3PL Billing System: How Technology Can Help

What is 3PL Billing and How Technology Impacts it

Third-party logistics (3PL) involves outsourcing services such as warehousing, transportation, and distribution to experienced third-party providers. By doing this, businesses can improve their bottom lines and offer their customers better TATs and reliable services every time.  

Opting for the services of a 3PL provider, businesses can focus on their core competencies while leaving the intricacies of logistics to the experienced professionals at their chosen 3PL service, such as 3PLNext. However, that is not the end of the impact on our client’s bottom line, we also help our customers reduce their labor and IT expense, as well as their delivery and inventory management.

3PLNext’s main objective is to let its clients focus on their core business functions while relying on our expert warehouse management systems to manage their logistics efficiently and cost-effectively. 

With global e-commerce expanding, the logistics industry faces multiple challenges. 3PL services provide businesses with hands-on expertise, resources, and scalability to manage these challenges with minimal hassle and expense. 

For businesses offering 3PL services, efficiency, cost-effectiveness, and reliability of their multiple inbound and outbound supply chains are critical. They need to accurately monitor activity from multiple perspectives for billing purposes 

This is where technology plays an important part, offering 3PL providers various tools to simplify their operations.

Technology in 3PL

3PL companies adopt warehouse automation and robotics technology to streamline processes and increase efficiency. Highly customized tools help 3PLNext track shipments and forecast demand efficiently. This lets us offer our customers customized supply chain operations for their optimum advantage.

These automation and analytics can usually tie up to a billing system to report space utilization, miles, and any other metrics needed for billing purposes. Our billing system plays a key role in efficiently managing multi-client warehousing operations and simplifying the billing process. 

Billing systems go beyond tracking inventory. They can record every activity within the warehouse to enable accuracy through automated billing systems. 

• An effective billing system lets users create customized billing profiles for different customer agreements. A 3PL WMS has features like real-time data capture and tracking to record every activity within the warehouse as it happens.
• The added visibility and automation simplify invoicing for activity-based pricing models that apply charges according to inventory movements, order processing, picking and packing, shipping, and returns.
• An automated billing system with visibility into these activities ensures accurate billing based on the services rendered, reducing the chances of discrepancies or errors. A flexible billing system allows customized customer profiles according to specific contract terms, billing rates, and schedules. This allows 3PL providers to modify their billing structure to align with pricing agreements and apply the relevant billing rules. The WMS can also support different rates for various services, whether it’s receiving, storage, picking, or transportation, ensuring accurate and transparent invoicing.
• The 3PL Billing system can generate periodic invoices for each client based on their recorded activities and billing profiles. These invoices give clients a detailed breakdown of the services they have used and the corresponding charges. 

Billing Types in a 3PL Software

Shipment and Transportation Fees

Shipping and transportation fees cover the cost of managing the logistic operations of goods through various transportation modes, depending on the 3PL warehousing model.

Accuracy and flexibility are key components in the dynamic logistical landscape. This is why 3PLNext offers tailored billing processes to cater to all clients’ needs. Here is a breakdown of the shipment and transportation billing types.

• Small Parcel Shipping: Typically carried out by traditional courier services such as UPwS, DHL, and FedEx, these packages include small and lightweight parcels.  These charges are based on the package’s weight, dimensions, and destination. 
• Less-Than-Truckload (LTL) Shipping: These shipments are larger than parcels but don’t fill up a truck. The carrier charges for these also usually depend on weight, dimensions, and destination.
• Full Truckload (FTL) Shipping: As the name suggests, these shipments fill up a truck’s entire capacity. Hence, carrier charges are often structured at a flat rate per mile or a fixed rate for the full trip. 
  
• 3PL’s Own Fleet: A 3PL system may also have its own transportation fleet and charge according to the transportation services provided by its vehicles. Rates depend on the chosen service, per mile, per shipment, or per hour of service.  

Shipment rates may also differ depending on the delivery type, such as truck, freight, or cargo. It also depends on the service choice, such as standard shipping, expedited delivery, or same-day delivery. 3PLNext aims to optimize the best shipping costs for our 3PL clients while maintaining profitability. 

Warehousing Fees

Storage or warehousing charges depend on the client’s choice of billing model. Typically, the fees are applied in the following circumstances:

• Average Space Occupied Daily for inventory.
• Zone or Section Blocked for clients for their goods.
• Minimum Space requirement that clients must pay for regardless of space utilized. 
• Per Unit/Box/Pallet Pricing based on the number of stored inventories. 

3PLNext uses advanced algorithms to ensure precise billing and also maintain monthly or annual billing cycles for ongoing warehouse needs. 

