Configuring item charges for landed costs in Business Central

If you book freight, customs brokerage, and duty or tariffs to expense accounts, your inventory is undervalued and your margins look better than they are. Microsoft Dynamics 365 Business Central (BC) solves this with item charges, a way to push those extra costs into the value of the items they relate to. This guide is for the inventory or accounts payable (AP) person who wants purchased goods to carry their true landed cost. By the end, you'll have item-charge cards and posting set up, you'll know how to attach a charge to a receipt and pick an allocation method, you'll be able to handle a freight bill that arrives weeks after the goods, and you'll confirm the cost actually landed in the item ledger.

Before you start

• A BC user with access to set up G/L (general ledger) accounts, posting groups, and item charges.
• The G/L account or accounts you want freight, brokerage, and duty to flow through.
• At least one posted purchase receipt to practice on, ideally one where a separate freight invoice is still coming.
• A rough idea of what drives each charge: weight, value, or piece count. That choice decides your allocation method.

Step 1: Create item-charge cards

1. Choose the search icon, enter Item Charges, and choose the related link.
2. Choose New. In No., give the charge a code such as FREIGHT, BROKERAGE, or DUTY. In Description, spell it out.
3. Set the Gen. Prod. Posting Group and VAT/Tax Prod. Posting Group so BC knows which accounts and tax treatment apply. Use a posting group dedicated to charges if you have one.
4. Repeat for each charge type you expect to use.

Step 2: Wire up the posting setup

1. Search for General Posting Setup and choose the related link.
2. Find the row that matches the Gen. Bus. Posting Group of your vendors and the Gen. Prod. Posting Group you put on the charge cards.
3. Confirm the Purch. Account and Direct Cost Applied Account are filled in. Item charges post through these accounts, so a blank here is the most common reason a charge fails to post.

Step 3: Assign a charge to a purchase receipt or invoice

1. Open the purchase invoice or a new purchase order from the vendor who billed the freight (often the same vendor, sometimes a separate carrier).
2. On a new line, set Type to Charge (Item), choose your charge in No., enter Quantity and the Direct Unit Cost (the dollar amount of the freight or duty).
3. With the charge line selected, choose Line, then Item Charge Assignment. This opens the assignment window where you tie the dollars to specific received items.
4. In the assignment window, choose Get Receipt Lines and select the posted receipt the freight relates to. The received items appear as candidate lines.

Step 4: Choose an allocation method

1. In the Item Charge Assignment window, choose Suggest Item Charge Assignment.
2. Pick how BC should spread the charge across the lines:
   • Equally splits the charge evenly across lines, regardless of size.
   • By Amount spreads it in proportion to each line's value. Use this for duty and insurance, which scale with value.
   • By Weight spreads it by the gross weight on each item. Use this for freight.
   • By Quantity spreads it by piece count. Use this for handling or per-unit fees.
3. Confirm the Qty. to Assign column fully consumes the charge (the remaining amount should hit zero). Adjust a line manually if a special case calls for it.

Step 5: Handle a freight invoice that arrives weeks later

1. When the carrier's bill finally lands, create a new purchase invoice for the carrier.
2. Add a single line with Type = Charge (Item) and the freight amount.
3. Choose Line, then Item Charge Assignment, then Get Receipt Lines, and pull in the original posted receipt even though it was posted weeks ago. BC lets you assign a charge to a historical receipt.
4. Allocate and post. The cost backdates onto those items as a value entry, so the item's recorded cost rises after the fact.

Verify it

1. Post the document carrying the charge.
2. Search for the item, open the Item Card, then choose Related, History, Entries, Value Entries.
3. You should see a value entry for the charge, separate from the original purchase, increasing the item's cost. The Cost Amount (Actual) now includes the freight or duty.
4. Run the Inventory Valuation report and confirm the on-hand value reflects the higher landed cost.

What to do next

Standardize a small set of charge codes and posting groups so everyone assigns costs the same way. Decide a default allocation method per charge type and document it. If late freight invoices are routine, build a habit of checking open receipts at month-end so nothing posts to inventory after you've already closed the period.