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Additional costs for purchase orders (PO)
Additional costs for purchase orders (PO)

Incorporate extra costs into POs for accurate inventory and financial records.

Siim Sirel avatar
Written by Siim Sirel
Updated over a week ago

Adding additional costs like shipping and customs to purchase orders, which can be allocated across purchased items, affect their total inventory value. This helps ensure the true cost of goods is reflected, aiding in accurate financial reporting and inventory management.

Additional costs come in handy if you're importing items or if shipping related costs make up a considerable amount of the final costs of goods. These costs are distinct from regular inventory items — their value can be allocated across purchased items, thus impacting their overall inventory value.

Katana offers three distinct cost categories: Shipping, Customs, and Other. Multiple rows can be included on each PO. These extra expenses are factored into the calculation of the order's total, and are also displayed on PDF printouts of the order.

You can add additional costs to Not received, Partially received, and Received POs and OPOs as long as they fall within an open inventory period.

Adding Additional costs to a PO

  1. Open up a the PO

  2. Click on Additional costs under the Items table.

    Additional costs option on a purchase order

  3. An Additional costs table will be added to the order.

    Additional costs table for a purchase order

  4. Pick a cost category by clicking on the Cost field and choosing from the dropdown.

    Costs column on the additional costs table

  5. Had some additional information as to what the cost is for (such as shipping service or tax specifics) in the Reference column.

    Reference column of the additional costs section of a purchase order

  6. Choose if you'd like to distribute the cost between purchase items by clicking on the Distribution method field and picking from the dropdown.

    Distribution method column of the additional costs section of a purchase order

  7. Click the Total price field to add the amount. The price here will use the order's currency.

    Total price column of the additional costs section of a purchase order

  8. Choose the tax rate by clicking on the Tax field and picking from the dropdown.

    Tax column on the additional costs table

    Note: Tax is not distributed between the purchased items.

  9. If you want to add another row, click + Add row below the Additional costs table.

    The + Add row option for the additional costs table

  10. Additional costs are included in the order totals.

    Costs breakdown on a purchase order

  11. You can email a PDF with the Additional cost rows directly to the supplier or print it.

  12. Find the total unit cost with the distributed additional costs in the Item table's Landed cost column. As a calculated field, this cannot be edited. Values are in stock UoM and order currency.

    Landed cost column for items on a purchase order

    If additional costs are added or changed on a Received PO, the Moving average cost (MAC) for the items on the order are recalculated.

By value distribution method

The by value distribution method allocates the largest proportion of the additional costs to the most expensive item.

For example you have three items on a PO.

  • Item A: 4 pcs, 8 USD/pcs, Total price $32 USD

  • Item B: 4 pcs, 10 USD/pcs, Total price $40 USD

  • Item C: 4 pcs, 12 USD/pcs, Total price $48 USD

  • Total price for three items 32 + 40 + 48 = $120 USD

  • Additional costs to distribute is in total $105 USD

  • Per every USD payed as a purchase price, there will be additional 105 / 120 = 0.875 USD of additional costs, i.e.

    • Item A: Landed cost 8 + 8 * 0.875 = 15 USD/pcs

    • Item B: Landed cost 10 + 10 * 0.875 = 18.75 USD/pcs

    • Item C: Landed cost 12 + 12 * 0.875 = 22.5 USD/pcs

Note: If all the items on an order have a price per unit equaling zero, the costs are distributed by quantity.

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