Why goods in transit matter more than they seem
In Swiss SMEs that import, distribute or ship to foreign customers, a significant share of current assets may be physically on trucks, ships or carrier warehouses at the period-end closing date. This is not a logistical detail: the accounting treatment of these goods determines inventory values on the balance sheet, the quarter's cost of goods sold and, consequently, the gross margin you present to shareholders, banks or investors.
The fundamental principle of Swiss accounting law — from the Code of Obligations (CO) to Swiss accounting standards (Swiss GAAP FER) — is true and fair presentation and relevance. Goods must be recorded on the balance sheet of the company that bears the economic risk, regardless of whether they have already arrived in the warehouse. A cut-off error on a single international shipment can shift tens of thousands of francs between inventory and cost of goods sold, artificially altering the quarter's profitability.
This guide explains how to identify goods in transit, apply the accounting cut-off correctly, value them under Swiss rules and interpret the impact on quarterly margins — with operational procedures suited to an SME using accounting software such as Accountex.
What goods in transit are and who owns them
Goods in transit (Waren unterwegs / marchandises en transit) are assets purchased or produced whose delivery is not yet complete at the accounting reference date. They may be between supplier and warehouse, between two sites of the same company, or between the warehouse and the end customer. What matters for accounting is not the truck's GPS location, but the transfer of risk and economic ownership.
Inbound goods in transit
Purchases for which the invoice has been recorded or the contract provides for transfer of risk before physical arrival. They should be capitalised on the balance sheet as inventory or, if the receiving process is not complete, as "goods in transit purchases" until actual warehouse receipt.
Typical in imports from the EU or third countries, where lead time extends beyond the monthly or quarterly closing date.
Outbound goods in transit
Sales where delivery to the customer has not yet taken place, but risk has already passed to the buyer under contract or Incoterm. They remain the seller's responsibility until risk transfers; afterwards, the customer records them in its own inventory.
Relevant for distributors shipping at quarter-end and for the correct calculation of revenue and closing inventory.
Accounting cut-off: the critical point of every closing
Cut-off (Abgrenzung / coupure) ensures that revenue, costs and inventory movements are allocated to the period in which the economic transaction occurs, not when documentation arrives or when someone clicks "save" in the ERP. For goods in transit, cut-off involves three flows that must converge at the closing date:
Purchase and sales documents
Supplier invoices, purchase orders, credit notes and sales invoices must be recorded in the correct period. An invoice dated 31 December for goods whose risk passes on 5 January should not be charged to the previous financial year, unless the contract provides otherwise.
Inventory movements and delivery notes
Receipts, issues and transfers must reflect the date of risk transfer, not just the barcode scan date. Month-end WMS reports should be reconciled with accounting.
Shipments in progress not yet invoiced
For purchases received but not invoiced, apply closing costs (accruals for invoices to be received). For sales shipped but not invoiced, revenue must still be recognised if delivery has taken place or risk has passed to the customer.
In practice, at each month-end or quarter-end closing it is advisable to extract a list of "in transit" shipments with departure date, Incoterm, value and document status, and compare it with inventory account balances and suspense accounts. Accountex allows you to link purchase and sales documents to stock movements, facilitating this reconciliation without parallel Excel spreadsheets.
Incoterms and transfer of risk: the cut-off compass
Incoterms 2020 (ICC) define when the risk of loss or damage passes from seller to buyer. They do not alone determine transfer of title — which remains governed by the contract — but in commercial practice they are the most widely used reference for cut-off. Here are the most frequent scenarios for an importing Swiss SME:
| Incoterm | Transfer of risk | Typical accounting (CH buyer) |
|---|---|---|
| EXW | When made available at the seller's premises | Goods in transit inventory from departure from supplier warehouse; transport costs borne by buyer |
| FOB / FCA | On delivery to the carrier (port or agreed location) | Goods in transit inventory from shipment; attention to customs border and import VAT |
| CIF / CIP | On delivery to the carrier, but seller pays transport | Goods in transit inventory; purchase cost includes freight and insurance to destination |
| DAP / DDP | On arrival at destination (DDP: seller also handles customs clearance) | Goods in transit inventory until arrival; with DDP supplier may invoice only on actual delivery |
Document the agreed Incoterm on every purchase order and align your internal accounting policy. In an audit or review, the auditor will verify consistency between contracts, transit documents (e.g. T1/NCTS) and electronic customs declarations (e-dec or Passar).
Valuation of inventory and goods in transit
Under the CO (Art. 960a and 960c) and Swiss GAAP FER, inventory — including goods in transit classified as such — is valued at the lower of acquisition or production cost and net realisable value less selling costs. The lower-of-cost-or-market principle (Niederstwertprinzip) also applies to inventory still in transit.
Full acquisition cost
Cost includes purchase price, import duties, transport costs to the warehouse (or to the point at which risk passes, if consistent with policy), customs clearance costs and other directly attributable costs.
Trade discounts not linked to individual purchases and general administrative overheads should not be capitalised.
