Ordering Something online and receiving it on your doorstep is really fun. But the backend which involves supply chain operations is not as enjoyable as it seems. This is where 3PL billing and invoicing comes into the picture and serves to be the life savior in fixing the challenges in supply chain management.
When you experience a surge of demands in your business: You might be overloaded with orders for your products, find your warehouse under-spaced to accommodate your stock inventories, or be overwhelmed to reach the customer with the specific order on a specified time. It’s time to free yourself from the pain of searching through carton boxes and packing tapes. It’s time to fix a 3PL provider and focus on growing your brand.
The 3PL providers manage these things: warehousing, packing, taxes, customs, and tariffs, pretty well but how about handling them and their invoicing process? Now, this sounds like a problem too. So we have articulated a blog to help you deal with this with advanced technologies and tools. Let us delve into the words to know better about 3PL Billing and what it actually accomplishes!
What is 3PL?
3PL stands for third-party logistics and denotes an outsourced order fulfillment provider of a business. A real-time example makes it more clear: you place an order in an e-commerce platform like Flipkart/eBay and your order will be shipped to you through a third party like Ekart Logistics. Here, Ekart is the 3PL provider and they take care of the inventory management between the business platform and the buyer. A 3PL provider performs the order fulfillment from start to finish saving you time and money.
Dare not to miss out on the secret ingredient – 3PL billing and invoicing software- in your supply chain management. Reports show an up arrow in 3PL best practices in 90% of Fortune 500 companies and are expected to grow to $1.75 trillion by 2026.
An expert 3PL provider devises effective strategies to maximize your business efficiency with speedy delivery and lowered shipping times and costs. The key functions performed by a 3PL provider are:
- Warehousing inventory – your manufactured products are stored in a secured location, usually owned and managed Warehouse Management System (WMS) by a 3PL provider.
- Distribution – This stage involves order fulfillment, custom labeling, and packing – managed either manually or by specialized software.
- Transportation management – Shipment and tracking of the order made feasible through Transportation Management System (TMS)
- Reverse logistics – Handling the orders returned by the customer and shipping it back to the manufacturer is reverse logistics. Legit policies on returns by the 3PL provider make it easy to handle returns and their track. This ensures convenience at both customer and business ends.
- Freight/cargo consolidation – Some strategies of the 3PL provider effectively reduce the shipment cost, like instead of delivering multiple small shipments to the same location delivering a large single one helps. Consolidation is one such benefiting factor of a 3PL provider.
There are numerous small tasks involved in each of these logistics activities. Doing these at your convenience would be the ever-wanted dream thing from a business provider perspective and 3PL billing and invoicing software makes this dream a business reality to adhere to forever.
Types of Charges / Fees in the 3PL Invoice
There are several types of fees that may be included in the billing process of a third-party logistics provider, depending on the specific services provided and the agreement between the 3PL provider and the customer.
Shipment or Transportation Fees:
charged for the transportation of goods, and is calculated based on factors such as distance traveled, mode of transportation, or weight of the goods.
Allocating the shipment to the warehouse and storage of goods is charged as warehousing fees. Factors such as the amount of space used, the duration of storage, or the type of goods stored are considered while invoicing a warehouse fee.
These fees are charged for the handling of goods, such as loading and unloading, sorting, or repackaging. This is the receiving or inbound charge invoiced.
Value-added service Fees:
The fulfillment fees are charged for additional services provided by the 3PL provider, such as labeling, assembly, or customization of goods. The value-added service fees are established as an outbound charge made by the business.
The reverse logistics involves a charge when a user returns the shipped product and charges are billed ad-hoc for activities like kitting, and scheduled delivery. Set-up fees, Maintenance charges, administrative, processing, and accessorial charges are also defined in some cases.
It’s important to note that these fees may be charged in different ways, such as per unit of goods, per hour, or as a percentage of the value of the goods. It’s important for both the 3PL provider and the customer to have a clear understanding of the fees and how they are calculated, to avoid any misunderstandings or disputes in the billing process.
3PL Billing Process
There is no doubt that billing such a wide range of services by the 3PL provider is complex and challenging and no wonder you are looking for a solution to optimize your 3PL billing process. Let us dig deeper into the 3PL billing process.
