AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Record customs duty and inbound freight as part of the inventory cost when the shipment arrives, not as an expense on the day you pay. They then move into cost of goods sold only as the goods are sold. That follows IRS Publication 538, which counts transportation and other charges incurred in acquiring goods in their cost.
The principle in one line
Duty and freight are part of what the goods cost you, so they follow the goods. When the stock is on your shelf, they sit in inventory on the balance sheet. When the stock sells, they leave inventory and become cost of goods sold (COGS). IRS Publication 538 describes cost of purchased merchandise as the invoice price less discounts plus "transportation or other charges incurred in acquiring the goods". This article shows how to record that; for what to include, see inventory accounting for imported Nigerian goods.
The flow, step by step
- Supplier invoice arrives: debit Inventory in transit, credit Accounts payable (supplier).
- Freight forwarder bills for air or sea freight: debit Inventory in transit, credit Accounts payable (forwarder).
- Customs entry: the broker pays duty and fees and bills you. Debit Inventory in transit for duty, fees and the broker's entry charge; credit Accounts payable (broker).
- Goods arrive and are counted: debit Inventory, credit Inventory in transit, at the total landed cost.
- Each sale: debit COGS and credit Inventory at the landed cost per unit of the items sold.
Using an "in transit" account keeps costs together until the shipment is complete, which helps when invoices from three parties land in different weeks.
A worked example
Example only. A Dallas business imports 500 jars of shea butter from Kano. All figures are invented for illustration.
| Entry | Debit | Credit | Amount |
|---|---|---|---|
| Supplier invoice (naira, translated at the payment-day rate) | Inventory in transit | Payable: supplier | $3,000 |
| Sea freight and haulage | Inventory in transit | Payable: forwarder | $650 |
| Duty and entry fees paid by broker | Inventory in transit | Payable: broker | $210 |
| Broker's entry fee | Inventory in transit | Payable: broker | $140 |
| Shipment received | Inventory | Inventory in transit | $4,000 |
| Sale of 300 jars at $8 landed cost each | COGS | Inventory | $2,400 |
Check: 3,000 + 650 + 210 + 140 = 4,000; 4,000 ÷ 500 = $8 per jar; 300 × 8 = 2,400. The remaining 200 jars stay in inventory at $1,600. If the business had expensed the $1,000 of freight, duty and broker fees on arrival, this period's profit would be $400 lower and next period's $400 higher, with nothing about the business having changed.
Common errors
- Booking duty to "taxes and licences". It is not a tax on the business; it is a cost of the goods.
- Putting outbound shipping to customers in COGS. That is a selling expense unless your accounting policy treats it otherwise; be consistent.
- Spreading a whole shipment's freight over only the first items sold. Allocate across all units in the shipment.
- Forgetting refunds of duty, such as a correction after the entry. Credit them back to inventory if the goods are still on hand, or to COGS if sold.
- Recording naira invoices at a rate you looked up rather than the rate you paid. The IRS says to use the rate prevailing when you pay or accrue the item.
Allocating costs across mixed shipments
Shipments from Nigeria are often mixed: fabrics, beads and dried goods in one consignment. Duty usually differs by product, so allocate duty item by item from the entry lines where you can. Freight can be allocated by weight or volume, since that is how it was charged. Write the basis down in a one-page costing policy and use it every time.
| Cost | Sensible allocation basis |
|---|---|
| Duty | By entry line, per product |
| Air or sea freight | By weight or volume |
| Broker fee | By value or evenly across lines |
| Insurance | By value |
Periods and timing
Shipments from Nigeria often span a month end: the supplier is paid in March, freight is billed in April and the goods clear customs in May. Keeping the costs in an in-transit account means none of them hit profit until the goods arrive and sell. At each month end, list what is in transit and check that every open item still has goods behind it. A balance that sits there for months usually means a shipment was received but never moved into inventory, or a cost was posted to the wrong shipment.
At year end, count the stock, value it at landed cost and compare the count with the inventory balance. The difference (damage, shrinkage or recording errors) goes to COGS or a separate loss line under your policy.
Records to keep
The IRS says to keep records as long as needed to prove income or deductions on a return (recordkeeping page, May 2026). For each shipment keep the supplier invoice, payment proof showing the rate, the airway bill or bill of lading, the customs entry summary, the broker's invoice and your costing sheet. A customs broker can supply entry copies on request.
Where Pryme fits
Paying the Nigerian supplier from a Pryme Business Account gives you a dated record of the naira paid and, if you convert, the rate shown before you approved it in Swap. That is the number your inventory entry needs. A verifiable receipt keeps the evidence together.
Questions people ask
Is customs duty an expense or part of COGS?
It is part of the cost of the goods. Record it in inventory when the goods arrive and it reaches COGS when they sell.
Where does freight-in go in the books?
Into inventory with the goods, then into COGS as they sell. Outbound shipping to customers is a selling expense.
How do I record duty paid by my customs broker?
Debit inventory (or inventory in transit) and credit the broker's payable when the broker bills you, then pay the broker.
What if duty is refunded later?
Credit inventory if the goods are still on hand, or COGS if they have been sold.
Sources
- IRS: Publication 538, Accounting periods and methods (Rev. January 2022) · accessed Oct 2026
- IRS: Foreign currency and currency exchange rates (reviewed 22 May 2026) · accessed Oct 2026
- IRS: Recordkeeping (reviewed 1 May 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.