Pass-Along Freight Rules

Use the pass-along freight process to pass freight expenses on to your customers. This eliminates the need to enter freight manually after reviewing the Freight Audit reports. You can pass freight charges automatically on hard or soft tagged orders and direct orders.

Before using pass-along freight, review Purchase Order Freight Term Guidelines.

When passing freight from the purchase order to the sales order, freight is added to the Totals tab on the sales order in the inbound billable or inbound expense column.

Important: The system does support the possibility of an "at" character (@) in the tag information.

Hard Tags

The system creates a hard tag when a customer requests a product that has zero on-hand and you create a purchase order to procure it. A hard tag links the purchase order on which you are procuring the requested product to the sales order on which the customer is ordering the product.

Use the Default Setting For Bill Incoming Freight To Tagged Sales Order Fieldcontrol maintenance record to set the default value for the Bill Incoming Freight To Tagged Sales Order field on the Purchase Order Entry Totals tab. If you set this field to yes, then the system applies any inbound freight incurred due when receiving a tagged purchase order to the customer as Inbound Freight & Billable.

By default, the COGS is updated to include both the cost of the item and the freight distributed for that item as if you were working in a landed cost environment. Use the Back Out Pass-Along Freight From COGScontrol maintenance record to indicate whether the system should remove the billed pass-along freight amount from COGS and/or COMM (COST). This control maintenance record is used to avoid overcharging for freight on a sales order. However, the system does not back out freight from COGS if it would take COGS below zero dollars ($0.00) or if COGS was overridden on a sell matrix. This override is usually done for rebate items and is indicated on the sales order by an exclamation point (!). In addition, the system does not back out the freight on an order until it is shipped.

Commission cost may also be updated to reflect the freight depending on how the Change Both COGS And COMM-COST On Overridecontrol maintenance record is set.

Note: This tool can be used as an incentive for sales personnel to bill customers for freight. Increased profitability on a line-item and order level basis has results in higher commissions for sales personnel.

Soft Tags

The system creates a soft tag when a customer requests a product and there is not enough available to meet the need. However, because there are zero on-hand, the system suggests that you purchase more of the product. The purchase order created is not directly linked to the customer's request.

A prorated freight charge is added to the sales order for the customer to compensate for your charges. If a hard tagged item exists on the purchase order, the customer with the hard tagged item incurs one hundred percent of the cost.

For example, Customer A requests products X, Y, and Z. Product Y is not a stocked item. The customer does not want to procure it. Because there is zero on-hand, the system suggests you procure product Y. The system creates a soft tag for Customer A from the sales order to the purchase order. Customer B comes in after Customer A and requests product Y. Product Y is not a stocked item, but Customer B wants to procure it. The system creates a hard tag from the sales order to the purchase order because the customer does want it procured. Customer B incurs all freight costs.

Use the following control maintenance records, as needed:

Expense Incoming Freight If Customer Is Freight In Exempt - Indicate whether the system should add the cost of incoming freight from a purchase order to a soft-tagged sales order as Expensed Incoming Freight, rather than billable incoming freight. This is applicable when customers are Inbound Freight Exempt.
Pass Along Incoming Freight To Billable Freight Customers - Indicate whether the system should pass incoming freight costs along to customers who are not freight exempt.
Product Ranks To Exclude From Pass-Along Incoming Freight Charges - Specify the product ranks the system should exclude from pass-along incoming freight charges. The intent of this record is to prevent freight from being passed to the customer for the shipment of material that the distributor should always have available. See Product Ranking Method and Breakpoint Rules for information on how to set up product ranks. Use this control maintenance record to prevent freight from being passed to the customer if the material should have been in stock.
Ignore Order Date For Pass Along Freight - Indicate whether the system ignores the order date when passing along freight from a purchase order to a soft-tagged sales order. This record does not apply to hard tags. The default is No.

Direct Orders

The system enters freight on direct sales orders associated with the payable based on the freight amount on the header of the A/P Entry window. If there are multiple directs reconciled to that payable, the system prorates the freight charge to the directs according to the amount in the PO Total field for each direct.

Use the Pass Along Freight To Direct Sales Orderscontrol maintenance record to indicate whether to pass along the amount entered in the Freight Amt field in the header of the A/P Entry window for a payable to any direct sales orders that are reconciled to that payable.

If a customer is freight exempt, a note is made in the Change Log with the following message: Expense Incoming Freight changed from 0.00 to <new cost> from <order number>.

In addition, freight will not be distributed to directs if they are in closed accounting periods or if incoming freight has already been applied. If freight has been applied, the following message displays: Freight Already Exists On at Least One of the Direct Orders. Do You Wish to Override that Freight? (Y/N). If you select yes, then the system prorates the new freight amount from the Freight Amt field to the directs replacing the existing freight amount. If you select no, the system leaves the existing freight amount on the direct order.

Note: You must be assigned the COST.VIEW and COGS.VIEW authorization keys to send or print direct orders.