Types of financial vouchers / documents
Invoice
• A document issued by a supplier which stipulates the amount charged for goods or services as
well as the amount of Goods and Services Tax payable.
PAY.... R...
Supplementary Invoice
• An additional invoice issued after the actual invoice has been issued with charges not originally
included such as additional storage, if charges were incorrectly charged or 3rd party charges not
accounted for.
Oops, you must PAY MORE... R...
My Study Notes
Types of financial vouchers / documents
Credit notes/ Voucher of correction
• To correct and reverse the incorrect charges or the client needs to be issued with a credit note to
the specified value owed. The seller usually issues a credit note for the same or lower amount than
the invoice, and then repays the money to the buyer or sets it off against a balance due from other
transactions.
You paid too much ...
Account Statements
• The freight forwarder will send an account statement to their customers with all outstanding
invoices issued within a specific time period in order for them to submit payment
Write-off voucher Payment within 30 days
• A voucher which is issued when an organisation are unable to recover costs incurred on a specific
shipment. The money in other words will have to be written off as a loss.
I cannot recover R ...
My Study Notes
Perform Invoicing Operations:
Statement of Account
+
Reconciliation of
Transactions
55
Perform invoicing operations
The double-entry-principle:
• When reconciling transaction you will have a debit and credit situation present with all the
accounts including the bank account. In the field of accounting, in both the older manual
systems and in today's basic accounting software, the double entry principal is based
on the 500-year-old accounting procedure.
• Double entry is a simple yet powerful concept: each and every one of a company's
transactions will result in an amount recorded into at least two of the accounts in the
accounting system.
Booking to system: 1 Amount entered appears The 2 amounts
as a “DEBIT” are offset against
Enter Amount X 1 →......
(left side ) each other.
For invoicing: 2 Amount entered appears Differences will
as a “CREDIT” appear either as
Enter Amount X 2 →...... debits or credits.
(right side )
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My Study Notes
Perform invoicing operations
The double-entry-principle:
What happens when the amount entered as a debit differs from
the amount entered as a credit?
The purpose of the double-entry principle is to highlight potential under-
recoveries, specifically on disbursements, versus recoveries (invoiced
to the client).
However, it will also highlight over-
recoveries where potential profit
was made on commissions (i.e.
when buying and selling freight
rates), but where the over-recovery
was not correctly booked to the
correct GL Code.
58
My Study Notes
Perform invoicing operations
The double-entry-principle:
Accountants indicate accounts and amounts using the following format:
Data Input / Recording in the Journal Booked as Booked as
Debit (L) Credit (R)
• Account Code: 101 (Int. Freight) R 20,000.00
• Amount: R 20,000.00
• Description of Charges: Freight payment SAF R 20,000.00
• Invoice Details: SAF / MM 14567 - 20130501
• Agent Invoice No: MM 167559 – 04/07/2013
• GL Code: D101 (Disbursements – Freight)
• Amount: R 20,000.00
• Client: A-to-Z Imports
60
My Study Notes
Perform invoicing operations
Example of an under-recovery through the double-entry principle:
Data Input / Recording in the Journal Booked as Booked as
Debit (L) Credit (R)
• Account Code: 101 (Int. Freight) R 20,000.00
• Amount: R 20,000.00
• Description of Charges: Freight payment SAF R 19,000.00
• Invoice Details: SAF / MM 14567 - 20130501
• Agent Invoice No: MM 167559 – 04/07/2013 R 1,000.00
• GL Code: D101 (Disbursements – Freight)
• Amount: R 19,000.00
• Client: A-to-Z Imports
Exception report
• Account Code: 101 (Int. Freight)
• Message: UNDER-RECOVERY / UN-INVOICED
This type of exception report allows the agent to reconcile the account in order 62
to make corrections or to pass a supplementary invoice. It also highlights
incorrect rates charged by operators where contracted rates are in place.