Handling Fees

Receiving and handling charges include costs rendered by a 3PL provider for:

• Receiving and processing goods incoming from suppliers and manufacturers. 
• Inspection fee to ensure products are in the right condition to be shipped
• Packing fee for order fulfillment that can be charged per package or time spent. 
• Person charges in case of extra labor during the receiving and handling process.

3PLNext assists its 3PL clients by managing and handling charges more effectively by optimizing labor and resource allocation, ensuring that warehouse operations are cost-efficient and scalable. 

Value-added Service Fees

3PLNext’s customizable features also allow 3PL providers to add miscellaneous charges that are unique to each client’s needs. These may include: 

• Kitting: Assembling products or combining items to build kits. 
• Branding: Adding private labels to products or packaging. 
• Returns management: This includes restocking and reverse logistics processes.

3PLNext’s flexible billing structures align directly with usage, ensuring streamlined operations. 

Advantages of 3PL Billing

The days of relying on paper trails and manual data entry are long gone. As organizations grow, many businesses opt to outsource their logistical needs to partnering agencies, such as third-party logistics (3PL).

While this may seem like a solution, 3PL is complex and brings more challenges, such as staying on top of driver management, customer demands, inventory management, and, most importantly, accounting needs.

Scalability demands smart business solutions, and with 3PLNext, technology joins forces with 3PL to solve all your organizational invoicing and billing requirements. We will explore the benefits of 3PL billing and why your business may need it later on. 

Reduced Human Efforts & Errors 

Today’s competitive 3PL market leaves no room for jeopardizing client relationships. Imagine your staff pulling out spreadsheets weekly to track bills and create invoices for multiple clients.

Not only is the process inefficient, but also time-consuming, which makes it prone to human errors. Here’s what 3PLNext offers: 

• Automated Billing: 3PLNext’s system automatically sends out bills at chosen billing cycles, significantly reducing the chance of errors.
• Simplified Reporting: The software offers a simplified reporting process system that enhances efficiency and accuracy.
• Easy Client Onboarding: 3PLNext provides an easy client onboarding system, allowing employees to add new clients without taxing the system or creating excess work.
• User-Friendly Module: The quick-to-learn module requires no extensive training for your staff, reducing overall human effort.
• Enhanced Customer Satisfaction: The advanced software automates the 3PL billing process, focusing on efficiency and accuracy, leading to enhanced customer satisfaction.

Eliminate Manual Billing Tasks

Having multiple clients in your business requires you to produce individual and accurate 3PL billing sheets, including all the pertinent details.  However, inaccuracies and errors due to manual billing may lead to lost revenue opportunities.

Manual record-keeping and pulling information from spreadsheets can be tedious and is usually prone to mistakes. 3PLNext eliminates the need for spreadsheets by sending a consolidated billing statement based on the chosen customized billing cycle.

Boosts Profitability

Automated billing enhances customer experience, and increases customer loyalty and retainment. While 3PLNext’s billing automation leaves no room for errors, it also frees up time for your employees to focus on other value-enhancing business activities for your clients. 

3PLNext also helps you avoid lost revenue from overlooked charges and enhances customer satisfaction with billing transparency. This also increases your chances of referrals, leading to a growing customer base.

Transparency

3PL clients have the right to transparency. When they see detailed and accurate billing information, they are more likely to trust the company for their services. Here’s how:

• With the understanding of what they are paying for, they are more confident in the services they are receiving. 
• Transparency also reduces the likelihood of disputes, as 3PLNext displays well documented and easily understandable invoices. 
• It holds providers accountable for their services and maintains the integrity of all financial processes.
• Customers are also more likely to choose a provider that is more transparent about transactions and offers honest billing practices. 

3PL Billing Process

To run accurate and efficient operations, it is necessary to streamline accounting tasks with automation. Leveraging technology in 3PL (third-party logistics) offers solutions for effective management. Fortunately, 3PLNext’s billing automation provides a viable solution for your warehouse to eliminate invoicing problems. Ahead, we will understand how the billing process works from start to finish. 

Setup Billing

To begin with, after the 3PL’s consultation with the client, signing the billing agreement is the initial step. 3PLNext focuses on complete transparency and customer satisfaction, which is why making an agreement is essential. 

This is particularly necessary for 3PL companies offering a variety of services. The 3PL and client agree upon rates, pricing terms, payment methods, service level commitments, services provided, and all other essential data. 

At this stage, all essential details are outlined according to legal standards. Including pertinent details at this stage is pivotal to setting the foundation for a successful business.

Rate and Fee Calculation

All 3PL companies offer diverse billing models that have fixed and variable pricing components. Typically, fixed pricing models include baseline services such as administrative costs, account management, and technology usage. On the other hand, variable pricing models cover the cost of services rendered and the number of goods handled. 3PLNext’s fully configurable system makes the job easy, as the 3PL warehouse can set up client accounts according to their specific requirements. 

