Shippers pay carriers a lot of money for their services. But carriers don’t perform perfectly — in fact, far from it. On any given day, three to five percent of shipments arrive late.
Often, carriers promise shippers compensation when they mess up. But they don’t make it easy for shippers to understand how much compensation they’re owed or when refund policies do and don’t apply. Carriers usually don’t announce when a shipper is owed money. And refunds are notoriously difficult to claim.
Refund policies look good when carriers are trying to woo shippers into contracts, but typically, carriers don’t actually want to pay out those refunds. If shippers want to collect the refunds they’re owed, they need to take responsibility for it themselves.
That starts with understanding the terms of your contract. Read your carrier’s refund policy in detail, noting blackout dates and other exceptions. Make sure you know how to file a claim and how wide the window is — do you have to do it within several weeks of the missed shipment, within several weeks of your invoice, or otherwise? And finally, create a process for reviewing your invoices regularly so you can collect refunds every time.
These aren’t easy habits to develop, but companies that can systematize them as part of their supply chain management will see the difference right away.
How to better understand your invoice audits
Invoices are a wealth of information. They typically include details of every shipment from the carrier’s perspective, including when the shipment was supposed to arrive and when it actually did. A single invoice can include thousands of these data points, however — so receiving this data in electronic form, rather than hard-copy form, is essential.
If your invoice auditing can move from analog to digital, your team will simply need to write a few targeted scripts to identify refund opportunities, rather than combing through page after page. Major carriers should have no trouble providing electronic data through online portals.
Next, your supply chain team needs to begin identifying invalid charges. Sometimes those are incorrect charges, like pricing mistakes or duplicate billing. In other cases, carriers charge for shipments that are actually service failures and ought to be free.
To spot these errors in your invoices, zero in on pricing. Do the prices your carrier charged you match the prices on your contract, including discounts and incentives?
Second, look at accessorial surcharges. Were any charges applied to shipments where they should not have been? Fees that commonly cause errors include residential surcharges, address correction surcharges, and weekend delivery fees.
Third, make sure you weren’t double-billed. Charging a shipper twice for the same shipment is a common error, but if you catch it, you can ask for that money back.
Finally, examine your carrier’s performance. Were any shipments late? Were any not completed at all? Some carriers offer refunds if packages are even a minute outside the delivery window they committed to, and those refunds can really add up. Further, if you have this data in aggregate and begin to notice repeated errors, you can bring up those concerns with your carrier.
How to realize cost savings
In general, if you identify an error, double-check your contract and make sure the charge is incorrect. Then, it’s time to alert your carrier. This is typically done by filing a claim. FedEx and UPS shippers can file claims online, and both companies have claims specialists on staff to process them. For certain claims, they may get your carrier representative involved.
Next, double-check your carrier’s claims policy to make sure you still have time to file a claim. How much time you have to submit a claim can vary widely. With some carriers and some types of claims, it could be as little as 15 days; with others, you have as long as 180 days.
Once your carrier has accepted your claim, make sure you know how it’ll be credited back to you. Claims are usually processed within a couple of weeks. Some carriers apply refunds to an existing account; others issue refunds separately. Some delay invoices until claims are settled.
To understand your carrier’s claims process, the best thing to do is talk to your carrier representative. The sooner you know how the process works, the better situated you’ll be when you have to go through it.
By auditing your invoices, catching carrier errors, and filing claims, you’re holding your carrier to account and making sure they hold up their end of your contract. That’s good for all of us in the business. You’re also recovering money in the short term. In the long term, by making invoice auditing and digital data-gathering habits, you’re building systems that will add up to big savings.
Reveel’s team of expert consultants love helping our clients develop those processes. We also start our partners off with a free invoice audit, so you can see what our 46-point review can do. Reach out today and let’s start saving money.