Step-by-step guide to enable, allocate, and report landed costs in Zoho Inventory for accurate cost accounting and valuation.
Quick Overview
- Enable landed cost tracking in item settings
- Create a purchase order and convert it to a bill
- Add service items for landed costs like freight or labor
- Allocate costs by quantity, value, weight, or dimensions
- Track actual inventory value through reports
What Are Landed Costs?
Landed costs are additional expenses — such as freight, import duties, or labor — incurred when products are received. These must be allocated properly to reflect true item cost in Zoho Inventory.
Step 1 — Enable Landed Cost Tracking
Navigate to Settings → Items and check the box to Track landed costs. Without this enabled, landed cost fields won’t appear on bills.
Step 2 — Create a Purchase Order
Select a vendor, add your items, and mark the PO as Issued. Landed costs aren’t applied here — they are applied on the bill level.
Step 3 — Convert PO to Bill & Add Landed Costs
Convert the PO to a bill. Use the Add Landed Cost button to include service items like freight or labor. These items must already exist in your inventory as service items.
Step 4 — Allocate Landed Costs
Choose an allocation method:
- By Quantity: Spread based on item units
- By Value: Weighted by item cost
- By Dimensions/Weight: Based on item metrics if configured
You can mix allocation methods within a single bill depending on cost type.
Step 5 — Add Landed Costs from Another Bill
If charges come later (e.g., separate freight bill), create a new bill with just the landed cost item, then return to the original bill and select Add charges from another bill to apply them.
Step 6 — Verify Costs in Reports
Use the Inventory Valuation Summary to ensure landed costs are reflected in unit price. These updated costs influence FIFO/WAC calculations and Zoho Analytics if integrated.
FAQs
What is a landed cost?
Any extra charge like freight or duty added to the item’s acquisition cost.
How do I enable landed costs in Zoho Inventory?
Go to Settings → Items and enable “Track landed costs.”
Can I apply landed costs from separate bills?
Yes, use the “Add charges from another bill” option within the bill screen.
Do I need to use service items for landed costs?
Yes — they must be added as service items in inventory.
How are landed costs reflected in reporting?
They adjust item cost and flow into FIFO/weighted average analytics and valuation reports.