My Study Notes
Perform invoicing operations
Example of an over-recovery through the double-entry principle:
Data Input / Recording in the Journal Booked as Booked as
Debit (L) Credit (R)
• Account Code: 101 (Int. Freight) R 20,000.00
• Amount: R 20,000.00
• Description of Charges: Freight payment SAF R 22,000.00
• Invoice Details: SAF / MM 14567 - 20130501
• Client Invoice No: MM 167559 – 04/07/2013 R 2,000.00
• GL Code: D101 (Disbursements – Freight)
• Amount: R 22,000.00
• Client: A-to-Z Imports
Exception report
• Account Code: 101 (Int. Freight)
• Message: OVER-RECOVERY / CREDIT
With this type of exception report it allows the agent to reconcile the account in 64
order to ascertain if a true profit or commission was made and to make
corrections by passing a “journal-entry” to book the commission to revenue in
the GL.
My Study Notes
Perform Invoicing Operations:
Statement of Account
+
Reconciliation of
Transactions
66
Perform invoicing operations
Charges relating to Ocean Freight:
Cost calculation for ocean freight is worldwide stipulated as United States
Dollars (USD).
In other words, the freight or carriage part , is charged in USD. FWD =
This includes all freight related surcharges (BAF, CAF, War Risk, Local
DGR Goods, etc.). Currency
Charges related to forwarding in the country of origin will be FRT = USD
charged in that country / region’s currency. I.e. Origin Europe = Currency
Euro currency
DEST =
Charges related to Clearing and Final Delivery in the county of Local
final destination will also be charged in that country / region’s Currency
currency. I.e. Destination South Africa = ZAR currency
67
My Study Notes
Perform invoicing operations
Charges relating to Air Freight:
Depending on the type of airfreight movement requested, these charges are
called express, consolidated charges, charges with breakpoints, ULD charges
etc.
FWD =
Airfreight / air carriage may be charged in any of the major Local
currencies, although there is general trend leaning towards the Currency
USD currency, specifically in developing countries and Japan. FRT =
As with sea freight, the forwarding part may be charged in the Major
local currency, so also with the currency pertaining to clearing Currency
and final delivery in the final country of destination. DEST =
Local
Currency
69
My Study Notes
Perform invoicing operations
Important Notes:
• In ocean freight certain charges are not always available at time of
invoice, such as storage or demurrage.
• These charges then have to be invoiced by ways of a supplementary
invoice.
• Supplementary invoices may also be necessary when mistakes are
made when invoicing the customer for example incorrect freight
rates or fuel surcharge used.
• One may encounter the same for air freight; however such charges
are available immediately upon request from the air terminal.
71
My Study Notes
Perform invoicing operations
Charges related to Customs (SARS):
Customs have a couple of charges related to customs clearance of goods. Not
all charges apply for every shipment.
• Customs duties (ordinary duties, excise and ad-valorem duties on certain
luxury or non-essential items),
• Anti-dumping and countervailing duties,
• VAT (which is also collected on goods imported
and cleared for home consumption and paid
over to the Receiver of Revenue),
• Customs STOP and examination charges,
• Penalties (for under-entries or errors on
Customs Declarations)
73
My Study Notes
Perform invoicing operations
Other Disbursement Charges:
The Freight Forwarder / Clearing Agent charges –
• Disbursement fee
• Finance fee
• Agent’s Commission
• Documentation fee
• Communication fee
75
My Study Notes
Perform invoicing operations 77
Other Disbursement Charges:
Examples of 3rd party supplier charges –
• Fumigation charges
• Pre-Inspection fee
• Insurance
• Storage
• Cartage (Container Haulage and Break-bulk transport)
• Packing & labelling
• Special equipment
• Special containers (for example refrigerated containers, special ventilated
containers, etc.)
