Three Options for Handling Tariffs in Cetec ERP
Tariffs have been a hot topic with our customer base in the past couple of months. Many manufacturers are seeing tariff-related charges appear on purchase orders, whether as true government-imposed tariffs or additional costs passed along by suppliers. Either way, handling these charges correctly in your ERP system is essential for maintaining accurate cost tracking and ensuring your pricing reflects these added expenses.
Here’s some options Cetec ERP provides to help you manage tariffs effectively. Each method has unique benefits, and you can decide which approach works best for your business.
1. Adjusting Material Costs at Receipt or Through Adjustments
One way to handle tariffs is by increasing material costs, either at the time of receipt via Landed Cost, or after receipt through a manual cost adjustment. This means the cost increase is absorbed directly into the inventory value of the materials. Here’s how it works:
- When receiving a material, add the tariff cost to the Landed Cost calculation.
- If the cost wasn’t included at receipt, adjust the material cost later to reflect the tariff expense.
- Resale pricing can then be adjusted accordingly to cover the increased costs.
This approach ensures that tariffs are reflected in inventory valuation and automatically roll up into finished goods costs when used in production, which then also impacts cost estimates for quoting.
2. Adding a Charge Line to Increase Net Resale
Another approach is to add a separate charge line on quotes and invoices to reflect tariff-related costs. This can be done in two ways:
- Misc Charge to a Component or BOM: Assign a “Tariff” charge per component, aggregating the cost as a separate line item on the quote. Misc Charges can also be added to the top level BOM item, and will automatically add a charge line.
- BOM Charge: Add a charge at the top-level BOM to account for the tariff impact on the total assembly. This is best used to include Tariff in the cost estimate of the top level item.
This method allows tariff costs to be clearly visible on customer quotes and invoices without affecting material costs in the system.
3. Modeling Tariffs as a Tax in Cetec ERP
Tariffs can also be entered as a tax and applied at the quote line level. This method treats tariffs as a separate, automatic charge rather than embedding them in material costs. Here’s how it works:
- Create a tax type specifically for tariffs.
- Assign that tax to applicable parts or line items in quotes and orders.
- The system will calculate and apply the tariff as a tax at the time of sale.
Using this option ensures that tariff costs are automatically applied during quoting and invoicing.
Each of these options provides a way to account for tariff charges in Cetec ERP. Whether you choose to include tariffs in material costs, add them as a charge, or apply them as a tax, you have the flexibility to manage these costs in a way that best fits your business.
Want to learn more about how to configure these options in Cetec ERP? Visit our guide here.