The billing process for third-party logistics providers involves calculating and invoicing customers for the services rendered, including transportation, warehousing, and other value-added services. The 3PL invoice process can be complex, as it often involves multiple parties, various rates and fees, and different billing cycles.
To streamline the 3PL invoice process, technology can be used to automate and digitize various aspects of the process. Here are some 3PL billing best practices:
1. Set Up Billing Agreement/Contract:
By leveraging technology, 3PL providers can streamline the billing process by signing a legal contract with the business provider. This agreement outlines every detail involved in the billing process like services provided and their rates and fees, payment terms and conditions, billing cycles and payment methods along with their frequency. The contract is also obliged by the industry standards and legal requirements defined by IWLA (International Warehouse Logistics Association) and UCC (Uniform Commercial Code).
2. Rate And Fee Calculation:
Expertise 3PL providers make use of automated software to calculate rates and fees based on the services rendered and agreed-upon pre-declared pricing structures. This can reduce errors and save time compared to manual calculations. To ensure the reliability of the process, all information on the transactions is collected and documented before billing the service. Reports and receipts for shipment, PO, and other value-added services/operations are validated before populating the automated invoicing software.
Every service is charged as per the contract and some services involve monthly/yearly charges and few have a charge per item. Many 3PL providers use electronic invoicing systems to send invoices directly to customers via email or a customer portal rather than relying on paper invoices. Automated electronic invoicing process speeds up the invoicing process and reduces the risk of lost or delayed invoices. With conventional 3PL billing, the upcoming steps require some integrations with external software, while solutions like Cflow are flexible with an inbuilt workflow creator interface.
4. Integration With Accounting Software:
By integrating billing systems with accounting software, 3PL providers can simplify the process of recording and reconciling invoices, payments, and other financial transactions.
5. Payment Processing:
3PL providers can use technology to process payments electronically, reducing the need for manual payment processing and associated paperwork. The 3rd party integration for payment is defined in the agreement.
6. Tracking And Reporting:
Technology can provide real-time visibility into the status of invoices, payments, and other financial data, allowing 3PL providers to quickly identify and resolve any issues using separate software.
3PL Billing Software
3PL billing software is a type of technology that can help 3PL providers automate and streamline their billing processes. This software is designed to handle the complex billing requirements of the logistics industry and can be customized to meet the specific needs of a 3PL provider.
Businesses can automate 3PL billing processes by using 3PL billing /invoicing software. This, in turn, aids to reduce errors and improve the efficiency of a business. This also leads to better customer satisfaction, increased profitability, and a more streamlined and efficient business operation.
The software module for billing involves special automation to streamline warehouse management, inventory management, tracking and transportation, and other supply chain processes.
Why Is 3PL Billing Really a Secret Ingredient in Hassle-Free Supply Chain Management?
Growing competition and market climate expedites a rising warehouse cost and shortfall of warehouse spaces in upcoming years, as per reports.
Several reports embark on the growing face of 3PL, showing it has indeed become a supply chain metric to be incorporated into a business model to focus on growth and performance. Meanwhile, opting for 3PL will save you from economic pitfalls, and eventually, so does the 3PL billing software too. The billing process for 3PL providers can be a complex and challenging task.
There are several factors that can make it difficult to accurately calculate and invoice customers for the services provided.
Delays and Errors:
Many 3PL providers still rely on manual processes for calculating and invoicing customers, which can be time-consuming and error-prone. This can lead to delays in the billing process and inaccuracies in the invoices.
Impaired Customer Relationship:
Different services may be billed on different billing cycles, such as weekly, monthly, or quarterly. This can make it difficult to keep track of which services have been billed and which are still outstanding. When a 3PL provider lacks visibility with their charges and fees, there may be a chance of disputes or discrepancies. This can lead to delays in payment and a strain on the relationship between the two parties, which can end up in losing a customer.
There are multiple parties involved in the transportation and handling of goods, such as carriers, warehouses, and other service providers. This can make it difficult to track the services provided and determine who should be billed for what. Generating invoices for individuals results in unwanted human errors and confusion in such cases.
Lack of Visibility:
Depending on the specific services provided and the agreement between the 3PL provider and the customer, there may be different rates and fees charged for different aspects of the services provided. This can make it challenging to accurately calculate the total amount due and ensure that all fees are accounted for. This data being disconnected creates confusion and hurts businesses dearly.
