Demo Trade & Imports FZCO: container to customer margin

Demo Trade & Imports FZCO is a fictional UAE importer of commercial kitchen equipment. It buys from Italy and China in EUR and USD, receives containers at Jebel Ali, clears customs through a broker, stores stock in Dubai, allocates units to Abu Dhabi and Riyadh channels, and sells in AED and SAR. The case teaches why a supplier quotation, purchase order, goods receipt, landed cost, supplier invoice, payment, transfer, sales order, and margin report are separate facts.

Import plan and supplier comparison

The buyer forecasts demand for 40 espresso machines and 120 grinders. The item master contains model, SKU, barcode, UOM, serial policy, origin country, HS code, tax category, warranty, default warehouse, and price lists. Demand is compared with on-hand, reservations, in-transit purchase orders, safety stock, and open customer commitments.

The buyer creates an RFQ for two suppliers. Each quotation records supplier, currency, validity, lead time, incoterm, port, minimum quantity, unit price, payment terms, warranty, and compliance evidence. Comparison must include freight, insurance, duty, broker, port, and inland transport. The lowest EUR unit price is not necessarily the lowest landed cost.

Field	Example	Purpose
Supplier	Milano Equipment SRL	Legal counterparty and AP
Currency	EUR	Original commercial amount
Incoterm	CIF Jebel Ali	Determines included freight/insurance
HS code	841981	Customs classification evidence
Container	CONT-MIL-2609	Shipment traceability
Expected arrival	30 Sep 2026	Demand and cash planning
Payment term	30% advance / 70% documents	Supplier settlement schedule

Purchase order and advance

The selected supplier receives a purchase order for 40 machines at EUR 2,000 each. The PO header contains company, branch, supplier, supplier reference, order date, expected date, currency, exchange rate policy, warehouse, incoterm, project or cost centre, and payment terms. Lines contain item, description, quantity, UOM, unit price, discount, tax treatment, and destination.

The company pays a 30% advance of EUR 24,000. The payment records bank, currency, rate, reference, date, supplier, and allocation to the PO or advance account. An advance is not a supplier invoice and does not prove goods arrived. The AP team must keep advance balance visible until the supplier invoice is matched.

Transit and customs evidence

The shipment leaves Italy. The logistics user records container, bill of lading, vessel, origin, destination, expected arrival, carrier, freight, insurance, and documents. Stock in transit is not available in the Dubai warehouse, but it is an accountable quantity in the supply plan.

At Jebel Ali, the customs broker submits duty, port, clearance, and inspection documents. Each charge records supplier/broker, document number/date, currency, tax, cost category, shipment, and allocation basis. A customs invoice without a shipment reference cannot be included reliably in landed cost.

Landed-cost calculation

The controller creates a landed-cost document against the receipt or shipment. It includes base item value, freight, insurance, duty, port, broker, inland transport, and allocation method. Example:

Supplier goods value (40 × EUR 2,000)       EUR 80,000
Freight and insurance                         EUR 6,000
Customs duty                                  AED 28,000
Broker and port                               AED 12,000
Inland delivery                                AED 5,000
Total landed cost                              base-currency equivalent

Allocation may be by value, quantity, weight, volume, or manual approved split. The method must match the nature of the cost. Allocating container freight equally to every item when one item weighs ten times more can distort margin.

Landed cost capitalises into stock or posts to an approved expense/clearing account according to policy. It must not be added manually to the item’s selling price while leaving inventory cost unchanged.

Goods receipt and serial control

The warehouse receives 38 machines; two are short-shipped. Goods receipt records supplier challan, container, transporter, warehouse, bin, item, quantity, serial number, batch if used, manufacture date, condition, and discrepancy. The receipt is partial and leaves two units open on the PO.

Three machines fail inspection because of damaged casing. They move to quarantine with reason, photos, serials, and claim reference. Only 35 saleable machines are available. The supplier invoice must be matched to accepted quantity and policy for disputed/short goods. A document showing 40 ordered is not evidence that 40 were received.

Supplier invoice and three-way match

The supplier invoice records supplier invoice number/date, PO, receipt, currency, tax, goods value, advance allocation, and payment due date. The three-way match compares ordered, received, and billed quantity. A mismatch routes to hold or exception review rather than forcing the invoice through by changing the receipt.

The AP controller checks duplicate invoice number, supplier, currency, tax registration, period, and ledger mapping. The supplier invoice clears goods-received-not-invoiced or another configured clearing path. Input tax treatment follows the company’s place-of-supply and import policy.

Branch allocation and transfer

The Dubai warehouse allocates 20 saleable machines to Abu Dhabi and 15 to Riyadh export demand. A transfer request records source warehouse, destination warehouse, item, quantity, serials, expected date, and reason. Dispatch reduces source availability and creates in-transit responsibility; receipt increases destination availability. A transfer is not a sale and should not create customer revenue.

If one machine is damaged during transit, the destination records shortage, serial, condition, carrier claim, and adjustment approval. Editing the transfer quantity after dispatch hides the logistics event.

Sales in AED and SAR

The UAE branch sells five machines in AED. The Riyadh customer orders ten in SAR. Each sales order records customer, branch, warehouse, currency, exchange-rate policy, payment terms, delivery date, tax regime, and lines. The serials delivered must match accepted inventory and warranty evidence.

The invoice currency can differ from the company base currency. The original amount, rate date, base amount, tax components, and due date remain visible. A later payment rate can create FX difference; it is a settlement result, not a reason to rewrite the invoice.

Margin by shipment

The trading manager reviews margin per shipment and branch:

Measure	Dubai AED	Riyadh SAR equivalent
Sales value	310,000	690,000
Landed inventory cost	218,000	485,000
Freight to customer	8,000	21,000
Marketplace/channel fee	0	18,000
Gross contribution	84,000	166,000

The report must explain whether the figures are posted actuals or forecast values, which exchange rate was used, and whether warranty provision, rebates, and returns are included. A high sales value with unallocated landed costs is not a reliable margin.

Payment and supplier close

The company pays the supplier’s 70% balance after document acceptance. Finance records bank, payment mode, instrument/reference, currency, rate, date, supplier, and allocation. A payment without allocation leaves AP open. A supplier credit for the two short-shipped units is a credit note or adjustment with source evidence, not deletion of the original invoice.

Month-end close reconciles open purchase orders, in-transit shipments, customs clearing, landed-cost allocation, quarantine, supplier advances, AP, branch transfers, serials, customer invoices, FX, tax, and period status. The controller retains the shipment pack: PO, commercial invoice, packing list, bill of lading, customs entry, broker invoice, receipt, inspection, landed-cost document, and payment.

Consultant challenge

Repeat the case with an EXW supplier, partial container, missing customs document, duty reassessment, foreign-currency rate change, short shipment, damaged serial, branch transfer loss, supplier debit note, customer return, warranty replacement, and a closed-period invoice. For each test record fields, evidence, owner, permission, stock effect, ledger effect, tax effect, FX effect, and report result.

Use this chapter with Sales and purchasing, Inventory, Advanced GL Mapping, Sales lifecycle, and API Library.