Does 56ACC understand logistics accounting
Posted: Fri Nov 21, 2014 4:31 am
The characteristics of Accounts Receivable of international freight forwarding industry
1. Multi-currency, changing exchange rates and payers in different countries under different jurisdictions
2. Seasonal price & CAF, Bunker results in frequent change in quotes, late billing, frequent amendment on invoices, issuance of debit note and credit note, supplementary invoice
3. Voluminous transactions
4. Integrated logistics service and charges
5. Incoterms is necessary to identify billing party
6. COD term for new customers
7. Payment and collection on behalf of others
8. Set off against AR and AP
9. Intercompany and Agent reconciliation
10. Summary invoice and Interfacing transactions among customers and vendors
11. Frequent review on credit limit especially overseas agent
12. Multi billing and payment locations
13. Tax invoices in China
14. Revenue recognition is difficult due to different incoterms, import & export and, integrated services
The characteristics of Accounts Payable of international freight forwarding industry
1. Audit on payment is difficult due to voluminous transactions, integrated services and seasonal prices and different Incoterms
2. On time payment is necessary to ensure the reliability supply of cargo space
3. Late billing or debit note or credit note by agents is common
4. TT payment to agents in overseas
5. Dispute and transactions which need clarification is common
6. Payment should be checked against billing to avoid omission of billing
7. Payment should be processed after netting of Accounts Receivable
8. Tax invoices is necessary before payment in China
The characteristics of taxation for international freight forwarding industry
1. Profit tax is one of the lowest in HK
2. No GST/VAT in HK
3. Offshore income is free of tax in HK
4. Subject to different taxations in different countries
5. Transfer pricing applies to each transaction
The characteristics of critical costs for freight forwarding industry
1. Sharing costs
2. Unnecessary costs, KPI and Improvement in efficiency
3. Cost reducing snowball cycle
4. Open sourcing
5. Unabsorbed cost
6. Idle cost
7. Taxation cot
8. Consolidation and equalization
9. Contingent cost, mishandling, claim and compensation, over-specification
The characteristics of pricing for freight forwarding industry
1. Seasonal pricing
2. Penetrating price for developing of new business operating unit
3. Peak seasonal price
4. Breakeven pricing for idle
5. Discount price for trial run
6. Premium service for the best services
The characteristics of IFRS for freight forwarding industry
1. Lessor accounting
2. Revenue Recognition
3. Accrual
4. Contingent cost
The characteristics of month end closing for freight forwarding industry
1. Early cut off not possible due to late SOA issues
2. Revenue and Cost Accrual
3. Interface from operating to accounting
4. Intercompany reconciliation and agent reconciliation
1. Multi-currency, changing exchange rates and payers in different countries under different jurisdictions
2. Seasonal price & CAF, Bunker results in frequent change in quotes, late billing, frequent amendment on invoices, issuance of debit note and credit note, supplementary invoice
3. Voluminous transactions
4. Integrated logistics service and charges
5. Incoterms is necessary to identify billing party
6. COD term for new customers
7. Payment and collection on behalf of others
8. Set off against AR and AP
9. Intercompany and Agent reconciliation
10. Summary invoice and Interfacing transactions among customers and vendors
11. Frequent review on credit limit especially overseas agent
12. Multi billing and payment locations
13. Tax invoices in China
14. Revenue recognition is difficult due to different incoterms, import & export and, integrated services
The characteristics of Accounts Payable of international freight forwarding industry
1. Audit on payment is difficult due to voluminous transactions, integrated services and seasonal prices and different Incoterms
2. On time payment is necessary to ensure the reliability supply of cargo space
3. Late billing or debit note or credit note by agents is common
4. TT payment to agents in overseas
5. Dispute and transactions which need clarification is common
6. Payment should be checked against billing to avoid omission of billing
7. Payment should be processed after netting of Accounts Receivable
8. Tax invoices is necessary before payment in China
The characteristics of taxation for international freight forwarding industry
1. Profit tax is one of the lowest in HK
2. No GST/VAT in HK
3. Offshore income is free of tax in HK
4. Subject to different taxations in different countries
5. Transfer pricing applies to each transaction
The characteristics of critical costs for freight forwarding industry
1. Sharing costs
2. Unnecessary costs, KPI and Improvement in efficiency
3. Cost reducing snowball cycle
4. Open sourcing
5. Unabsorbed cost
6. Idle cost
7. Taxation cot
8. Consolidation and equalization
9. Contingent cost, mishandling, claim and compensation, over-specification
The characteristics of pricing for freight forwarding industry
1. Seasonal pricing
2. Penetrating price for developing of new business operating unit
3. Peak seasonal price
4. Breakeven pricing for idle
5. Discount price for trial run
6. Premium service for the best services
The characteristics of IFRS for freight forwarding industry
1. Lessor accounting
2. Revenue Recognition
3. Accrual
4. Contingent cost
The characteristics of month end closing for freight forwarding industry
1. Early cut off not possible due to late SOA issues
2. Revenue and Cost Accrual
3. Interface from operating to accounting
4. Intercompany reconciliation and agent reconciliation