Invoicing

The invoice summarizes the total charges based on all the services during a certain time period. The invoice is the most important component of any 3PL billing system. It is important to focus on all the details and include all relevant charges in the invoice before sending it to the client. To ensure successful billing, every step of the invoicing process should be executed carefully. Accurate billing is crucial for company growth, which is why 3PLNext’s billing system offers error-free results. 

Integration with Accounting Software

3PLNext’s billing system uses API (Application Programming Interface) to connect with QuickBooks. This integration allows seamless data exchange between the systems and synchronizes financial data such as invoices, payments, and expenses. QuickBooks allows the warehouse and the client to track their business expenses more conveniently. 

Payment Processing 

Once the various costs, services, and charges are aligned in the invoice, 3PLNext’s system calculates the data and charges based on the agreed pricing structure. Finally, after validation and reconciliation of the payables, the payment is cleared to the 3PL client. 

Tracking & Reporting

Integrated reporting tools provide detailed financial reports, combining data from 3PLNext and QuickBooks. With access to 3PLNext’s advanced reporting and analytics capabilities, you’ll always stay informed about your business’s financial and operational health. This allows businesses to better track their expenditures, helping them in their financial analysis and decision-making.

Implementation

Choose the Right Software

Selecting 3PL billing software means entrusting your accounting process to an external entity. In that case, making the wrong decision may lead to financial repercussions for your business, ultimately impacting your overall performance. This is why it is important to choose wisely. Here’s what you need to look for:

• Cutting-edge Technology: Your 3PL billing partner should be equipped with the latest technology to aid you in cost savings and error-free calculations. 

• Ecosystem Capabilities: Software that is adaptable to your system will establish a smoother workflow and harmonize with your existing system with ease.
• Power of Automation: To create timely invoices, the 3PL billing software should be able to automate transactional data from fulfillment activities (inbound, storage, and packing operations) to charge the client accurately.  
• Versatility: Each 3PL client has distinct needs, and your 3PL billing software should be able to support various billing elements and invoicing formats.  

• Easy On-Boarding: New clients are not only important for your 3PL company but also for your clients, which is why your 3PL billing software should not hinder the acquisition of new clients. It should provide an easy and accommodating onboarding process.
• Customer Support: In case of any issues, the 3PL billing software company should always be available for any inquiries, requests, or challenges to better guide you to smoother accounting operations. 

Set-up the System

With a few simple steps, you can automate shipping, receiving, and recurring inventory storage charges for your client. 

Step 1: Evaluate Service Processes

Uncaptured charges are one of the biggest issues in billing. Make sure that you walk through all of the processes and charge for everything you can. It is important to understand that 3PLs also make money on labor, and when customers are not charged when labor is doing something, you are losing money. 

Step 2: Modify Standard Rate Sheet

Standardization is an important step in optimizing your billing workflows. To automate new customers easily, modify your standard rate sheet. 

While 3PLs may use differing billing methods for different clients, standard charges help ensure consistent charges across all customers, making billing less complicated. 

Step 3: Inform Existing Customers 

Now you would inform existing customers about the new rates and negotiate with them to adapt to changes. All charges are immediately accessible through the 3PL billing platform.

Step 4: Set Up Automation

Charges can be set up with billing rates that automate how much to charge for custom services such as breaking down or assembling pallets and recurring storage fees. Implementing this billing automation can take time to set up and test properly, but we have seen warehouses boost profits by 3% on average every month after automating their billing processes.

Train and Test

Give your new employees hands-on training for the new system and test it in parallel with your existing system during the transition period. This allows you to see the improvement in efficiency and revenue. It also helps avoid any interruption in your current operations and allows the 3PL to adapt to the new billing workflow.

Enjoy Billing

Without automated billing, the stakes are high. However, with it, you will be able to reduce costs, improve customer service, and increase profits. Now you can manage financial aspects seamlessly, including invoicing, billing, and generating comprehensive reports for informed decision-making.

3PLNext: Your Trusted Automated Billing Partner

Operating within a multi-client warehousing setup in today’s economic landscape is challenging. To continue to grow and thrive as an organization, it is important to arm your business with essential quality tools such as 3PLNext. 

3PLNext’s services are used across a myriad of platforms besides e-commerce, including retail, healthcare, automotive manufacturing, and more. Overall, they help improve efficiency, cash flow, and customer satisfaction. They can also improve timeliness and accuracy as compared to paper-based manual billing and management systems.  

With 3PLNext, you can tailor billing profiles to meet specific needs, efficiently manage transactional data, and instantly generate accurate invoices.  We focus on helping you optimize your supply chain and maximize operational performance as your 3PL billing and invoicing partners.

Sadia Zaheer