Freight in

From CEOpedia | Management online

Freight in is a term used to refer to the cost of transporting goods from a point of destination to their eventual origin. This cost includes the cost of the transportation, as well as any other fees associated with the shipment, such as fees for customs clearance and port handling fees. Freight in is typically paid by the seller who is shipping the goods.

Freight in rules

  • Freight in costs must be properly documented in order to be eligible for deductions in the company's financial statements.
  • The freight in cost should be included in the calculation of the cost of goods sold.
  • The freight in cost should be allocated proportionally among all the products shipped.
  • The freight in cost should be clearly identified on invoices and other documents.
  • The freight in cost should be tracked separately from other shipping costs.

Freight in example

A company orders 10,000 units of a product from a supplier. The supplier charges the company for the cost of the product plus a freight in cost of $500. The company would record the total cost of the product as $10,500, with the additional $500 allocated to freight in. The company would then deduct the freight in cost from their cost of goods sold.

Freight in vs. freight out

Freight in and freight out are terms used to refer to the cost of transporting goods from a point of origin to their eventual destination, and from a point of destination to their eventual origin, respectively. Both freight in and freight out include the cost of the transportation, as well as any other fees associated with the shipment, such as fees for customs clearance and port handling fees. Freight in is typically paid by the seller who is shipping the goods, while freight out is typically paid by the customer who is ordering the goods.

The choice between freight in and freight out depends on the specific needs of the company. Generally, freight in is recommended if the company is receiving goods from an outside supplier, while freight out is recommended if the company is shipping goods to its customers. In both cases, the company should ensure that the cost of the freight is correctly accounted for and that the cost is allocated appropriately.


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Shipping noteFreight outFreight prepaidAdvance paymentDispatch noteLogistic processDownstream supply chainPurchase invoiceWaybill

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