3PL Billing Challenges26 April, 2017
3PLs face many challenges, particularly when they want to implement a solid billing process. The ultimate goal is to integrate each customer’s unique set of circumstances into one cohesive process that tracks and captures costs in an efficient streamlined manner.
Customer’s appreciate the difficulties and complexity in agreeing on an acceptable billing method – one in which both companies can profit.
For the 3PL, understanding the client’s obstacles, addressing them, and implementing the right operational procedures; is one step towards success. The second step is finding the right software solution to standardize billing processes with configurable services and rates components to centrally manage billing operations.
Listed below are some of the key challenges faced by the industry today:
A. Supporting multiple customers and distinct billing schedules: Every 3PL customer has different billing rates. No matter how hard a 3PL tries to make billing rates uniform, it is rarely a realistic or profit optimizing strategy. In the 3PL world, custom pricing and pricing flexibility are mandatory.
B. Handling multiple warehouses, spaces and variable labor costs: Customers often manipulate their shipments to minimize inventory, reduce on close storage charges adding to the woes on the 3PL operational processes during month end.
C. Value added services: Customers often kit, bundle, add price or quality stickers just before the actual shipment. These types are services are charged extra or billed separately. Keeping a track of all such transactions becomes imperative for the 3PL companies.
D. Freight Fees: It primarily means transportations charges. Regardless of whether the 3PL owns the fleet of trucks or outsources transportation, it is standard practice to charge for these activities. There are a lot of hidden costs that your customers may not see including driver pay, fuel, vehicle maintenance, tolls, insurance and rentals.
E. Prompt Invoicing: 3PLs are scrambling through paperwork and sticky notes every month trying to make sure they don’t miss all of the billable activities before you close your period, you are not alone. Many 3PLs – through no fault of their own – are just too busy to investigate better solutions to help them with closing their billing periods. It is recommended that if 3PLs are still using a spreadsheet to help close your billing cycles, it is time to find a better solution. Competitors are using it and the customers are demanding it.
F. Data accuracy and communication: A time-consuming task for most 3PLs is customer invoicing. A best practice is to provide billing visibility to customers throughout the month so when the monthly invoice arrives there are not any surprises. Providing access for a 3PL customer is not only instrumental in collaboration; it can be a deal-breaker when a 3PL is entertaining new business, especially if the 3PL can’t offer web visibility. In fact, it’s just not enough to provide access to view inventory; today’s savvy customer wants to be able to run billing reports, view current billing charges and download or export these charges. With this type of access in the market today, the 3PL is bound for trouble if spreadsheets or legacy systems are still in use.