Landed Cost Voucher – Prerequisites & Accounting Flow
To correctly use a Landed Cost Voucher (LCV) in ERPNext, it is important to understand the required base documents and configuration. The LCV depends on proper stock and accounting setup to ensure accurate valuation of inventory.
1. Documents Required for Landed Cost Voucher
A Landed Cost Voucher is always created against one or more of the following source documents:
- Purchase Receipt – Used when stock has already been received into inventory.
- Purchase Invoice (with Update Stock enabled) – Used when stock is directly updated through the invoice.
2. Conditions for Purchase Invoice
When using a Purchase Invoice as a reference for Landed Cost Voucher, the Update Stock option must be enabled.
If “Update Stock” is unchecked, the Purchase Invoice will not be available while creating a Landed Cost Voucher because it does not affect inventory valuation directly.
3. Conditions for Purchase Receipt
When using a Purchase Receipt, the item must be configured correctly to allow stock valuation updates.
- The item must have Maintain Stock enabled in the Item Master.
If “Maintain Stock” is not enabled, the item will not appear when fetching items from a Purchase Receipt in the Landed Cost Voucher.
4. How Additional Costs Work
A Landed Cost Voucher is used to allocate additional expenses incurred after purchase, such as:
- Freight charges
- Insurance
- Customs duty
- Handling or logistics fees
Once these costs are added in the LCV, ERPNext distributes them proportionally across items and updates their valuation rate in stock.
5. Impact on Accounting
The effect of landed cost allocation can be tracked in the accounting entries linked to the Purchase Receipt.
You can view this under:
Purchase Receipt → View → Accounting Ledger
Here, ERPNext shows how stock valuation and expense adjustments are posted after applying landed costs.
6. Payment and Expense Handling Options
There are two common ways to handle payments related to landed cost expenses:
6.1 Direct Payment Entry
- Create a Payment Entry directly for the additional expense supplier.
- Optionally create a Purchase Invoice marked as “Is Paid” if accounting tracking is needed.
This method is simpler when you do not need detailed expense tracking in accounts.
6.2 Purchase Invoice for Expense Supplier
- Create a Purchase Invoice for the third-party service provider (freight, customs, etc.).
- Then create a Payment Entry against that invoice.
This method provides full accounting visibility of landed cost-related expenses in financial reports.
7. Key Outcome
Regardless of the method used, the Landed Cost Voucher ensures that all additional expenses are correctly absorbed into inventory valuation, resulting in accurate product costing and profitability analysis.
