RSMUS.comIn today’s global trade environment, tariffs are constantly evolving, impacting businesses of all sizes. With shifting trade agreements, new tariff classifications, and fluctuating duties, companies must remain agile to maintain profitability and compliance. To navigate these complexities, many businesses are leveraging ERP systems like NetSuite to track and manage tariffs effectively. One of the most powerful tools within NetSuite for addressing these challenges is its Landed Cost functionality.
Understanding recent tariff changes
Tariffs have undergone significant changes recently due to geopolitical shifts, trade policies, and global economic trends. These changes have affected a wide range of industries, requiring businesses to stay informed and adaptable. Some of the key developments include:
- Shifts in Trade Agreements: Modifications in international trade deals have impacted tariff structures and duty rates across various markets.
- Adjustments to Import Duties: Governments have periodically revised import tariffs on certain goods to protect domestic industries or respond to economic pressures.
- New Regulatory Compliance Requirements: Evolving trade policies have introduced additional customs duties, VAT rules, and reporting obligations for global supply chains.
- Economic and Political Influences: Factors such as inflation, trade disputes, and global supply chain disruptions have led to fluctuating tariff rates.
With these ongoing adjustments, businesses need a robust system to track, analyze, and adjust pricing models in response to tariff fluctuations. This is where NetSuite’s Landed Cost functionality becomes a game-changer.
The role of Landed Cost in tariff tracking
NetSuite’s Landed Cost functionality enables businesses to track and allocate all costs associated with acquiring inventory, including:
- Tariffs & Duties: Automatically factor in applicable duties when calculating the total cost of imported goods.
- Freight & Shipping Fees: Capture logistics expenses to gain a complete view of product costs.
- Customs & Brokerage Fees: Maintain compliance by incorporating all regulatory costs into financial reporting.
- Insurance & Handling: Include additional costs that may influence pricing decisions.
By integrating tariffs into NetSuite’s Landed Cost calculations, businesses gain a clearer understanding of their total cost structure, leading to more accurate pricing and margin analysis.
How NetSuite helps businesses adapt to tariff changes
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Automated Cost Allocation: NetSuite enables businesses to assign tariff-related costs at the item level, reducing manual entry errors and enhancing accuracy.
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Real-Time Cost Visibility: Built-in financial tracking provides instant insights into how tariff fluctuations affect overall expenses.
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Scenario Planning & Reporting: Businesses can model different tariff scenarios to optimize sourcing strategies and mitigate risks effectively.
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Integration with Procurement & Accounting: Seamlessly connect tariff data with purchasing decisions and financial reporting to ensure compliance and support strategic decision-making.
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Audit & Compliance Readiness: Maintain detailed records of tariff payments and landed cost allocations to remain prepared for audits and regulatory reviews.
Limitations and risks of not using Landed Costs
Failing to incorporate landed costs into financial tracking and pricing decisions can expose businesses to several risks, including:
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Inaccurate Pricing: Without considering tariffs, duties, and additional fees, businesses may set incorrect prices, leading to reduced profit margins or uncompetitive pricing.
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Hidden Costs: Businesses might underestimate their true expenses, resulting in unexpected financial shortfalls and challenges with budget planning.
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Regulatory Non-Compliance: Inaccurate duty and tariff tracking can lead to non-compliance with trade regulations, increasing the risk of fines and audits.
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Supply Chain Inefficiencies: A lack of visibility into total costs can hinder sourcing decisions, impacting inventory management and supplier relationships.
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Financial Reporting Challenges: Improper allocation of landed costs can distort financial statements, leading to inaccurate profit and loss reporting.
By leveraging NetSuite’s Landed Cost functionality, businesses can mitigate these risks, gain better financial clarity, and ensure accurate cost tracking for optimal decision-making.
Tariff changes are an unavoidable challenge in global trade, but businesses don’t have to navigate them blindly. By leveraging NetSuite’s Landed Cost functionality, companies can efficiently track, manage, and respond to tariff shifts, maintaining both profitability and compliance.
With real-time cost tracking and automated reporting, NetSuite provides the insights needed to make data-driven decisions and optimize supply chains. As tariff regulations continue to evolve, embracing ERP tools like NetSuite will be essential for businesses striving to remain competitive in an increasingly complex trade environment.
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Ready to optimize your tariff tracking and landed cost calculations? Reach out to explore how NetSuite can streamline your operations and enhance your financial visibility by filling out the form below.
Sean Callahan
Experienced executive leader with expertise in Accounting, Operations, Sales, and NetSuite implementation. Proven track record in strategic planning, team leadership, and fostering organizational growth. Dedicated ally actively advocating for underrepresented colleagues through companywide initiatives.
