Addressing Tariffs with your customers

Kinetic ERP
1

Hi there,

We are exploring how to manage tariff surcharges with our orders. Some personnel want to note in quotation “applicable tariffs will be added to the final invoice” but others are concerned that will be problematic when PO <> Invoice amount. Similar to our shipping charges, we will have an estimated tariff but won’t know the exact amount until ready to ship.

Can some others please share how they are dealing with this?

Thanks very much!
Nancy

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You can add a misc charge to your sales order, shipment, or invoice. There is nothing that requires the final invoice to match the sales order.

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  1. Some customers are requesting that any tariff fees be shown separately from the product.
  2. As a result, Finance created two parts:
    a) Buy-to-order Stock Qty-bearing part for tariff charges on material parts
    b) Buy-to-order Stock Qty-bearing part for tariff charges on resell parts
  3. The idea is to pass through the tariff costs from the PO to the SO. However, I don’t know if this works if we don’t sell the same qty of tariff part as we received on the PO. E.g., we buy qty 1000 widgets, so the PO also has qty 1000 of the tariff fees; but if we only sell qty 50 widgets at a time, then can we do multiple BTO links to the 20 different SO releases it will take to consume the 1000 tariffs received? I thought BTO ↔ SO links would have to be 1-to-1.
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I think those would make a lot more sense as simple miscellaneous charges instead of part numbers with all the associated baggage.

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Nancy,

We’re handling this two ways:

  1. for suppliers who are willing/able to itemize tariff charges, we set up a miscellaneous charge linked to a new GL account to track.
  2. for supplier prices we know have tariff charges embedded in them, I created a UD checkbox field in the VendPart table to track them. Then we can easily identify and (hopefully) expire those at a later date.

Hope that helps!
John Mahala
KRB Machinery

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Thanks so much for your input everyone - Miscellaneous Charge will be the way we go.

Nancy

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I am currently working with a customer and determining the best practice to capture tariff costs.

We are looking at utilizing some standard functionality in Epicor to push tariffs through to the customer based on the “actual” cost.

The following is assuming that you are average costing your parts.

  1. When an invoice is received for tariff against a purchase order, the charge will be added as a miscellaneous charge to the purchase order and supplier invoice to track the expense.

  2. Using a reason code that will be for tariff costs (tied to a GL), the part costs will be updated to apply the tariff cost to all units in inventory as material burden. Following the average costing rule.

  3. When that material is issued to a job the material burden cost on the job will capture all of the tariff charges on that job into one bucket. When the job is received into inventory and subsequently issued to another job, the material burden will be applied to that job. At the end of the line, when the part is shipped to a customer, the material burden which has been collected by the various sources will be on the cost of sale and will be recorded in the InvcDtl.MtlBurUnitCost field for the invoice line.

  4. A line miscellaneous charge will be added to the invoice line based on the MtlBurUnit Cost.

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