How to manage tariffs in NetSuite

Due to recent changes in global trade agreements, tariffs and import duties have become a significant consideration for businesses involved in international commerce. Accurately managing these costs is crucial, not just for compliance, but for maintaining accurate landed cost calculations, protecting margins, and making informed procurement decisions. Thankfully major ERP providers are developing solutions that help support their users’ tariff processing and management. For NetSuite users, there are several effective strategies to manage tariffs, from leveraging built-in functionality to implementing custom solutions.

In this post, we’ll explore how to manage tariffs in NetSuite with three primary methods: landed cost, non-inventory charge items, and custom development. Plus, we’ll highlight why partnering with a trusted NetSuite expert like Rand Group for NetSuite customization and support is a smart step towards optimized international business operations.

Tariffs are taxes imposed on imported goods and are a key part of your total landed cost. Landed cost is the total expense of bringing products into your warehouse for distribution. This includes not just the price of the goods, but also freight, insurance, duties, and other import-related charges. When tariffs change frequently, tracking them manually can lead to costly errors like misreporting inventory value, mispricing products, or accidentally failing to comply with trade regulations. That’s where ERP systems like NetSuite stand out. NetSuite gives businesses the tools to automate tariff tracking, maintain accurate product costing, and quickly adapt to regulatory changes. With the right setup, you can manage tariffs in NetSuite faster, more reliably, and more accurately, helping your team stay compliant and your margins protected.

Using Landed Cost to allocate tariffs accurately

NetSuite’s landed cost feature enables users to account for additional expenses beyond the cost of the product like tariffs, customs duties, freight, and insurance. These unique costs can be applied to inbound shipments or purchase orders and then allocated to individual line items using customizable allocation methods.

By using the landed cost function:

• Tariffs can be recorded at the time of receipt, ensuring accurate inventory valuation.
• You gain an accurate full picture of your total cost of goods sold (COGS), enabling better pricing and margin decisions.
• Financial reporting and profitability analysis become more precise.

For businesses that import products regularly, leveraging landed costs is the best practice and can be configured relatively easily in standard NetSuite.

Tracking tariffs with non-inventory charge items

Another approach is to use non-inventory charge items to track and report on tariff-related expenses. These items don’t represent physical goods but are used to record costs associated with a transaction.

For example:

• A “Tariff Fee” charge item can be added to purchase orders or vendor bills.
• These charges can be categorized to specific GL accounts for better visibility and reporting.
• Businesses can tag and track tariffs across vendors, items, or transactions for audit and compliance purposes. This also provides heightened visibility into the total cost of goods.

This method is particularly useful for companies that want to isolate tariffs for reporting or need more flexible handling of unplanned fees.

NetSuite custom development for complex tariff scenarios

While landed cost and non-inventory charge items address many of the tariff management scenarios we see, some businesses face more complicated tariff challenges. For example, larger more complex organizations may need to manage variable rates across multiple locations, integrate with third-party trade compliance systems, or automate tariff calculations based on product classification and origin.

In these scenarios, custom development within NetSuite may be required. Customizations can:

• Automatically calculate tariffs based on real-time data.
• Integrate with international trade databases for harmonized tariff codes.
• Trigger custom workflows or approvals for items exceeding specific thresholds.

For example, with a custom workflow you can automatically mark an inventory item as “Subject to Tariff” applying a standard percentage toward the tariff cost on each product. Then create a custom sales order for customers subject to tariffs. The system then calculates and applies the tariff based on your custom workflow settings. Once processed, the invoice displays the tariff according to your custom format. 

Custom development like this can ensure your processes are fully aligned with business needs and regulatory requirements.

Navigating tariff management in NetSuite, especially when your business requires customizations, presents a problem that NetSuite partners like Rand Group are uniquely qualified to solve. Our expert NetSuite consultants regularly tailor NetSuite to fit the exclusive business needs of our clients. We are already working with our clients who require tariff management support implementing the solutions covered in this article, we can easily help your business make the same customizations in your system to ease the burden of ongoing tariff changes.

We offer:

• Extensive NetSuite implementation and customization experience
• ERP and financial compliance expertise to ensure regulatory accuracy
• Ongoing support to optimize and scale your solution as business needs evolve

Whether you’re looking to fine-tune your landed cost strategy, create charge item workflows, or build advanced custom functionality, Rand Group can help tailor NetSuite to meet your tariff management goals.

Tariff management doesn’t have to be a compliance headache. With the right configuration and support, NetSuite can serve as a powerful tool to streamline your processes, improve cost accuracy, and maintain regulatory compliance. By leveraging standard tools like landed cost and non-inventory charge items or investing in custom development when needed, you can confidently face changes to global trade knowing your software investment is a safeguard for accuracy.

Are you struggling to maintain accurate reporting in the face of ongoing tariff changes? Contact our team today for NetSuite support or for custom development in NetSuite to streamline this process. Or connect with a team member to learn more about implementing an ERP solution like NetSuite to optimize your business processes for enhanced profitability.