Additional cost Feature in Purchase Bill

The Additional Cost feature in Purchase Bill is designed to help businesses calculate the
true Landed Cost of their inventory. It allows you to capitalize ancillary expenses (like freight, labor, or duties) directly into the value of the products, ensuring your inventory valuation and profit margins are 100% accurate.

Feature Overview: The "Landed Cost" Concept
When you buy a product for Rs 100 but spend Rs 10 on shipping, the true cost is Rs110.

• Without this feature you record Rs 100 as inventory and Rs10 as a separate expense. Your profit per unit is calculated incorrectly.
• With this feature Tigg adds Rs 10 to the product value. Your inventory is valued at Rs 110, and your Cost of Goods Sold (COGS) is updated automatically when you sell the item.

Allocation Methods
Tigg provides four ways to distribute additional costs across the items in a bill:

1.  By Value: Costs are distributed proportionally based on the price of the items. (Higher-priced items carry more of the cost).
2.  By Quantity: Costs are distributed equally per unit, regardless of price. (Useful for labor or handling charges).
3.  By Tax Base: Distributed based on the valuation provided in official documents specifically used for customs duties).
4.  Product-Wise (Manual/Excel): Allows you to specify the exact amount of cost for each specific item. You can also Import via Excel for complex bills with many items.

Key Use CasesUse Case A: Import Purchases (Global Sourcing)
The most common use case. When importing, you must add:
  - Customs Duties (Import Duty).
  - Clearing Agent Fees.
  - International Freight and Insurance.
  - Pragyapan Patra (Customs Declaration) charges.

For a complete step-by-step guide on recording import purchases, customs valuation, VAT handling, freight, insurance, and landed cost allocation in Tigg, refer to the article: “Managing Import Purchases and Landed Cost in Tigg.” 

Use Case B: Local Transportation & Labor
Even for local purchases, you can use this feature for:
  - Loading/Unloading Charges: Distribute labor costs across all units.
  - Local Trucking/Freight: Add the cost of a delivery truck to the unit price
    of the items delivered.
Use Case C: Assembly & Packaging
If you pay a third party to package or prepare items before they reach your warehouse, those costs can be added to the item value to reflect the final "ready-to-sell" cost.
How to Use the Feature

1. Create a Purchase Bill: Start by creating a standard Purchase Bill for the items purchased.
2. Add Additional Cost: Scroll to the bottom of the bill and click “+ Add Additional Cost”.
3. Select Cost Terms: Choose the relevant cost terms such as Freight Expense or Import Duty. You can also create custom cost terms from Configurations → Apps → Cost Terms → Additional Cost Terms.
• Note: If you want to claim VAT on these expenses as input tax credit, ensure the VAT amount is entered separately.
4. Choose Allocation Method: Select how the additional cost should be distributed among the items — by Value, Quantity, or Product-wise allocation.
5. Enter the Cost Amount: Input the total additional expense amount. Tigg will automatically recalculate and display the updated unit cost for each item in the bill.
6. Configure GL Impact (Optional): Click the dropdown arrow at the end of the additional cost row to access the Description and GL Account selection options.
• If a GL Account is selected, the accounting impact of the additional cost will be recorded together with the Purchase Bill.
• If left blank, you can record the accounting entry separately using transactions such as Quick Payment or Journal Voucher.
7. Save & Approve: Once the bill is approved, the inventory valuation is updated with the revised higher unit cost.

- Additional Cost Summary: Available inside the "Options" menu of any Purchase Bill. It provides a detailed breakdown of how much freight or duty was added to every single item.
- Inventory Ledger: When you check a specific product's history, you will see the Rate is higher than the supplier's price because it includes the allocated additional costs.

What's Next?

Record and track business expenses to keep your finances organized and up to date.

➡️ Learn more: Expenses