The chaos of managing diverse client billing agreements is a challenge that’s unique to third-party logistics (3PL) companies. Operations leads are responsible for constantly working and reworking this dynamic puzzle of client needs, contracts, and service-level agreements to find innovative solutions.
However, the popular reliance on error-prone spreadsheets and manual invoicing processes is a key contributor to the industry’s notorious complexity. But perhaps the worst part is that this complexity is largely unnecessary—particularly when it comes to billing.
3PL-specific warehouse management software (WMS) includes numerous features to help boost profitability, such as query functionality and the ability to split costs between different entities. But operations leads aren’t just tasked with protecting revenue; they must also effectively maneuver the core challenge of 3PL operations: pervasive contract complexity.
Here’s how 3PL providers can leverage integrated WMS functionalities to efficiently navigate the many nuances of this space.
The Multiclient Billing Nightmare: Why Spreadsheets Fail 3PLs
3PL operations leads are stuck in a whirlwind of data analytics, optimization, and constant communication, constantly juggling dozens of client contracts. Most of their day-to-day work involves rapid problem-solving and firefighting urgent fulfillment crises while optimizing complex workflows for efficiency.
Ultimately, the lead must constantly balance proactive strategic planning, managing client expectations through performance reviews, and ensuring financial consistency for every contract.
All of this work involves precise coordination of numerous diverse variables, including different pricing models (e.g., per pallet, per unit), unique storage fees, accessorial charges, value-added services (such as kitting), and varying billing cycles. Suffice it to say, shuffling between a bunch of spreadsheets simply won’t cut it to manage all of that information. After all, spreadsheets can’t dynamically analyze product velocity across multiple clients.
When 3PLs rely on manual processes using spreadsheets, they run this risk of:
- Billing errors: Lack of automated data processing tasks tends to result in less accurate records because they’re more susceptible to human error.
- Revenue leakage: Inaccurate billing records resulting in lost revenue.
- Cash flow delays: Manually collecting data points from disparate sources takes days to consolidate, leading to late invoices and payments.
- Customer disputes: Underreporting and inaccurate invoices stall the payment process, necessitating time-consuming reconciliation work.
- Strained client partnerships: Client relationships thrive on clarity and transparency supported by real-time data, which manual processes can’t provide.
These common outcomes represent inefficiencies that subsequently damage your bottom line. What’s the best approach not just to reduce underlying complexity but also to navigate the variability that will inevitably remain?
The Solution: A Configurable Billing Rules Engine for Unlimited Contract Variations
A specialized 3PL WMS—considered a configurable billing rules engine—acts as a central hub for all billing logic. This means that operations teams can set up unique billing rules for each client without custom coding.
This approach significantly expedites the development process, not only saving time and money but also adding crucial flexibility to the billing process. Operations leads will find this level of flexibility especially helpful as it applies to per-pallet storage fees, kitting charges, handling surcharges, specialized pricing for temperature-controlled environments, and anniversary billing.
Specific benefits of implementing a purpose-built 3PL billing engine include:
Automated Activity Capture
Automation transforms the 3PL billing process from a reactive, month-end scramble into a proactive, continuously accurate system. Because the WMS automatically tracks every billable activity as it occurs on the warehouse floor, everyone can easily keep track of product movement and any changes in the supply chain.
Examples of trackable activities include:
- Receiving
- Putaway
- Order fulfillment
- Storage duration
- Value-added services
- Shipping cost calculation
Plus, this accessibility isn’t limited to 3PL staff. A robust WMS includes a user-friendly client portal where customers can see billable activities and line items in real time.
Billing Dispute Prevention
Integrated 3PL billing software provides a single source of truth for both the 3PL and its clients, improving data accuracy across the enterprise. This proactive transparency helps to prevent billing disputes before they arise and strengthens client trust and partnerships, protecting profitability and reducing administrative overhead. More accurate billing leads to fewer discrepancies and thus, less frustration among your clients (and your customer service team).
Seamless Integration
Lastly, modern 3PL billing functionality within a WMS integrates with transportation management systems, accounting software (e.g., QuickBooks, NetSuite), and other enterprise systems to streamline your operations. Through these integrations, you can swiftly manage your workflows end to end without ever leaving the WMS. The days of constantly switching between spreadsheets and application windows are over.
3PL providers can now leverage advanced integrations to eliminate duplicate data entry, reduce billing cycle times, accelerate cash flow, and free up the operations team to focus on core fulfillment operations instead of manual invoicing processes.
Take Control of Your 3PL Billing with Datex
Manual billing is unsustainable, and a WMS with a configurable, automated billing engine is the solution for complex 3PL operations. Apart from navigating complexity, this technology both improves accuracy and strengthens client relationships, minimizing revenue leakage and protecting profitability. The right WMS makes it possible to manage various pricing models, payment terms, billing activities, and partnerships all within one unified interface. To see this software in action, get a preview of Datex® Footprint® WMS.