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Posted 4th July 2023
Importing items from overseas can make great financial sense for businesses, literally opening up a whole new world of products, materials and suppliers. But it often comes with complex administrative challenges, particularly in the wake of the UK’s exit from the EU.
Perhaps one of the biggest challenges for businesses that regularly import items for wholesale or reselling is the administrative burden of calculating and managing landed costs.
Landed costs go way beyond the headline purchase price of the items being imported to include several other – sometimes variable – expenses like transportation, customs duties, taxes, handling fees and currency exchange rates.
Working out the total landed cost for each item is a complex calculation, but it’s important for businesses to get it right, because it can have an impact on their bottom line. The accuracy of landed costs calculations can mean the difference between a business making a profit each time they sell an item or suffering a loss.
For most businesses that rely on importing items, whether that’s for wholesale or for smaller businesses reselling seasonal gifts, homeware, toys or other fast-moving consumer goods, calculating landed costs involves regular manual updating of a Microsoft Excel spreadsheet that uses complex formulas. It’s a time-consuming yet critical process.
The formulas required for the calculations can be so complex, and their accuracy so crucial, that often only one person within the business is given access to and responsibility for the document. And while this is sensible in terms of preserving the integrity of the spreadsheet and those all-important formulas, it can pose certain other challenges in terms of data input.
Calculating landed costs is time-consuming – not just because of the volume of data that needs to be inputted, but because there is a huge amount of documentation that needs to be gathered, and many of the variables can and do change.
Businesses face multiple challenges when it comes to accurately managing landed costs:
Manual calculations involving multiple variables can be prone to errors that can impact a business’s bottom line.
Navigating the relevant customs regulations and ensuring accurate documentation can be resource intensive.
Exchange rates change daily, adding further complexity and uncertainty to landed costs calculations.
Coordinating costs with suppliers and resolving discrepancies can be difficult and time-consuming.
Trade policies and tariffs need to be monitored constantly, and businesses need to remain adaptable to any changes.
Automation has proven itself a key differentiator for businesses over recent years. Those that have invested in productivity applications and cloud-based solutions have benefitted from streamlined workflows, resource savings and further opportunities for investment, innovation and growth.
As a particularly burdensome workload, landed costs automation could prove transformative for business that regularly import items for sale.
By centralising data within a single application and applying relevant costing models, landed costs calculations can be automated to account for any fluctuations. This helps businesses to:
Better visibility of the costs that will be incurred for each item imported.
Integrating landed costs with live data from sales, product and inventory systems.
All teams can make better, data-driven decisions.
Freeing up talent and resources to focus on more strategic, business-oriented goals.
BCN offers the Evo-supply: Landed Costs automation application to help customers take control of their calculations, save time, and give them a single, system-wide source of truth when it comes to imported items.
Using the costing models features, businesses can define different costing rules and assign them to relevant items to generate automated estimations for landed costs based on known values and assumptions, even before items are purchased. Then, as invoices are received, the actual costs are applied directly to the items and an accurate landed costs is calculated.
Costing structures are entirely customisable and can include any variation of elements, from duty and commission to haulage and demurrage, and businesses can set entry measurements to their preferred units.
By making data input simple and tailored, landed costs applications give businesses a comprehensive and transparent view of costings. This not only helps ensure compliance, it enables agility and profitability by empowering businesses to make informed decisions based on accurate cost information.
Navigating the complexities of landed costs is a significant challenge for businesses, and leveraging an automated landed costs application offers a game-changing solution.
By streamlining calculations, ensuring compliance, simplifying currency conversions, improving supplier collaboration and serving as a single source of truth, businesses can enhance their operational efficiency, make more informed decisions, and free up resources to focus on business growth.
To find out how BCN can support your business towards a more streamlined and profitable import process, get in touch today.