If you import from China, the price on your supplier’s proforma invoice is fiction. An $18.50 patio chair quoted in Foshan costs $33.13 by the time it lands in your Ohio warehouse — 79% more than the number in your books. If your dealer accounting still records purchases at quoted FOB prices, every price list, promo, and rep commission you’ve built sits on a broken foundation. Most dealers find out during a customs review, or during a quarter where revenue grew 20% and profit shrank. Fix it before your next container ships, not after.

Why Quoted Prices Wreck Your Dealer Accounting

Take a pattern we see every month: a dealer orders 500 outdoor chairs from a Foshan factory at $18.50 FOB — $9,250 total. Ocean freight plus drayage runs $3,800 ($7.60 per chair), Section 301 duty on wooden furniture adds 25% of the FOB value ($4.63 per chair), and brokerage, ISF filing, bond, and destination charges add another $650 ($1.30 per chair). Inland trucking adds $1.10. True landed cost: $33.13. The dealer sells at $52 wholesale, believing in a 64% gross margin. The real margin is 36% — before defects, chargebacks, and storage. Because the freight bill went to overhead and duty sat in a separate accrual, no report ever flagged it. Bad dealer accounting doesn’t just misreport profit; it silently redirects your capital toward your worst products.

The Landed Cost Formula Every Dealer Accounting System Must Capture

Every imported unit carries at least seven cost layers, and a functioning dealer accounting workflow prices all of them at the SKU level, not the container level:

  • FOB unit price — your negotiated factory price.
  • Freight allocation — total ocean freight plus drayage divided by units shipped ($3,800 ÷ 500 = $7.60 in the example above).
  • Duty — HS code rate × dutiable value. Note: US Customs assesses duty on FOB value; the EU assesses on CIF. Getting this backwards means double-paying or underpaying.
  • Entry costs — brokerage, bond, ISF, terminal handling; typically $450–$950 per entry.
  • Inland freight and insurance — port-to-warehouse trucking plus cargo cover at roughly 0.3–0.5% of shipment value.
  • Tooling amortization — an $8,000 mold spread over a 20,000-unit run adds $0.40 per unit.
  • Defect allowance — budget 1–3% of goods value; 2.5% defects on a $60,000 order is a $1,500 hit nobody plans for.

The Cost of Money Most Dealers Never Book

China orders run 30% deposit at purchase order, 70% before shipment, then 30–35 days on the water and 20–30 days to first sale — a 60–90 day cash cycle per order. A $40,000 order financed at 9% APR over 75 days costs about $740 in pure carry, money that belongs in your landed cost model, not in a surprise interest line. Currency adds another leak: a 3% USD/CNY move on a $50,000 commitment is $1,500. Once orders clear roughly $30,000, ask your bank about forward contracts — locking rates turns FX from a gamble into a known input.

Fapiao, VAT Rebates, and the Paper Trail That Protects Your Books

Every legitimate Chinese factory charges 13% VAT and can issue a fapiao — the official tax invoice. Exporters then claim a rebate of up to 13%, which is a major reason factory-direct quotes beat no-invoice middlemen. When a supplier offers a 6% discount for skipping the fapiao, they are not doing you a favor: you lose the documented transaction trail, weaken your customs valuation position, and often discover the supplier was a trading company with no production control anyway. Your dealer accounting file for every shipment should hold four matched documents — proforma invoice, commercial invoice, packing list, and bill of lading — plus the fapiao. Run a 3-way match between PI, commercial invoice, and bank payment monthly, and chase every discrepancy within 30 days. Archive everything: US customs law requires importers to keep entry records for five years from entry date (19 CFR Part 163). We have watched dealers lose legitimate deductions in audits simply because the paperwork was gone.

Five Dealer Accounting Mistakes That Cost Real Money

  • Booking inventory at quoted price and expensing freight as overhead. This makes slow, heavy products look like winners and hides 20–40 margin points of distortion across a catalog.
  • Misclassifying HS codes. One dealer we worked with reclassified an LED work light from a 25% tariff line to a 3.9% line — $8,860 recovered on a single $42,000 entry. Spend the $150–$300 on a broker classification review or a binding ruling.
  • Never auditing freight forwarder invoices. When we reconcile forwarder statements for new clients, we routinely find 2–4% in duplicate accessorials and demurrage charges that were not the client’s fault.
  • Ignoring FX timing. Deposits paid months apart at different exchange rates create cost variances of $1,500+ on mid-size orders with zero operational change.
  • No defect or chargeback reserve. If 2% of a $60,000 shipment comes back, that is $1,200 plus return freight. A booked reserve keeps SKU margins honest.

Your customs entry, your commercial invoice, and your books must tell the same story. When they don’t, an auditor assumes the worst number is the real one — usually 18 months later, when your paperwork is gone.

A 7-Step Dealer Accounting Workflow for Every China Order

  • Step 1: Build the landed cost model per SKU before paying the deposit. Kill any SKU that cannot clear a 30% gross margin after full landed cost.
  • Step 2: Book the 30% deposit to a deposits with suppliers asset account — never as an expense.
  • Step 3: When the bill of lading issues, move the full order value to inventory in transit and accrue freight plus estimated duty.
  • Step 4: At entry summary, record actual duty paid and the entry number; true up estimates the same week.
  • Step 5: Reconcile forwarder and customs broker statements monthly — not at year end.
  • Step 6: Roll actual landed costs into price lists quarterly and recompute minimum sell prices.
  • Step 7: Archive the entry summary, packing list, fapiao, and freight invoices together for five years.

Dealers who run this loop consistently tell us the same thing: the first quarter of clean dealer accounting data changes their entire product mix. The items they pushed hardest were often their least profitable once freight and duty were allocated correctly.

Tools That Make Dealer Accounting Nearly Automatic

Under 50 SKUs, a disciplined spreadsheet plus QuickBooks or Xero inventory items will do the job. From 50–500 SKUs, tools like Cin7, DEAR, or Unleashed allocate landed costs automatically at goods receipt. Multi-warehouse dealers above roughly $5M in annual imports typically justify NetSuite. Whatever the stack, the principle is fixed: cost flows to the SKU, not the container, and every shipment reconciles against its entry documents. When we quote for clients at SimpleChinaSourcing.com, every quote ships with a landed cost breakdown — freight by route, duty by HS code, per-unit cost — so your dealer accounting starts accurate instead of being corrected later.

Fix the Math Before Your Next Deposit

Pull your last three containers and rebuild landed cost per SKU using the seven layers above. If real margins run more than 10 points below what your books show, the leak is in your process, not your sourcing. Send us your latest supplier quote and we will return a complete landed cost sheet within 48 hours — freight, duty, entry costs, per unit — so your next order is priced on facts instead of a proforma fiction.