Valuation method
Swiss SMEs generally apply FIFO (first in, first out) or weighted average cost. The chosen method must be applied consistently and documented in the notes to the financial statements.
For perishable goods or those with rapid obsolescence, consider specific write-downs on goods in transit as well if market value has fallen before arrival.
Goods in transit may be recorded in a dedicated inventory account (e.g. "Goods in transit") or included in the merchandise inventory account, provided the balance is reconciled with the open shipments list. Avoid leaving them in generic suspense accounts at year-end: at annual closing they must flow into total inventory on the balance sheet.
Impact on quarterly margins: where distortions arise
Quarterly gross margin is calculated as revenue minus cost of goods sold (COGS). If the cut-off on goods in transit is incorrect, the quarter's COGS will be too high or too low, distorting apparent profitability. Here are the four most common scenarios in SMEs:
| Cut-off error | Effect on closed quarter | Effect on following quarter |
|---|---|---|
| Goods in transit purchase recorded as expense instead of inventory | Inflated COGS → artificially low margin | Understated COGS → artificially high margin |
| Goods in transit purchase left off balance sheet | Understated COGS → inflated margin; understated inventory | Negative adjustment when sold |
| Sale shipped but not recorded (risk already passed) | Understated revenue and margin; overstated inventory | Double counting of revenue in following quarter |
| Sale recorded without inventory issue | Inflated margin; understated inventory | Inventory adjustment or abnormal COGS subsequently |
Simplified numerical example
An importing SME closes Q3 on 30 September. On 28 September an FOB shipment departs from Portugal worth CHF 80,000 (risk transferred on the 28th). The goods arrive in the warehouse on 4 October and are sold in full in Q4.
Correct cut-off: CHF 80,000 to goods in transit inventory at 30.09 → Q3 COGS unaffected; when sold in Q4, cost moves to COGS.
Incorrect cut-off (recorded as Q3 expense): Q3 shows CHF 80,000 more COGS with no corresponding revenue → Q3 gross margin penalised by 80,000; Q4 benefits by the same amount with no associated cost.
Goods in transit, VAT and customs: two records, one transaction
For imports into Switzerland, import VAT (currently 8.1% on standard goods) and customs duties affect the capitalised acquisition cost in inventory, but follow documentation timelines distinct from internal accounting cut-off.
The import declaration (e-dec or Passar, currently in transition) may be filed at the border or deferred, depending on the company's authorisation. The accounting timing of import VAT follows the rules on import tax (Art. 52 VAT Act): generally at customs clearance, when goods are released for free circulation on Swiss territory. Coordinate this flow with your fiduciary to avoid deductible VAT appearing in one period and goods in transit in another.
For imports from EU suppliers (purchases with delivery in Switzerland), verify that the foreign invoice, shipping note and customs documentation are aligned on the customs value (transaction value + costs to the border).
Operational procedures with Accountex
Integrated accounting software reduces cut-off errors when purchases, inventory and reporting share the same data foundation. Here is a recommended workflow for quarterly closings:
Set up a "Goods in transit" account
Link it to the inventory chart of accounts. When recording a purchase with risk transferred but goods not yet received, debit this account instead of the main warehouse.
Automatic transfer on warehouse receipt
When goods are received and confirmed, transfer the balance from "Goods in transit" to operational inventory with an internal movement. Cost of goods sold will only be generated on sale issue.
Pre-closing reconciliation report
Before consolidating the quarter, compare the goods in transit account balance with the open shipments list from the courier or forwarder. Every difference must be investigated and adjusted before final closing.
Gross margin by period
Use Accountex margin reports only after cut-off is complete. A "clean" quarterly margin requires revenue, COGS and inventory change to be consistent within the same time frame.
Quarterly closing checklist
Before finalising quarterly reporting, verify each point:
| Check | Action |
|---|---|
| Open inbound shipments list | Compare with "Goods in transit" balance and supplier invoices |
| Undelivered outbound shipments list | Verify Incoterm and correct allocation of revenue / inventory |
| Invoices to be received (accruals) | Estimate costs for goods whose risk has passed but with no invoice |
| Invoices to be issued | Accrued revenue for deliveries completed or risk transferred |
| Valuation method consistency | FIFO or average cost applied uniformly, including goods in transit |
| Incoterm documentation | Archive delivery notes, CMR, customs declarations for every relevant shipment |
| Gross margin vs. budget | Variance analysis after cut-off, not before |
Conclusion: rigorous cut-off, reliable margins
Goods in transit are one of the points where Swiss SME accounting most easily diverges from economic reality. A disciplined cut-off — anchored to Incoterms, supported by systematic reconciliations and correctly recorded in the chart of accounts — protects the reliability of the balance sheet and quarterly margins.
You do not need a dedicated logistics department: clear policies, a well-managed transit account and a closing process that always includes the open shipments list are enough. With Accountex, purchases, inventory and reporting stay linked, reducing the risk of shifting costs and revenue into the wrong quarter and allowing you to present consistent figures to shareholders, banks and auditors.