Goods Received Voucher (GRV) | External Charges

What is a external charge/cost?

An external cost is the cost incurred by an individual, firm or community as a result of an economic transaction which they are not directly involved in. External costs, also called ‘spillovers’ and ‘third party costs’ can arise from both production and consumption.

Overview:

In IQ you can enable external charges which will allow one to process external charges from goods receiving vouchers/GRV.

This will entail if you import goods from a foreign country and additional costs needs to be added such as custom clearing agents. By utilising external charges you are able to link it to a creditor or supplier and the costs incurred will form part of the costs of the applicable stock items. 

In this knowledge base article we will show you how to configure external charges in IQ. 

What is the difference between Extra and External Charges?

The amount entered as an external charge on Goods Receiving will be added to the cost price of the items on that GRV. 

The external charges amount will be broken down in a pro-rata basis (known as the Weighted Average System) based on each stock item’s ACTUAL COST as a percentage of the GRV total. 

The difference between the Extra and External Charges is that one is able to link the External Charge to a supplier/creditor.

 Therefore external charges can be utilised in such a way to link relevant charges like shipping and freight and link them to the clearing agent creditor. 

Steps:

Navigate to Utilities --> Setup --> Company Details and select the Default Settings (1) tab. 

You can search for the setting, by start typing "Enable"

You will note the search criteria will display all the settings that contains the value Enable.

Search for the option in the third row 7th from top, "Enable External Charges".

Click on the Accept button to proceed.

Navigate to Ledger --> Reports --> Foreign Currency Setup. 

Please note to enable it only if you are working with foreign creditors or suppliers. 

Click on the tick box, next to the Foreign Currency Enabled in Invoicing/Goods Receiving.

Click on the Accept button to activate. 

Note [!]: 

Only enable this setting if there your trading with foreign currency Debtors and Creditors.

We need now to configure a general account, for the expense or cost of sale to be recorded. 

If you have got an existing general account you may skip this secrion                                                                                      

Navigate to Ledger --> Maintenance

Click on the Add button.

You do not need to add the details like below. 

You would need to add a unique general ledger Account Number field.

Type in a Description. for the general ledger account. 

You can select the Default Branch, but this is not required. 

It is good practice to add it for reporting purposes.

In the Account Type radio button you can either select the Expense or Cost of Sale's account. 

We do recommend that you speak to your accountant to make sure. 

Click on the Accept button to proceed.

Navigate to Utilities --> Setup --> Module Parameters

Click on the Creditors tab and click on the GRV External Charges option. 

Click on the Add button. 

The reference field displays the reference that was used when the GRV external charge was created. 

The creditor field will display the creditor\supplier that was used when the GRV external charge was

created. 

The VAT rate field displays the VAT rate that is used for the specific GRV external charge that is

created. 

The ledger field displays the ledger account that is linked to the specific GRV external charge. 

The amount field displays the amount that is currently linked to the specific GRV external charge. 

(This can be empty and can be inputted during the transaction.)

Click on the Accept button to proceed.

You can proceed to close or click on the Accept button on the External Charges Setup form. 

To perform a GRV with external charges associated to it. 

Navigate to Processing --> Goods Receiving

Capture the details as per usual. 

Once you have captured all the details and stock items as per the Goods Received Note or Voucher from the Creditor or Supplier;

Click on the External Charges button. 

The external charge that you have created earlier will appear on the form below. 

From this screen you can fill in the amount. 

If you are ready to proceed click on the Accept button. 

Tip [!]:

On the screen below, you have the option to display the totals in the configured currency tables, by click on the Show Totals in combo box below. 

To finalise the GRV click on the Process and Display or Process Print as per usual.