Item charges are a utility in Business Central used to update an item’s landed cost – which can be described as the additional costs associated with purchasing or selling items. Common examples of these include freight, handling fees, insurance, and transportation, which can influence the calculation of an accurate inventory valuation.
Before assigning item charges, it's necessary to set up an item charge that will define how costs are posted to the general ledger. Creating and setting up a new item charge can be done in a few easy steps:
- On the Item Charges page, choose the New action to create a new line.
- Populate the following fields to ensure your item charges are set up correctly:
1. No. – this is the number or name assigned to the item charge.
2. Description – this is the short and easily understood caption. Eg. Freight or Fuel Surcharge
3. Gen. Prod. Posting Group – this will determine the G/L accounts that transactions are posted to for this item charge.
The other fields can be filled in optionally. When in doubt, hover over a field to read a short description about the field and suggested input.
Once your item charges have been set up, you can use them to apply additional costs on a purchase or sales record line. They can be posted on orders and have charges assigned with the order or they may be added after the fact using invoices and then assigning these charges to the posted shipment or receipt lines.
Applying an Item
For this example, we will use a Purchase Order. To apply an item charge:
- Find an open purchase order you want to assign the item charge to.
- Add a line to the purchase order with line type Charge (Item) and select the appropriate Item charge.
- Select Line > Item Charge Assignment.
This will open a new window showing the available lines to apply item charges to. After selecting the line(s) to assign the charges to, you can manually assign the item charge, or use “Suggest Item Charge Assignment” to assign the charges to the correct item.
Note that this process can be done from the Sales order by following similar steps but from the Sales Order page instead.
Applying an Item Charge to a Received Item
You can apply an item charge to a purchase that has already been posted and closed - “Received and Invoiced”. To apply an item charge after an item has been received:
- Create a new purchase invoice and create a new line with type Charge(Item) and select the appropriate charge item on the line.
- Choose Line > Functions > Item Charge Assignment and then choose “Get Receipt Lines” to bring up a list of available purchase receipt lines.
- Select the document line(s) to apply the charge to and then choose “Suggest Item Charge Assignment”. You can then select how the charges are applied - Equally, By Amount, By Weight, or By Volume. This will automatically distribute the amount to each of the lines.
- Post the document. Once the charges have been assigned successfully, you can then close the window and post the document. These additional charges will be posted to the value entries and rolled up into the actual cost displayed on the unit cost on the item’s item ledger entries.
This also works for partial receipts. You can also use this process with similar steps to assign item charges to a Sales Invoice.
Item Charges can help you better track, manage and account for the true cost of your inventory by providing a clear and reportable breakdown of an item’s landed costs. These insights can help drive better supply chain decision-making and improve cost management all while utilizing core Business Central functionality.
