Freight revenue and VAT codes in the ledger
How the Logistics pack posts freight and clearing fees to separate accounts, the VAT codes its starter items begin with, and why you confirm them.
By Achekam · · 4 min read · For Logistics businesses in South Africa, Nigeria, Kenya
Launching soon. The Industry CRM add-on described in this article is launching soon. This article describes it as it will work at launch.
A freight forwarder's income is not one thing. Moving a load between two towns in the same country, moving one across a border, and clearing and handling goods at a port are different services with different margins and, very often, different VAT treatment. Put them all into one sales account with one VAT code and two things go wrong: the business cannot see which service earns its money, and the VAT return is only as right as the clerk's memory.
The Logistics & freight pack in Achekam's Industry CRM starts the ledger off separated and coded. This article explains which accounts it adds, which VAT codes its starter items begin with, and the confirmation that remains your responsibility.
Two revenue accounts, not one
Switching on an industry pack adds that industry's revenue accounts to your chart of accounts and its starter items, unpriced, to your catalogue. For logistics, the accounts are:
| Account | Code | What it is for |
|---|---|---|
| Freight revenue | 4630 | Charges for moving goods, domestic and cross-border |
| Clearing and handling fees | 4640 | Charges for clearing, handling and related services |
Keeping clearing and handling apart from freight matters because the two behave differently. Freight revenue moves with fuel, carrier rates and volume. Clearing fees depend on paperwork, port activity and staff time. A month in which freight volume falls but clearing work rises looks flat in a single account; in two accounts, it tells you what changed.
If either code is already used in your chart for another type of account, activation is refused and the clash is named, so your accountant can resolve it before trying again.
The VAT codes the starter items begin with
The pack's starter catalogue begins with two VAT positions for freight:
- domestic road freight, marked standard-rated; and
- international and cross-border freight, marked zero-rated.
Those codes are flagged for the business to confirm. They are a reasonable starting point, not a ruling on your business. Whether a particular movement counts as domestic, international or cross-border for VAT, and how each leg of a multi-leg journey is treated, are questions for your tax adviser and your country's rules.
Confirming the codes in your country
What confirming involves depends on where you operate.
South Africa. The standard VAT rate has been 15% since 1 April 2018. At the time of writing, a South African invoice line takes 15% or 0%, and the invoice screen does not tell zero-rated and exempt apart, so make sure your adviser confirms which of your 0% lines are zero-rated and keep that note for your VAT working papers. SARS's VAT 404 guide for vendors covers zero-rated exports and exempt supplies, along with tax invoices and records.
Nigeria. The VAT rate is 7.5%. A Nigerian business picks a tax code on each invoice line, whether standard, zero-rated, exempt, out of scope or reverse charge, and only standard lines carry VAT. While the Nigerian VAT rate rule awaits platform approval, Achekam refuses to charge standard-rate VAT and tells you to choose a code without VAT or wait. A standard-rated domestic freight line may therefore be held until the rate is approved; do not recode it as zero-rated to get it out.
Kenya. The standard VAT rate is 16%. The same per-line tax codes apply, and the same caution: while the Kenyan rate rule awaits approval, standard-rated lines are refused with an instruction to choose a code without VAT or wait.
A mixed invoice in words
A forwarder moves a shipper's consignment from its depot to a buyer in a neighbouring country and clears it at the border. The invoice carries three lines. A line for the domestic leg to the border names Freight revenue and, as advised, its VAT code. A line for the cross-border leg names Freight revenue with the code your adviser confirmed for cross-border freight. A line for clearing names Clearing and handling fees with its own code.
With the pack, every invoice line names the revenue account and the product it sells, so the revenue posts per account in one journal, with cost of sales in the same journal where a line sells a product. The board pack can then show freight and clearing separately, straight from the ledger.
Acceptance drafts the invoice
Freight is usually quoted before it is moved. In the Industry CRM, the shipper accepts a quotation on a link by typing their name and ticking a box, and the acceptance drafts the invoice in receivables. A sent quotation is frozen and changed only by a revision, the shipper's IP address and browser are kept, and issuing the invoice immediately on acceptance needs an administrator's recorded authority. Otherwise the draft waits for someone to review it, which is the right moment to check the VAT code on each line.
Pricing and coding are yours
None of the starter items carries a price; the business sets its own. Before the first invoice:
- Confirm with your accountant that codes 4630 and 4640 are free in your chart.
- Take the two starter VAT positions to your tax adviser and get a written answer for your country and lanes.
- Price the items, by lane or by load type as you quote today.
- Agree who reviews draft invoices before they are issued.
Coding freight correctly from the start is far less work than correcting a VAT return later. The other month-end entries that complete a freight business's figures are covered in accruing carrier costs at month end and depreciating trucks and trailers each month, and getting the invoiced amounts in is the subject of shipper accounts that drift past their terms.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
