SAP Module (i.e.

Materials Management (MM) Module)

City of Portland

Freight Conditions on the Purchase Order

Overview:
When buying goods, you can account for the cost of shipping in the purchase order by adding a
line for freight to the overall PO, or by using Freight Conditions.
Freight Conditions have the advantage of being invisible to the Goods Receiver while being
visible to the AP Processor. Freight conditions can apply to the overall PO, or be different for
each line, and can be entered as a fixed amount or as a percentage of the order value.
Transaction:
ME21N Create Purchase Order
Hints / Tips:
Procedure: Including freight conditions in the purchase order header
Step 1: Open ME21N Create Purchase Order, and complete your purchase order as usual.
Before saving, open the Conditions tab in the header and select the first available blank line in
the Pricing Elements area:

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Step 2: Use the drop-down box and select FRA1 for Freight percentage or FRB1 for Freight
value, then click the green checkmark

FRA1 applies a percentage of the total value of the PO as freight. FRB1 applies a specific dollar
value for freight to the whole PO.
Step 3: Enter the percentage (10 for 10%, 5 for 5%, etc.) or the dollar value in the Amount field.
Here, we are expecting to pay 1.5% of the value of the purchase order in freight.

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Enter. The freight condition line may move up in the list automatically. This is okay. Save the
purchase order. Freight conditions (that is, the cost of freight) will be applied automatically at
invoicing.
Procedure: Including freight conditions at the purchase line item level
There are some cases where it makes more sense to apply freight conditions at the line level. In
this example, we have a multi-line PO where one line is for a piece of equipment with freight
charges, and the other is for the installation service, not subject to shipping.
In this case, we apply freight conditions to the first line, but not the second.
Step 1: Complete the purchase order as usual. In the Item Detail area, on the line for the
equipment, select the Conditions tab. Scroll down and select the first blank row.

Step 2: As in the header, use the dropdown to select either FRA1 for freight percentage, or
FRB1 for freight amount. Here, well use FRB1. Enter or click the green checkmark:

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Step 3: Enter the agreed dollar value of freight, as quoted by the vendor, and enter. The system
completes the entry with USD and moves it up in the list:

Save the purchase order. $150 for freight will be allowed at the time of invoicing.
To remove freight conditions from the purchase order (header or line item), open the Conditions
tab, select the FRA1 or FRB1 row, and then click on Delete:

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What happens next? Goods receiving:

When the Goods Receiver enters a purchase order with freight conditions, they see only the
quantity ordered, and are responsible only to record the quantity delivered. The cost of freight,
even if its mentioned on a combined shipping/invoice document, is not the Goods Receivers
concern.
NOTE: If you use freight conditions on your purchase orders, do NOT add a separate line for
freight. Its not necessary and will make accurate accounting very difficult.
Here, were receiving against the purchase order with percentage freight conditions at the
header. Weve received a quantity 8 out of the 10 on the purchase order.

This means that whatever the invoice price per item (which may differ from the PO price if the
vendor has offered a discount or rebate, for instance), 1.5% of that will be allowed for freight.

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Once the Goods Receipt is posted, we see that the cost of the goods, 8 at $100 each PLUS
1.5% for freight, or $12.00, has been applied to the vendor.

When we receive the other two items, worth $200, an additional $2.50 will be added and can be
invoiced.
Meanwhile, back at the purchase order
After goods receiving, you can return to ME23N and see the effect by looking at the Purchase
Order History tab:

Freight conditions are coded as DVGR. Note that there is no QUANTITY associated with this
line (that is, there was nothing to receive).
Your AP processor will have a view in MIRO called Goods/services items + planned delivery:

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This will break out the freight condition in a separate line and payment of goods plus shipping
will be allowed. The actual cost of the goods will be maintained as a separate entry from the
cost of shipping.

A quick return to the Purchase Order History tab after the invoice has been entered now shows
that $12.00 has been recorded as item type DLIV:

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