All of these challenges persist to make the 3PL billing process a difficult and time-consuming task. However, by leveraging technology and implementing streamlined processes, 3PL providers can overcome these challenges and aid businesses run successfully.
3PL Billing Process: Quick Steps to Implement
Automating the 3PL billing process helps 3PL providers streamline operations, reduce errors, and improve efficiency. Implementing billing software for 3PL providers requires careful consideration and planning to ensure a smooth and successful rollout. Here are some things to consider when implementing 3PL billing software:
Choose the right software:
The first step in automating the billing process is to choose the right software. It is eventually important to assess the specific needs of the 3PL provider for choosing the right one.
- Evaluate the types of services provided, the billing cycles, and the rates and fees charged by the 3PL provider.
- Look for software that is designed specifically for the logistics industry and can handle the complex billing requirements of 3PL providers.
- The software should be customizable to meet the specific needs of the 3PL provider and should be able to integrate with other software systems, such as accounting software or transportation management systems.
- Look for software that can initiate billing activity, configure billing rules, configure invoice templates, make invoice worksheets, and review them automatically on the go.
Set up the system:
Once the software has been selected, the next step is to automate the 3PL billing process. The billing software should be customizable to meet the unique needs of the 3PL provider. This involves configuring the software to match the 3PL provider’s billing requirements, including rates and fees, billing cycles, and invoicing templates. The system should also be set up to integrate with other software systems, such as accounting software or transportation management systems. Make sure your Invoicing system communicates and collaborates effectively with your CRM and HRM to lead a feasible automation pace.
Train and Test:
After the system has been set up, it’s important to train staff on how to use the new system. This can include online training, user manuals, and in-person training sessions. Once the staff is trained, it’s important to conduct thorough testing of the system to ensure it’s working properly and to identify any potential issues.
- If the 3PL provider is transitioning from manual processes or different billing software, it’s important to ensure a smooth data migration to avoid any data loss or inconsistencies.
- Test the system with test data, run reports, and conduct a mock billing cycle.
- Look for a billing software provider who can offer ongoing support to ensure the software is working properly and to address any issues that may arise.
3PL Invoice- Best Practices Overview
Billing is a critical component of any business, including 3PL providers. Implementing best practices in the billing process helps 3PL providers improve accuracy, reduce errors, and ensure timely payment. Here are some billing best practices that 3PL providers should consider:
- Frame out a clear and detailed contract agreement defining the services provided, the rates and fees charged, and the billing cycles. This can help avoid confusion and disputes down the line.
- Make sure your invoices are accurate, easy to understand, and sent in a timely manner to ensure prompt payment.
- Ensure building customer trust with detailed billing statements that clearly show the services provided, the rates and fees charged, and any discounts or adjustments.
- Maintain regular communication with customers regarding billing, including sending reminders for upcoming payments and addressing any billing inquiries or disputes promptly.
- Regularly evaluate their billing process to identify any areas for improvement, such as inefficiencies, errors, or delays.
- Formulate reports for calculating rates and fees, generating invoices, and processing payments.
- Always make your billing practices comply with any applicable regulations, and abide by tax laws and data privacy regulations.
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Automate 3PL Billing Process Using Cflow
Making sure you tick out all the boxes above, we affirm that our SaaS BPM suite Cflow, allows you to get seamless supply chain activities. With Cflow you can simple and easy-to-use platform that equips you with all data from the warehouse to your in-house billing. Digital billing with Cflow also offers:
- Faster payments
- Reduced billing time
- Zero missed billables
- Increased revenue
- Saved time and resources
- The efficient and customizable billing process
- Peaceful customer handling
- Hassle-free integration
When you live in an era where more than 60% of customers expect speedy delivery of their orders, it is safe to go along with 3PL billing as a prime business consideration. The on-cloud enterprise SaaS suite like Cflow comes up as a one-stop automated solution for advanced billing and invoicing where every invoice has defined rules for approving, invoicing and acknowledging the same. The Cflow’s dynamic workflows are efficient with custom approvals and their rules creation.
Make your supply chain management more agile and responsive to fit your business’ scaling ambitions with Cflow’s digital invoicing. Sign Up For a Free Trial Now.
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