Three Things Every Shipper Should Know About Auditing Shipping Expenses

February 8th, 2011 @ Newgistics  -  No Comments

Now that the dust has settled from the peak shipping season and daily operations have returned to normal, you likely have a stack of vendor services invoices waiting for your staff to audit and pay, and few are more critical than the invoice received from your shipping service provider(s). Not only is it critical because of the importance of your carrier in your overall business strategy, but also because of how tedious these invoices can be to reconcile and audit. So whether your invoices are delivered electronically or are shipped to you in a box, big or small, here are a few things to consider as you dive into those numbers.

Depending on the carriers you elect to use, auditing may be a relatively simple task or may be one of the most difficult duties your transportation department performs. In fact, it can be so difficult that there are companies who do nothing but audit and pay carrier invoices for their clients. Regardless of the manner in which you handle your carrier invoices, look at the following items first:

  1. Reconcile – It sounds simple, but if you receive one invoice for basic transportation services and another for “value-added services” (i.e., accessorial fees), putting the data together on a per shipment basis can be very tedious, if not seemingly impossible. Until you reconcile your bills this way, you will never really have a firm grasp on what your true cost of service is – and in some cases, a carrier may hope you never really figure out what those costs truly are because of the impact those fees have on their bottom line.
  2. Identifying Enhancement Opportunities – Carriers, regardless of who they are, do their absolute best to deliver on their commitments to you and your customers. Your invoice likely provides detail indicating how well a carrier performed in terms of hitting delivery windows, fees assessed for additional services, and any number of other pieces of information that are valuable to your business in evaluating these services. This is especially the case for expedited and guaranteed products where you pay a premium for service based on your customers’ expectations to receive a product within a given period of time.
  3. Managing Claims – Claims are available as a way to protect merchants and their customers. There are a couple of things that need to be considered when making claims or negotiating carrier contracts based on past performance. The first step is to document, which may require you provide proof of a customer complaint relative to a service failure. And while it should not have to be that difficult, some carriers make it absolutely impossible to file a claim for a damaged or lost shipment so come to the table armed with all the details surrounding the shipment and the reason the claim was filed. The second thing to consider is how hard you want to push claims when renegotiating contracts. This is not to say that you should let things slide during a negotiating session, but exercise caution. Some people will say you should hit the carrier for every single fee or error in an audited invoice when looking at a new service agreement, and you are well within your right to do so, but the carrier may decide in turn to not be as kind when negotiating the total costs of service. You simply have to choose your battles.

At the end of the day, putting merchandise into the hands of your customers is the lifeblood of your business, and the manner in which you execute your shipping strategy can pay huge dividends to your business or can create significant problems for your customer and your bottom line. If your current process is too difficult, whether it is in the manner in which you manage and reconcile invoices, handle claims for shipping issues, negotiate terms and conditions of your carrier service agreement, or anything else, look at alternatives. Introducing new ideas and service providers into the mix may not only keep current providers on their toes, but you may also identify alternatives that will provide greater long-term benefit to you and your customers.

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