Accruing carrier costs at month end
How a freight business accrues carrier costs invoiced after month end, reverses the accrual, and closes the month cleanly in Achekam.
By Achekam · · 4 min read · For Logistics businesses in South Africa, Nigeria, Kenya
Look at a freight forwarder's monthly figures without accruals and they swing wildly. The month a big contract starts looks extraordinarily profitable: the shipper has been invoiced for every load, but the subcontracted hauliers have not yet sent their invoices. The following month looks dreadful, because all those carrier invoices arrive at once. Neither month is true. The loads, the income and the costs all belonged to the first month.
An accrual fixes that. At month end, you record the carrier costs you know you owe but have not yet been invoiced for, so each month carries the costs of the loads it delivered. This article explains how to do that in Achekam, how to undo it when the invoices arrive, and how the month-end close keeps it tidy.
Why freight costs lag the delivery
In freight, the shipper is often invoiced as soon as a load is delivered, sometimes the same day. The carrier who actually moved it may invoice weekly, fortnightly or monthly, and their invoice may take days more to reach your accounts office. Border agents, warehouses and port handlers often run even later.
So at any month end, a freight business owes for loads it has already billed its own customers for. Leaving those costs out overstates the month's margin and, more dangerously, overstates what each lane or customer earns.
Working out the amount
An accrual is an estimate, but it should be a careful one built from documents, not a guess. For each carrier, list the loads delivered in the month that have not yet been invoiced, and price them from what was agreed:
- the rate confirmation or booking for each load;
- the carrier's rate card for the lane;
- proof of delivery dates, to be sure the load really belongs to this month;
- known extras, such as waiting time or additional drops, that the carrier will charge.
Keep the working, carrier by carrier. When the invoices arrive, it is the first thing your accountant will compare them with.
Recording the accrual with a manual journal
Achekam lets a business post manual journals. For a month-end accrual, that is a journal dated on the last day of the month that:
- debits the cost account, such as subcontracted freight or clearing costs; and
- credits a liability account for accrued expenses.
Two rules protect the books. Achekam refuses an unbalanced journal, so the debits and credits must agree. And it refuses a journal dated in a closed month, which is why the accrual has to be posted before the month is closed, not after.
An accrual in words
At the end of the month, a forwarder has three loads delivered by a subcontracted haulier with no invoice yet. Using the rate confirmations, the accountant totals the agreed charges and posts a manual journal dated on the last day of the month: subcontracted freight cost on one side, accrued expenses on the other. The month's income statement now carries the cost of those three loads alongside the income already invoiced for them.
Reversing it when the invoice arrives
In the following month, the accrual has done its job and needs to come out, otherwise the cost would be counted twice once the real invoice is posted.
In Achekam, a posted journal is corrected only by a reversal, never by editing or deleting it. Reverse the accrual in the new month, then post the carrier's actual invoice in the normal way. If you bring carrier invoices in through Financial Intake, they become suggested postings that a person approves and posts, as described in carrier invoices turned into suggested postings.
The effect is that the new month carries only the difference between the estimate and the real invoice. If the estimate was good, that difference is small, and both months tell the truth. AccountingTools explains the accruals concept behind this: recording expenses in the period they are incurred, including accrued expenses and reversing entries.
Closed months refuse postings
Achekam lets a month be soft-closed, hard-closed and locked. A closed month refuses postings from every source, and reopening a hard close needs a second approver.
Before closing, the close screen checks that the ledger balances and that no posting suggestions, unposted bills or unmatched bank lines are waiting. For a freight business, that check is a useful prompt: carrier invoices sitting as suggestions are often exactly the costs you were about to accrue. Post what has arrived; accrue what has not.
Checking the trial balance
Before you close, open the trial balance for the month. Achekam's trial balance shows each account for all time, for a period or at a date, and says whether debits equal credits. The general ledger lists every posted line, so you can trace the accrual and, next month, its reversal.
A short close routine:
- Post every carrier invoice that has arrived.
- Accrue the loads delivered but not yet invoiced, with your working kept.
- Post the month's other entries, such as depreciation; see depreciating trucks and trailers each month.
- Check the trial balance balances and the cost accounts look sensible against the month's loads.
- Close the month.
- In the new month, reverse the accrual before the carrier invoices are posted.
The pay-off
Accruals take a little work each month. In return, the margin on each lane and each shipper becomes something you can trust, which is what you need when deciding which customers to keep, which rates to raise and which shippers' late payments you can afford; shipper accounts that drift past their terms covers that side.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
