Unit cost is the invoice price
Freight, duty, and handling are expensed separately, so a product costing fifteen to thirty percent more than its invoice price shows a margin that is confidently wrong.
ERP by industry
A distribution business runs on two or three points of net margin, which means every deduction between the invoice price and the bank deposit matters — and most of them are recorded somewhere other than the accounting system.
Send a product list, a month of invoices, and your vendor bills. We will produce margin after every deduction.
The problems
None of these are unusual. They are what happens when the ledger, the warehouse system, and the purchasing process were chosen at different times for different reasons.
Freight, duty, and handling are expensed separately, so a product costing fifteen to thirty percent more than its invoice price shows a margin that is confidently wrong.
The warehouse system knows what is on the shelf; the ledger holds a value. They are connected by one monthly journal that nobody decomposes, and the variance accumulates in it.
Vendor rebates, growth incentives, and co-op allowances are earned monthly and recognised when the cheque arrives. That timing difference distorts every margin figure in between.
Customer profitability after freight terms, returns, discounts, and payment behaviour is calculable and almost nobody calculates it. The bottom decile is often negative.
Web, EDI, wholesale, and phone orders each reading on-hand rather than available, so the same unit gets promised twice and somebody finds out at pick time.
The month cannot close until inventory is valued, and inventory cannot be valued until receipts, returns, and adjustments are all in. It is the last thing done and the thing everything waits on.
Where the money goes
A representative shape for a distributor between $20M and $80M. Five of these six originate outside the accounting system, which is why margin is so hard to state confidently.
Vendor rebates commonly run two to four points of cost and are recognised when received rather than as earned. Accrued properly against actual purchase volume, the ranking of which products and which suppliers are profitable frequently changes — and it changes in favour of exactly the lines a distributor was considering dropping.
Your stack
The warehouse keeps doing what it does. What changes is that finance stops rebuilding the picture from four exports each month.
Benchmarks
Drawn from our own engagements with distributors between $20M and $80M. The bar is a typical erp.io customer after two quarters; the marker is the segment median.
We do not replace your warehouse system. Bin logic, pick paths, wave planning, and barcode workflows belong there and are genuinely hard to do well. What we hold is quantity, value, commitment, and the accounting relationship between all three.
That division matters because the problem distributors bring us is almost never operational. It is that the operational picture and the financial picture are connected by a monthly journal, and everything anyone wants to know sits in the gap between them.
For imported goods, freight, duty, and handling commonly add fifteen to thirty percent to unit cost. Allocating that across receipts by value or weight — into the cost layer rather than as a separate expense — changes which SKUs are profitable, and the change is not uniform.
Heavy, low-value items absorb disproportionate freight and are frequently losing money at the margin everyone believes they are earning. Light, high-value items are usually better than assumed. Neither is visible until the allocation is done properly.
Distribution customers are not equally valuable and the ranking by revenue is nearly always different from the ranking by contribution. Freight terms, return rates, order size, order frequency, and payment behaviour all move it, and each is recorded in a different system.
Joining them is arithmetic once the data is in one place. The common finding is that the bottom decile of customers by contribution is negative, and that several of them are in the top quartile by revenue.
If you need real warehouse management as your system of record — bin-level control, wave picking, cycle-count discipline across multiple sites — Acumatica or NetSuite are better purchases. The same applies if you manufacture as well as distribute; we have no MRP and do not plan to. We would rather say this here than in month four.
Questions
True margin after freight, rebates, and returns, from your own invoices and vendor bills.