Freight cost settlement and finance integration

Freight costs are where transportation meets finance, and where LE-TRA replacements most often break. In TM, charges are calculated on the freight order from freight agreements (the contracts with carriers), using calculation sheets and rate tables. A freight settlement document (FSD) then takes the charges to Materials Management, where they become accruals and are matched with the carrier's invoice. Distributed costs can be posted down to products and profitability.

Charge calculation

A freight agreement for Midwest Freightways holds a calculation sheet with charge types and rate tables, for example a base rate per truck by lane and a fuel surcharge as a percentage. TM finds the agreement by carrier, purchasing organization and validity, then calculates the charges on the freight order. In LE-TRA the same logic lived in condition records of a shipment cost pricing procedure; nothing converts those records, so each rate is rebuilt and checked.

Step by step: settling a freight order

1. After execution, create the freight settlement document for the freight order, individually or for many orders with the batch report /SCMTMS/SFIR_CREATE_BATCH.
2. Check the FSD: charges are copied from the freight order (or recalculated from the agreement); adjust only with a reason.
3. Post the FSD to MM (online or with /SCMTMS/SFIR_TRANSFER_BATCH). TM creates a service purchase order and a service entry sheet with the charge values; the SES posts the accrual.
4. When Midwest's invoice arrives, Ana verifies it in MIRO against the PO and SES, using the freight order or carrier to find the lines; or ERS creates it automatically where agreed.
5. If the invoice differs, the variance is handled through the settlement side (for example a new FSD for an extra charge), not by editing the accrual.
6. Cost distribution passes the freight cost to the responsible objects, for example by delivery item and product, through a settlement management document.

What finance sees

Cost distribution matters for margins. Contoso's controllers want outbound freight visible per customer and product in margin analysis, so the 761.80 USD for the Grand Rapids truck is distributed to the delivery items on it, in proportion to weight. For a truck carrying only delivery 80001234, all 761.80 USD lands on the 50 CMC-ALT-100: about 15.24 USD per alternator, compared with a 4,500.00 USD margin on the 12,000.00 USD sale.

Month-end and timing

Timing decides whether finance sees freight in the right period. If FSDs are posted only when invoices arrive, freight for goods shipped in March but invoiced in April lands in April, and March margins look too good. Contoso posts FSDs daily in batch for executed freight orders, so the accrual is in the month of shipment. Dan's month-end check compares executed freight orders without an FSD against zero, and the open accrual balance against the expected open carrier invoices.

Settlement test cases

• Happy path: one freight order, one FSD, invoice equals SES, accrual clears.
• Extra charge: invoice higher than SES because of a confirmed accessorial; settled through TM.
• Lower invoice: carrier bills less; FSD corrected, accrual reduced.
• Combined invoice: one carrier invoice for several freight orders.
• Cancellation: freight order cancelled after FSD posting; accrual reversed.
• ERS: self-billing for Midwest creates the invoice from settlement data on schedule.