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Is Your 3PL Billing System Helping or Hurting Your Business?

If you’re like many third-party logistics (3PL) providers, you’re probably using a warehouse management system (WMS) that wasn’t specifically designed for 3PL operations.

And when it comes to billing, you may find that your system lacks the necessary functionality to satisfy your customers’ unique requirements. The impact of this can be far-reaching, leading to revenue leakage, inefficiencies, and customer dissatisfaction.

Is it time to reassess whether your current system is helping or hurting your business?

Common Billing Issues Faced by 3PL Providers

Many 3PLs struggle with billing inefficiencies due to outdated or ill-suited systems. These are some of the most prevalent challenges:

Revenue Leakage

A major concern for 3PLs using legacy systems is revenue leakage. If your WMS doesn’t adequately track value-added services or misreports them, it’s likely that you’re undercharging your customers. Even minor inaccuracies can accumulate over time, leading to substantial revenue losses.

Errors from Manual Processes

If your team relies on workarounds, manual data entry, or even handwritten notes to track billable services, you’re increasing the risk of errors. When this data is transferred to your billing system, small mistakes can cascade into larger issues, from inaccurate invoices to underreported services.

Customer Dissatisfaction

Legacy systems often impose limitations on billing formats, forcing you to generate invoices in ways that might not align with your clients’ preferences or requirements. If your invoices are difficult for clients to understand or don’t meet their expectations, customer frustration will mount, potentially driving them to look for alternative 3PL providers.

Labor Leakage

Inaccurate or inefficient billing systems require additional labor to resolve issues, whether it’s researching discrepancies, gathering additional data from warehouse staff, or manually inputting invoices. These extra tasks add up, driving up labor costs and reducing overall productivity.

Do You Need a Better 3PL Billing System?

Can your current 3PL billing system split costs between different entities?
If your billing system requires manual workarounds to allocate costs to various internal departments, projects, or accounts, you’re wasting valuable time and increasing the likelihood of errors.

Does your system offer comprehensive query functionality?
A modern 3PL billing system should allow you to select any data element from any table within the WMS as a billing attribute. If your current system lacks this flexibility, you’re missing out on critical customization that could streamline your billing processes.

How long does it take to set up billing for a new customer?
Efficient onboarding is essential. If it takes too long to set up billing for new clients due to system limitations, you’re losing precious time and resources.

Are you using manual operations or workarounds?
If you need to manually collect or input information about billable activities, your system is hurting your business. Automation should be handling these tasks, not your team.

Can you automatically generate and send invoices?
Automation is key to reducing errors and accelerating the billing process. If your system can’t automatically create and email invoices, it’s time for an upgrade.

Can you track all customer charges?
Visibility into every charge on a customer basis is vital for transparency and accuracy. A modern system should offer this feature without requiring manual tracking.

Can your system create multi-year contracts?
If your system can’t handle multi-year contracts or fails to adjust for increases automatically, you’re losing out on flexibility and potential revenue.

Does billing continue when a contract expires?
In the event of an expired contract, your billing system should be able to continue billing without manual intervention, ensuring no revenue is lost during transitions or renewals.

Can you manage uncommon billing strategies?
Your system should accommodate a variety of billing methods without relying on tags, manual adjustments, or user-defined fields. If it doesn’t, it’s limiting your flexibility and adaptability.

Can you bill for fuel surcharges or overtime automatically?
Manual billing of surcharges or overtime is inefficient. Modern systems should handle these charges automatically, ensuring you don’t miss out on any billable services.

Can you bill on a percentage or rate basis automatically?
This flexibility should be built into your system. If it’s not, you’re losing time calculating and applying these rates manually.

Does your system have a 3PL billing wizard?
A billing wizard simplifies setup, making it faster and easier to configure client-specific billing processes. If you don’t have one, you’re missing out on valuable time-saving features.

How many billing line items can your system handle?
Scalability is crucial. A robust 3PL billing system should be able to handle an unlimited number of billing line items without compromising performance or accuracy.

Is your system forcing you to bill a certain way?
Your billing system should work for you, not the other way around. If it forces you to follow rigid processes that don’t suit your business or your clients, it’s time for a change.

Why It’s Time for a Change

Answering these questions will give you a clear idea of whether your current billing system is helping or hindering your business. A well-designed 3PL billing system should:

  • Streamline processes and reduce manual workarounds
  • Improve accuracy and minimize errors
  • Increase customer satisfaction with clear, flexible billing methods
  • Boost profitability by eliminating revenue and labor leakage

If your system falls short in these areas, investing in a new, more robust 3PL billing solution will not only reduce inefficiencies but also improve your bottom line. A modern, tailored system ensures you are meeting customer demands, tracking all billable services, and maintaining operational efficiency.

Don’t let an outdated billing system hold your business back. It’s time to take control, streamline your billing, and enhance your 3PL operations.

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