What the difference between freight-in and freight-out for financial records
Freight Forwarding is all about getting goods from point A to point B, efficiently and effectively. But when it comes to keeping track of all those shipments, things can get a bit complicated, especially when it comes to financial records. That’s where knowing the difference between freight-in and freight-out comes in handy.
At Allegro Freight Forwarding we are experts in all things freight, based in the South West of England we help businesses navigate the complexities of international logistics. In this blog post, we’ll outline the difference between freight-in and freight-out while discussing how they are treated for financial statements.
Why Does it Matter for Financial Statements?
So, why does freight-in and freight-out matter when it comes to financial records? Well, for starters, keeping track of your freight-in and freight-out expenses helps you understand your overall cost of goods sold (COGS). This is crucial for calculating your gross profit and, ultimately, your bottom line which are key figures for any business.
However, understanding freight-in and freight-out is not only useful for performance measurement and accounting purposes. Understanding your freight costs can also help you identify areas where you can save money. For example, if you notice your freight-in expenses are affecting profits, you might look for ways to streamline your supply chain or negotiate better rates with your suppliers.
>Find out more about Supply Chain Management
Similarly, if you’re spending a small fortune on freight-out, you might want to explore alternative shipping methods or invest in better packaging to reduce the risk of damage in transit.
A strong understanding of the difference between the two can help you eliminate unnecessary costs, keep more accurate financial records and optimise your business performance through analysing profitably and the cost effectiveness of your supply chain.
How to Manage Freight Costs
Keeping track of all your freight-related financial data can be a daunting task, especially if you’re dealing with a high volume of shipments. This is where having the right tools and systems in place comes in handy.
Many freight forwarding companies use specialised software to help them track and manage their freight-related expenses. These systems can automate tasks like calculating freight costs, generating invoices, and reconciling payments, saving you time and effort in the process.
But even with the best software, it’s important to have a solid understanding of the underlying principles behind freight-in and freight-out. After all, technology can only take you so far. You still need to know how to interpret the data and make informed decisions based on what it tells you.
>Find out more about trends and changes in freight container prices
How to Reduce Freight Costs
If you find your freight costs are too high and a sizeable expense for your business, then there are various strategies you can implement to help reduce your freight costs and benefit from increased profitably as well as a streamlined supply chain.
Optimise your inventory management – Improving your internal approach to inventory management can really help streamline your supply chain operations and reduce freight costs. Implementing strategies like just-in-time inventory management can help to reduce costs by striking a perfect balance between supply and demand which will reduce unnecessary holding or storage costs.
Reduce dunnage – By reducing the dunnage used in your shipments, you can save space and ship more for less. It’s important to ensure your products are still protected though so you should find the optimal level of dunnage for your products before making any drastic changes.
Ship on off-peak days – By choosing to ship to your customers on off-peak days, you can make considerable savings
Negotiating with suppliers and carriers – By negotiating with your suppliers and carriers, you can reduce various costs related to freight. Some suggestions for proposals you can make to your carriers or suppliers include pooling your freight with other business (especially if you’re a small business) and committing to long-term contracts that involve discounted rates.
Choose larger freight shipments – If possible, consider making larger shipment of freight goods. This will help you to benefit from economies of scale which leads to reduced freight costs.
Cost-effective Freight Forwarding Services from Allegro Freight Forwarding
Understanding the difference between freight-in and freight-out is essential for anyone in the freight forwarding business, whether you’re a small business or a global logistics giant.
By keeping track of your freight-related expenses and using that information to make strategic decisions, you can improve your bottom line and stay ahead of the competition. Get in touch today to find out how we can help provide you with cost-effective freight forwarding services.
Full-Service Freight Forwarding with Allegro
Make sure that you are using a fully certified, trusted freight forwarder to ship your goods. They will have the connections and expertise needed to make sure that your expectations are exceeded through vigorous compliance.
At Allegro Freight Forwarding, we work hard to make your life easy. Our team can fully manage your freight, from choosing the transportation method that’s best for you to navigating the complexities of customs and borders. Our end-to-end solution takes all the hassle out of shipping by collaborating with our sister company to supply your logistics needs.
Contact a member of the team – the solution to your forwarding needs could be just one call away. Check out our range of services, or find out more about freight forwarding with our article on its differences with logistics.
