PO Receiving, Tariffs, and Separation of Duties: Best Practices for Manufacturers
When you’re managing purchasing, receiving, and accounting across different teams, clear processes and clean handoffs are key - not just for efficiency, but for fraud prevention and accurate cost tracking. One area of frequent confusion is how to handle non-material costs like tariffs, freight, and tax charges on purchase orders, especially when they’re not tied to a specific inventory item.
Let’s walk through the best practices and system tools available for handling these scenarios, particularly in environments with strict separation of duties, where:
- Purchasing writes and adjusts the purchase order (PO)
- Receiving handles incoming products and services
- Accounting vouchers the PO and issues payment
Step 1: Entering Non-Inventory Charges on the PO
You can include freight, tax, and tariff costs directly on the PO by using the following fields and processes:
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Freight: Enter a flat freight charge directly on the PO Edit screen using the “Freight Cost” field. This gets captured during the receipt process and rolled into the PO cost summary.
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Tax: Assign a Tax Group to the PO (assuming your vendor charges tax). If the PO is marked as taxable, this will be included when the PO is vouchered.
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Tariffs: Tariffs are best handled via Landed Cost, which allows you to increase the inventory cost at the time of receipt. This affects both inventory valuation and COGS downstream, enabling the pass-through of increased costs to the customer if desired.
Learn how to apply tariffs via Landed Cost
Step 2: Receiving Best Practices for Non-Inventory Charges
There are different practice processes for receiving non-inventory charges, and the best choice for you depends a bit on your internal structure.
For most companies, receiving personnel only receive the physical goods, not freight, taxes, or tariffs. The non-material charges are typically managed by the Accounting team at the time of voucher creation.
Here’s how that breaks down:
Physical Inventory Items
- Physical items are received by the Receiving team.
- PO lines for inventory are matched with incoming shipments.
- Lot and serial numbers, certificates, and quantities are recorded.
Freight and Tax
- These are pulled in automatically if added to the PO and appear during voucher creation.
- No manual receiving is required for these lines.
Tariffs (Landed Cost)
- Not shown as PO line items.
- Added at time of receipt on the Receipt Edit screen as Landed Cost entries.
- This increases the cost of inventory for accounting and sales margin accuracy.
If you’re using separation of duties, you can still set up landed cost entries so Accounting can apply them at voucher time based on known tariffs or customs invoices.
Best Practice: Keep PO Lines Clean and Separated
A common mistake is trying to create a separate PO line for freight or tariffs and “receive” it like inventory. This complicates receiving and doesn’t improve traceability.
Instead:
- Use designated fields and modules (Freight field, Tax Group, Landed Cost).
- Let Receiving handle product receipts only.
- Let Accounting handle landed costs, tax application, and freight at voucher time.
This keeps each department in its lane while maintaining audit control and accuracy.
If your team is managing global sourcing, tariffs, freight surcharges, and complex vendor invoices, Cetec ERP gives you the flexibility to manage these costs without compromising internal controls.
With proper PO setup and role-based responsibilities, you can:
- Ensure accurate cost tracking
- Maintain separation of duties
- Support traceability and audit-readiness
Ready to set this up in your own environment? Check out our step-by-step tariff guide!