders (SO301000) window. The freight amount is calculated similarly for all ship via codes, as shown below.

FreightAmt = (FreightCost x FreightCost% / 100)
+ (LineTotal x InvoiceAmt% / 100)
+ ShippingHandling
+ (NumberOfLines x LineHandling)

The premium freight amount is specified for a sales order as a flat amount on the Totals tab of the Sales orders (SO301000) window.
The premium freight amount can be any additional handling flat fee that originates during the processing of the sales order due to the order's properties or circumstances, for example, extreme fragility or extreme dimensions, volume, or weight.

If you need to correct the excessive freight charges that were specified in one of the earlier orders, you can manually adjust the premium freight amount in the current order by decreasing it by the adjustment amount or by entering a negative freight amount.

Notice that the order's total amount, which results from adjusting the premium freight amount, must be greater than zero or, at least, equal to zero. Otherwise, the invoice that is later generated for the order cannot be released.

A sales order can be fulfilled by multiple shipments if it is allowed for the order, and with multiple shipments, your company can define how the freight amount should be allocated among shipments: Use the Freight allocation on partial shipping field, located on the General settings tab of the Sales order preferences (SO101000) window, and select one of the following options:

  • Full amount first time to assign the freight amount to the first shipment created for the order
  • Allocate proportionally to distribute the freight amount among shipments proportionally to partial shipment amounts
Notice that on shipments shipped with ship via codes for which Manual is selected as the freight calculation method, you can edit the freight amounts.

The freight cost determined for a sales order is not recorded to any expense account until an invoice from the carrier is processed.
An invoice from the carrier may include freight charges for all the sales orders that were shipped by the carrier during a specific time interval (a week, two weeks, or a month).
If the invoices are created for each ship via code used for shipping, the Freight expense account specified in the Ship via codes (CS207500) window can be manually selected on the appropriate lines of the invoice.

For each ship via code defined for the shipping options provided by your company (with the Common carrier check box cleared), in the Ship via codes (CS207500) window, you can specify the VAT category that applies to freight as to additional service provided by your company.
The list of VAT applicable to the freight will include the VAT that are present both in the VAT category and in the VAT zone of the branch that sold the goods. If the goods are shipped by a common carrier, the VAT category is applied only to the amount of freight in excess of freight cost, and the list of VAT applied to the specified amount is the VAT from both the VAT category and the VAT zone of the customer's delivery address (the specified VAT zone of the customer location or, if not specified, the VAT zone automatically determined by the delivery address's post code).

However, the real cost of freight and handling becomes known only after all shipments are completed and actual shipping charges for all packages have been provided by the carrier.

If you need to correct the excessive freight charges that were specified in one of the earlier orders, you can manually adjust the premium freight amount in the current order by decreasing it by the adjustment amount or by entering a negative freight amount.
If you need to adjust the Total freight amt. in an invoice, you can specify the needed positive or negative Premium freight amt. in the shipment line on the Freight details tab.

Notice that the order's total amount, which results from adjusting the premium freight amount, must be greater than zero or at least equal to zero; otherwise, the invoice that is generated later for the order cannot be released.