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Author's profile photo Abdullah Galal

Including Freight in Inventory Valuation and Purchasing Invoice Processing – SAP S4HANA & ECC

According to IFRS, Inventory Valuation should be at landed cost which includes the Purchase Price, Freight Cost, Customs and any other costs needed to make the product available in our warehouse

Based on this standard the correct financial entry for Goods Receipt should be:

Account Debit Credit Notes
Inventory 820
Goods Receipt Invoice Receipt 800 Purchase Price
Goods Receipt Invoice Receipt 20 Freight, Customs, Duties, ..etc

And furthermore, any Purchase Price Variance (PPV) during invoice processing should also impact:

  • The inventory value in case of moving average valuation
  • The Inventory PPV in case of standard cost valuation

How can we easily post the freight and other related expenses to our inventory value without activating Transportation Management or any other components?

Check the video below for:

  1. Business Process explanation
  2. Full demo on the process on SAP S4HANA which is also applicable to ECC


Many SAP users don’t know about this process, so they end up posting the freight and other similar expenses (insurance, duties, customs, etc) to expense accounts without any link to the inventory, and this is wrong as it leads to wrong inventory valuation and a lot of manual processing

Let me know your thoughts in the comments and help me spread the knowledge by sharing this everywhere!


See you in the next blog post 😉

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      Author's profile photo Narasimhulu Konnipati
      Narasimhulu Konnipati

      Very nicely explained Abdullah Galal. Keep up the great work.




      Author's profile photo Abdullah Galal
      Abdullah Galal
      Blog Post Author

      Thanks a lot Narasimhulu Konnipati, you've great knowledge in SAP and you always give great answers on all questions, I'm one of your followers.

      Please keep helping the community, I learn a lot from what you share.

      Thank you.

      Best regards,

      Abdullah Galal

      Author's profile photo Venu Jalda
      Venu Jalda

      How did that GR posted with 820 amount to inventory account. Is inventory getting valuated at moving average price?

      Author's profile photo Abdullah Galal
      Abdullah Galal
      Blog Post Author

      Yes it's valuated at moving average

      Author's profile photo Genevieve NOWACZOWSKI
      Genevieve NOWACZOWSKI

      Hi Abdullah Galal


      You should align your tab in striating of your post with same value as your video, it will be more helpful.

      Nice presentation, I haven't seen any progress between ECC and S4 on this topic, and you?


      Author's profile photo Abdullah Galal
      Abdullah Galal
      Blog Post Author

      Hi Philippe Gauthier ,

      Very valuable comment, I've updated the blog accordingly, thank you.

      No I've not seen any difference between ECC and S4 in this basic scenario, but there maybe differences in more complicated scenarios, you never know until you get a complicated requirement and investigate

      Author's profile photo Jai Muripindi
      Jai Muripindi

      Hello dear,

      In S4hana is there is no option to freight charge to directly to the freight vendor at the time of invoice verification … Like ECC.

      There is much difference between S4hana &  ECC. 

      For example if you want pay to freight charge in ECC , there is a option, that is planning delivery cost at invoice verification screen . 

      But S4hana no such option (1809 version). there is only one option , that is invoice verification with reference to Bill of Landing .

      Can you please check once... 


      Thank you 






      Author's profile photo Abdullah Galal
      Abdullah Galal
      Blog Post Author

      Hi Jai,

      It's there, even now in 1909 it's still available



      Author's profile photo Ketki Sutaria
      Ketki Sutaria

      Nice demo and presentation. This process works fine for freight dependent on the quantity. If it's flat fee for freight  then  the freight amount is proportioned based on goods receipt quantity. This is a problem whenever there is under or over delivery compared to PO item quantity. Is there any difference or new functionality introduced in S/4 HANA (without using transportation)

      Author's profile photo Srinivas B
      Srinivas B

      Hey Abduallah,


      Can you help me with Delivery charges not to post to inventory acc.

      I have done the below cofigs.

      1. ZFRE with condition category "B" and "Accrual" flagged in the control data (M/06)
      2. G/L assigned to FR1 in OBYC with Debit n credit entries (40-50)
      3. Assigned ZFRE in pricing schema with FR1 (M/08)
      4. ZFRE is statistical falgged (M/08)
      5. account key FRE & Accrual key FR1 (M/08)
      6. PO created with 10000 with Freight 2500
      7. I am expecting freight should not be added into BSX value post MIGO

      Actually which is not happening. I am getting..

      BSX - DR - 12500

      WRX - Cr - 10000

      FR1 - Cr - 2500

      Did I missed anything?


      Appreciate your help on this.