Import Management Process
Land every import cost — accurately reflected in true material cost.
The true cost of an imported material is more than the price on the supplier’s invoice: letter of credit, customs, freight and insurance charges are part of it too. In many companies these charges are tracked piecemeal in spreadsheets and separate systems, and the true material cost emerges only after the process has ended, often incorrectly. Standard SAP does not tie these charges together end to end. The Conforcus import solution gathers all landed-cost elements in a single import file and distributes them automatically to material cost at goods receipt. Every step, from letter of credit to customs declaration, is tracked inside SAP.
What happens when import costs are tracked piecemeal
The charges of an import come from different parties at different times: the letter of credit charge from the bank, freight from the carrier, the insurance premium from the insurer, and duties and fees from customs. When the system does not hold together which import and which material these documents belong to, the link is made in spreadsheets kept by individuals. Under accounting standards the cost of inventory includes, alongside the purchase price, import duties and charges directly related to the acquisition such as transport; without that link, a correct stock value cannot be formed.
The consequences show in more than one place. Cost accounting has to collect the charges at period end and allocate them to materials by hand, which takes time and delays the close. Meanwhile, sales and pricing work with an incomplete cost: the material has entered stock at the supplier’s price and the landed costs have not yet been added. When the true cost finally emerges, the difference is often unexpected.
How the import file and cost distribution work
At the centre of the solution is the import file. The letter of credit, customs, freight and insurance costs of an import are gathered in this file, and the steps from letter of credit to customs declaration are followed through it as well. Which step an import has reached, and which charges have arisen so far, can therefore be seen in one place. Purchase order, goods receipt and invoice remain MM and FI documents; the import file is where they are seen together.
On the cost side, the solution uses SAP’s planned delivery costs and condition-based charge handling. Landed costs are defined through these conditions and, when the goods receipt is posted, are distributed automatically to the materials concerned. The material therefore enters stock not at the supplier’s price alone but together with its landed costs. Because the solution is integrated with MM and FI, the stock value and the accounting entry are created together.
What changes for procurement, foreign trade and cost accounting
The foreign trade and import team follows the letter of credit, customs, freight and insurance information of an import in one file rather than in separate spreadsheets. Procurement sees what an order costs together with its landed costs. For cost accounting, the true material cost is formed at goods receipt rather than after the process has ended; the period-end work of allocating charges by hand disappears and the close speeds up.
Because these teams look at the same file, the question of which import a charge belongs to is answered from the system rather than by correspondence. The same applies in an audit: the letter of credit, customs, freight and insurance items of an import can be traced from the import file.
Defining the charge structure, and who the solution suits
Every company’s import charge structure is different: the delivery terms it works with, which party bears which charge, and how a charge is to be shared across materials all vary. The charge types to be tracked, their mapping to SAP conditions and the basis of distribution are therefore defined during implementation. The solution applies these definitions in the same way on every import file.
The solution suits companies that import regularly and currently track landed costs in spreadsheets or separate systems. It is aimed at procurement directors, foreign trade and import managers, and cost accounting teams. In businesses where imported materials make up a large share of cost, reflecting landed costs accurately and on time has a direct effect on the accuracy of product costing and profitability analysis. The solution is in live use across different sectors.
Benefits
- Accurate landed cost from day one, no end-of-process surprises
- Letter of credit, customs, freight and insurance tracked in one file
- Manual cost distribution disappears, closing accelerates
Where it sits in SAP
Integrated with MM and FI; uses planned delivery costs, condition-based charge handling and automated cost distribution at goods receipt. Production-proven across multiple sectors.
Who it is for: Procurement Director, Foreign Trade & Import Manager, Cost Accounting
Frequently asked questions
What does the import file cover inside SAP, and how does it differ from a standard purchase order?
A standard purchase order carries the material and its price; it does not tie letter of credit, customs, freight and insurance charges together end to end. The import file gathers those costs, and every step from letter of credit to customs declaration, in a single place. Purchase order, goods receipt and invoice remain MM and FI documents, and the import file is where they are followed together.
How are landed costs distributed to material cost?
The freight, insurance, customs and letter of credit charges gathered on the import file are handled through planned delivery costs and condition-based charges. When the goods receipt is posted, these costs are distributed automatically to the materials concerned and flow into material cost, with no separate manual allocation. Because the solution is integrated with MM and FI, stock value and the accounting entry are created together.
What changes for cost accounting at period-end closing?
Because landed costs are distributed to the material at goods receipt, the true material cost exists from day one rather than after the process has ended. The period-end work of collecting charges and allocating them to materials by hand disappears, which speeds up closing. Cost accounting follows the letter of credit, customs, freight and insurance items of an import from a single file.
What does landed cost cover?
Landed cost is the set of charges incurred, on top of the supplier’s price, until the material reaches the company’s warehouse. In the solution these charges are tracked under letter of credit, customs, freight and insurance. Which charge types a company uses is defined during implementation; what matters is that the charges are linked to the import and the material they belong to.
What are planned delivery costs?
Planned delivery costs are charges such as freight and customs that are defined as conditions in SAP when the purchase order is created. Standard SAP includes these costs in the value of the material at goods receipt. The solution uses this standard structure; what it adds is that the charges are gathered in the import file and the distribution is automatic.
Why does it matter that material cost is correct at goods receipt?
From the moment a material enters stock it can be used in production or sold, and the cost of consumption and of sales is calculated on the stock value at that time. If landed costs are added later, part of the material will already have been consumed at an incomplete cost and the difference has to be corrected afterwards. When landed costs are distributed at goods receipt, the material enters stock at its full cost from the start.