My Study Notes
EXPORTS – Sea Freight Group 3 – Destination Charges
Group 1 – Forwarding Charges at Origin Port THC
Inland Freight / Transport Depot Handling / De-stuffing Fee
Port THC Inland Freight / Transport
Port Crane Charges / Cargo Dues Customs Inspection Fees
Depot Container Packing Liner Charges (Release & Equipment Cleaning)
Packing Material (Dunnage) Customs Import Duties & Taxes
Liner Charges (B/L Fees & Equipment Release) Agent Charges (Clearing & Documentation)
Agent Charges (Clearing & Documentation)
Customs Inspection Fees
Group 2 – Freight Related
Ocean Freight
BAF (Bunker Adjustment Factor)
CAF (Currency Adjustment Factor)
Port Congestion Surcharges (Peak Season)
War Risk Surcharges
My Study Notes
EXPORTS – Air Freight Group 3 – Destination Charges
Group 1 – Forwarding Charges at Origin Air Terminal Handling
Inland Freight / Transport Air Consol De-group Fee
Terminal / Parcel Handling Inland Freight / Transport
Terminal Taxes Customs Inspection Fees
Consol / Groupage Fee Customs Import Duties & Taxes
Security Surcharge Agent Charges (Clearing & Documentation)
Air Waybill Fees
Agent Charges (Clearing & Documentation)
Customs Inspection Fees
Group 2 – Freight Related
Air Freight
Fuel Surcharge
Risk Surcharge
My Study Notes
4. Freight Finance for Exporters
• 4.1. Introduction to Methods of Payment
• 4.2. The Bank Documentary Credit Process
• 4.3. Forward Exchange Contracts
• 4.4. Exchange Rates
83
Methods of Payment
• The ideal method of payment to try and negotiate is that of an open account with the
supplier.
• This however is never easy, and takes a good track record to win the trust and confidence
of an overseas supplier.
• With Sight Drafts, term bills and letters of credit, documentation moves through the
banking system which is notorious for delays.
• Pre-payment is not permitted by the RSA Reserve Bank.
Without security With documentary security Pre-payment
Open Account Bill of Exchange Cash with Order
(Credit terms Documentary Collection Cash on Delivery
or Documentary Letter of Credit (cash without scrutinization)
On consignment) (LC) (safest!)
My Study Notes
Buyer 1
(SA)
Buyer will request his Bank
to establish an LC
Start of the process: Buyer’s Bank confirms Confirms to Buyer’s 2
shipping documents received Buyer’s Bank will
1. Buyer place Inquiry
onto Seller. and releases payment. 6 Bank goods inform
Upon shipment & receipt of Seller’s
2. Seller advise on shipped & Bank LC
quote that the sale documents: established
is subject to LC. 1) Buyer attests documents. sends (received
2) Authorise Bank to release copy)
3. Buyer will apply for shipping
LC with his bank payment. doc’s on.
Upon confirmation of LC: Request
1) Seller will prepare goods
payment 5
for shipment.
2) Confirms goods shipped
Seller Seller hands over shipping
(GB) documentation to Bank.
4
Seller’s Bank confirm LC to
seller (sends copy)
3
My Study Notes
Forward Exchange Contracts
• An Exporter RECEIVES Forex as a result from an overseas sale:
o The Exporter SELLS the Forex to the Bank and the Bank pays the Exporter in Rands.
o An Importer BUYS Forex from the Bank to Pay his overseas supplier. The bank SELLS
Forex to the Importer
• Currencies are divided into two categories.
o Major Currencies: USD, Japanese Yen, Euro and GBP British Sterling. These currencies
are “Freely Tradable Currencies”.
o Exotic Currencies : These are currencies of smaller countries, often fixed by their
governments against the US Dollar.
My Study Notes
Exchange Rates
1. The Buying Rate
There are three types of buying rates:
i. T/T Buying Rate (Telegraphic Transfer): Used for everyday commercial transactions and it
is the most beneficial Rate.
ii. The A/M (Air Rate): This is the rate used for cashing foreign and travelers’ cheques.
iii. The S/M (Surface Rate): Least beneficial for exchanging Foreign Bank Notes (money).
2. The Selling Rate
There is only one sell rate and this is used when a Trader purchases goods. This is the rate he
is charged for buying the currency. All Sell transactions are at the T/T Selling Rate.
3. Daily Spot Rate
Quoted for a particular day with value for that current day. This is for transactions under ZAR
20,000 only.
My Study Notes
END OF MODULE My Last NB Notes !