Match Freight Charges Actually Paid to Customer Invoices to Ensure Surcharges are not Missed.

The rising cost of diesel fuel is passed to your company through Fuel Surcharges on freight bills. It can reduce your company’s profits if you re-bill a constant amount instead of your actual cost. Today’s EDI technology enables freight bills to be received electronically and imported into your business application. The actual charges are posted immediately to the invoicing application before the Invoice is sent. This also helps satisfy the Sarbanes-Oxley cost recovery and allocation requirement.

Overview

Determining the proper freight charges for each customer is time consuming, tedious, and error prone. A proper solution was to analyze periodically and then set an amount. After time passed, and customers complained, several amounts were set. Due to time constraints these set amounts sometimes are not changed when charges increase.

Companies already doing EDI need only add two new transaction sets – 210 for over the road/parcel and 110 for air carriers. Data from both is received, verified, and then billed to the customer. Later, if a customer questions the charge, the freight invoice is then printed and faxed to the customer. (Payment can continue to be made from weekly paper statements or bills so current cash-flow is maintained.)

To justify the approximately 40 to 80 hours of I.T. development needed, an analysis which compares the total amount paid to the total amount billed is needed. Since costs have been rising sharply, it is likely that losses have occurred. Second, the benefit of automation of this process means lower labor costs. Finally, for some customers where extra charges are paid for items such as tarping, additional revenue can be gained.

Conclusion

It is likely that as fuel costs rise, you are paying your carriers for the increase. Freight billing allows a method to match the freight charges to your customers to the charges you actually pay your carriers. Without it, your charges to your customer will lag behind the rising costs incurred from the carriers. In addition, automating these processes will result in fewer errors and a significant amount of time saved from manual re-entry of information. Plus, the better you handle your data, the more value you bring to your customers and your company. If you need help, DCS can provide assistance due to our familiarity with industry practices and with most MRP and EDI systems.