The first and most important step in properly handling or entering freight is to have a clear notion of how you plan on ultimately invoicing your Client for freight. Here at Design Manager, we have seen it done via many methods. Some firms want to include Freight on the Proposal, some only want to invoice freight to the Client upon receiving the freight bill from the Vendor, others still just want to charge freight as a percentage of the merchandise, and more. We will walk through these three most common methods.
When including freight on the Proposal, we are entering what we believe or presume the freight will be or what the Vendor has indicated as the forecasted freight cost. In Design Manager terms, this is the estimated cost of the Freight. Conversely, the actual cost of the freight gets recorded when we enter the Vendor Invoice for the Freight. You can include on the Proposal what the estimated freight cost is and then if the actual freight cost is higher you can invoice the Client for the higher cost after recording the freight on the Vendor Invoice.
Depending on which method you prefer, this can be set up as a company default under Settings or can be adjusted by Project with the Project settings.
Depending on how you want to handle freight, you may also want to compare your estimated freight costs with the actual freight costs to see if you need to make any adjustments to your process. You can use Reporting to run the Profit Analysis Report to see changes in your estimated vs actual costs.
Include Freight on the Proposal to Your Client
Include Freight on the Proposal to Your Client
The first step in including freight on the Proposal to your Client is to add the freight as a Component to the Item in a Project.
1. Navigate to the Project and find the Item you want to add freight to and open the Item by clicking on the Items Ref. No. Then scroll down and open the Component by clicking on the Comp. #.
2. In the edit Component window, scroll down and click the green +Add button next to Freight/Design Fee/Additional Charges.
3. Change the type to Freight and enter your cost and markup if applicable. Check the taxable setting (this defaults from the sales tax code selected on the Project along with your Projects settings) When finished, click on the green Save button.
4. In the edit Item window, you can review the freight Component added by scrolling down the page to the Purchase Components Information section. When finished, click on the green Save button.
5. Next create a Proposal with the Item to which you just added freight. To create a Proposal, tag the Item or Items, then click on the Create button and review the Proposal information shown. To learn more about creating a proposal, click here. When ready, click OK to create the Proposal and review.
There is a less commonly used option to include freight on a Proposal and this would be to create a single freight Item to propose to the Client. This method makes the management of freight fairly straightforward at least from the perspective of the Client. To create freight as a single Item, you can follow the steps here under Add an Item Manually to add the freight Item. You can name the Item as Freight and when adding the cost under the Component, select the type as freight.
Include Freight on the Invoice to Your Client when Actual Freight Costs have been Received
Include Freight on the Invoice to Your Client when Actual Freight Costs have been Received
The first step in including actual freight on an Invoice to your Client is to add the Vendor Invoice with the actual freight you paid. This can be done in different ways depending on when you receive the actual freight costs.
If you are entering the Vendor Invoice for the first time and the Vendor Invoice includes the actual freight costs then you would follow this guide under Vendor Invoice.
If you received the freight Invoice or bill separately after you have entered the Vendor Invoice then you would follow this guide under Vendor Invoice.
Once the Vendor Invoice is entered and posted with the actual freight costs, then you can create an Invoice by following this guide.
Under your company settings and in your Project settings, the Invoice is set-up to calculate freight in three different manners
Proposal – Whatever is in Specifications will be charged to the Client. Vendor Invoices/bills don’t affect the Invoice price whatsoever
Always Actual – Marking up the Actual Cost from the Vendor rather than the Estimated Cost
Automatic - (default selection) Higher of the above two. Design Manager is configured to charge your Client appropriately and never miss billing those critical Freight charges
If you want to change this under your Company settings, then click on Settings in the black navigation bar to the left. Then click on the Workflow Settings tile and go to the Invoice tab.
If you want to change this only in a Project, then go to the Project and click on the Settings tab and then click on the green Advanced/Mark-up button and go to the Invoice tab.
Charge Freight as a Percentage of the Merchandise
Charge Freight as a Percentage of the Merchandise
Another method of managing freight is to add freight to each merchandise Component calculated as a percentage of the price of the merchandise. Doing so prevents us from forgetting to enter freight and distributes a uniform freight cost across the Project so you can very accurately Project your profit on Freight. To use this method follow these steps:
1. Go to Settings in the black navigation bar and click on the Workflow Settings tile. In the General tab, set the freight pricing type to fee and enter the percentage of the merchandise you will be using. Then under the column that says Auto, select this for freight. When finished, click Save at the bottom. You can also just save this setting on a Project level by going into the Project and clicking on the Settings tab and then click on the green Advanced/Mark-up button and go to the General tab.
2. Once the above setting is saved, you can then add an Item to a Project and after entering the cost of the Component, you'll see that freight was automatically added and calculated with a fee %. To learn how to add an Item, click here.
