In the competitive world of third-party logistics (3PL), accurate and efficient invoicing is critical to a 3PL’s success and maintaining successful relationships. If done correctly, it can significantly impact your business for the better. If not done accurately and efficiently, it can negatively impact your business’s success and tarnish customer relationships and reputation. Oof. No one wants that - and we are here to help you avoid it. In this article, we will look at the intricacies of 3PL invoicing and billing and how technology can help alleviate the process.
Here’s a quick overview at what we will covering:
- The intricacies of 3PL invoicing and billing
- The two paths of invoicing
- Top 3 benefits of using a WMS for 3PL invoicing
- How to overcome invoicing challenges
The intricacies of 3PL invoicing and billing
3PL invoicing and billing involves several key stages: contract signing, data collection, charge calculation, invoice creation, and payment. Each stage is needed to collect the necessary information to accurately calculate rates and charges, and decide on payment.
The contract: setting the ground rules
The billing process kicks off with a contract between a 3PL provider and a client. This contract should outline all aspects of the agreement, including the service provided, the corresponding rates (shipping charges, managing fees, etc.), payment terms, and any other important information.
This initial agreement sets the stage for successful collaboration, eliminating misunderstandings and disputes down the line. It is a protection both for the 3PL and the client to ensure that everyone is on the same page.
Data collection: the foundation of billing
Data collection is a critical step in 3PL invoicing. Before signing a contract, knowledge of the client’s specific operations is essential. This requires gathering detailed answers from the client on important information, like:
- Information needed for packing slips
- Shipping box sizes
- Expected monthly shipments/orders
- Number of SKUs
Proper data collection reduces the risk of oversight and errors, helping to ensure that billing processes are as accurate as possible.
Calculation: the art of charging
After data has been collected, the 3PL will then determine the charges for each service provided, based on the contract’s terms. This stage can be complex. Different services may have varying rates, also some rates might be unique to each client.
If done manually, make sure to double-check to ensure no errors slipped in. However, if you are looking for a more streamlined approach, a 3PL software can help with the calculations, reducing human errors while expediting the process.
Invoicing: the final touch
Once the charges have been calculated, the 3PL then generates an invoice summarizing the costs for the various services and sends it to the client. The invoice should include all relevant fees, and every step in the invoicing process should be executed meticulously to ensure that billing is correct and is completed successfully.
Payment: the end game
Lastly, the 3PL processes the payment via whatever way the client and the 3PL decide on.
And voila! The 3PL invoicing process is complete!
The two paths of 3PL invoicing
When it comes to 3PL invoicing, there are two paths to choose from:
- Manual processes and outdated systems (aka the past)
- 3PL software (aka the future)
The past: manual processes & outdated systems
Humans are creatures of habit. Mastering a specific process takes time and even more time for it to become second nature in your mind. Understanding a workflow like the back of your hand can be comforting, but sometimes it is not the best way to complete a particular task.
When it comes to 3PL invoicing, a manual process or the use of an outdated system can introduce errors, or it might allow for billing to be delayed, all which can strain client relationships and hinder business growth. Yes, it might be second nature to complete the task manually or with a software that has been around for longer than you remember, but it might not be the most efficient and reliable choice.
The future: leveraging technology
Fortunately, the introduction of technology and 3PL software, specifically warehouse management systems (WMS), changes the way 3PL invoicing is handled, making it easier, more accurate, and more streamlined.
Implementing a new system may require some time to familiarize yourself and adapt to the new process. However, the advantages it offers will far outweigh the initial adjustment period.
The top 3 benefits of using a WMS for 3PL invoicing
There are a multitude of benefits you can unlock when utilizing a WMS. Let's take a look at the top three advantages that await you when integrating a dependable warehouse management system into your invoicing process.
#1 Automation of billing processes
Manual billing processes are time-consuming, error-prone, and lack scalability. With a WMS, 3PLs can automate the billing processes, eliminating the need for manual calculations and data entry. The WMS integrates with other systems to gather accurate and up-to-date data for billing purposes. This automation ensures that invoices are created on-time and accurately, reducing billing errors and improving overall efficiency.
#2 Accurate and transparent billing
Inaccurate invoices can make clients feel uneasy. Multiple inaccuracies can be considered by some clients as a “red flag” and might result in the client ending their relationship with the 3PL. Unclear invoices that don’t reflect a full breakdown of all the fees can result in disputes between the client and the 3PL because the client does not feel like they have the complete knowledge of what they are being charged for. These incidences have the potential to tarnish the reputation of a 3PL and negatively impact their business relationships.A WMS helps banish these situations by providing real-time visibility into all the relevant data needed for invoicing, such as storage space used, order fulfillment activities, and any other additional services provided. By automating the invoicing process with a WMS, you can be sure that all billable items are accurately captured and included in the invoices. This transparency builds trust with the client and the 3PL, reducing the likelihood of disputes.
#3 Customization and flexibility
Every 3PL client is different and has unique billing requirements and preferences. A WMS allows 3PLs to customize invoice templates and billing rules to meet the specific needs of each client. Whether it’s charging for storage space, handling fees, or anything else, a WMS can easily accommodate different billing structures and contract terms. This customization and flexibility ensure that clients receive invoices that match their expectations, making the invoicing process seamless and hassle-free.
How to overcome invoicing challenges
Introducing: Zenventory - the ultimate solution to overcoming invoicing challenges
Zenventory was built for 3PLs. Its robust WMS capabilities allow 3PL providers to automate and streamline their invoicing processes. Zenventory simplifies the invoicing process by automating fee charges. Additionally, it offers a user-friendly feature that allows users to generate invoices directly from the system using a customizable PDF invoice template.
Zenventory also supports 3PLs by offering a self-service portal that clients can view their charges, ensuring transparency and customer satisfaction. These features make Zenventory a valuable ally for 3PL providers seeking to optimize their billing processes.
Final thoughts
In the competitive world of logistics, 3PL invoicing can be a daunting task. However, with automation and the right tools, 3PL providers can streamline the billing process, ensuring accuracy, efficiency, and improved customer relations. By implementing 3PL invoicing software like Zenventory, 3PLs can reduce errors, improve visibility, and enhance their services, setting themselves apart in the industry.
