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Options to Consider when You Have Freight and Are Using a Credit Card Program in Microsoft Dynamics NAV

Forklift shown with credit cards and computer

In this blog, we will go over general credit card and tax / freight integration in Microsoft Dynamics NAV.

Sales tax and freight charges on the same sales order

It is common to have both sales tax and freight charges on a sales order. If you are using standard Microsoft Dynamics NAV, the sales tax is added based upon the Sales Tax setup, which determines what is taxed. Typically, only services and items are taxed, but sometimes freight is also taxed. Freight can be added as either a G/L Account or Resource line type. Whether freight is taxed depends on how it is set up.

The sales tax is typically calculated when the order is released. If a credit card application is used, it is important to note that the authorization or charge for the credit card must follow the release so that the proper amount is included in the credit card transaction. If it occurs before the release, no tax will be included in the credit card transaction.

Freight added to the sales order during the shipping process

Another issue is when freight is added to the sales order during the shipping process. Typically, you enter the sales order, release the sales order, and then get authorization for the sales order amount. At that time, you do not know the exact shipping cost. If you run into this situation, you have a few options to think about.

First, you will need to know if your credit card gateway allows you to reverse the original authorization and get a new authorization. If they do, you can reverse the first authorization and then get an authorization for the amount of the order plus the shipping fee, mitigating the downgrade. If they don’t allow a reversal, you have two options. Allow the order to ship without an authorization for the freight and or get an estimate of the freight prior to getting the original authorization on the sales order. In both cases, you need to check what types of downgrades you could receive from your gateway and how this impacts you.

What is a downgrade? In the credit card processing industry, a Downgrade Fee is a blanket term used to signify surcharges added to the processing fee. However, there is no standard on what a Downgrade Fee must be called or how it can be applied, and the terminology can vary from provider to provider.

Knowing about the options for freight and tax, as well as the cost, when it comes to shipping should help you pick the direction that works best for your company. If you would like assistance in determining if your current credit card and shipping charge handling is best for your company, or you need more information on the general processing of NAV tax or credit card add-ons, please contact Archerpoint.

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