3PL WMS Billing: Top Functionality Can Help Boost Profitability

Key 3PL WMS Billing Capabilities Help Ensure Profitability & Competitive Advantage

By their very nature, third party logistics businesses have complicated business models.  Often working for numerous clients simultaneously, a 3PL must be able to meet the unique needs and requirements of every client, no matter the type of commodity or business model.

Within one warehouse, a 3PL can be responsible for many different types of products, each with their own handling, storage, inspection and fulfillment requirements.  With the trend towards outsourcing to 3PLs increasing, third party logistics companies are providing a wider array of value added services than in past years.  The question is, can your 3PL capture and bill for all the value-added services you provide?  Can your current warehouse management software handle all the billing needs for all of your 3PL customers and if not, what does this mean for your company?   If your current WMS lacks adequate 3PL billing capabilities, your business is leaving money on the table, diminishing your profitability.

 

Complexity of Third Party Logistics Operations Requires 3PL Billing Flexibility

Logistics providers sometimes encounter unusual billing requirements and may be challenged to meet the needs of these clients.  If the third-party logistics provider uses a WMS that is inflexible, the 3PL may be forced to rely on spreadsheets and manual error-prone processes to meet the customer requirements.  Not only is this frustrating, but also likely to result in missed billing opportunities, extra labor and other drains on profitability.

Many, but not all 3PL warehouse management software packages include standardized 3PL billing capabilities that can be customized or configured without having to pay for costly source code changes and new development.  Many warehouse management systems have 3PL billing modules, however not all systems have the flexibility to customize time intervals and bill for non-standard items.  In addition, those that can do this often require time consuming error prone workarounds or manual calculations.

Can Your 3PL WMS Billing System Split Cost?

One issue frequently encountered these days by 3PLs is the need to split costs.  Customers often want the 3PL to split costs between different entities including internal departments, billing each a percentage of the total cost.  Having the ability to split charges between projects and accounts without manual or system workarounds can give your company a competitive edge and help win new business.

Why is flexibility in 3PL billing important?  Having flexibility in 3PL billing helps ensure that your company can bill according to customer specifications.  Not all customers and commodities are alike.  From volume or weight-based billing strategies to billing requirements involving fee splitting, billing for overtime fees, fuel surcharges or conditional charges, every third party logistics provider must be able to bill to meet both customer needs as well as that of their own organization.  3PLs who perform value added services need activity-based billing so that they can capture and bill for every service their company performs.  Not to do so wastes resources and potentially reduces profitability.

 

Why Workflow-Based 3PL Billing is Optimal

Using a workflow-based 3PL WMS system can help ensure that the rules are configured to meet the client’s specifications, including when conditions occur that may vary.  An advanced workflow-driven WMS incorporates sophisticated business logic and decisions into the configurable billing process so that 3PL billing can be automated.

“Workflow” is a term often used when talking about software, but what is it actually?  A workflow is a set of activities joined together to form a process.  Incorporated within the workflow are decision points and business logic that enable the process to be executed in a flexible manner, changing as conditions are met and decisions are executed. Some workflow-based warehouse management systems reduce or eliminate the need for hard coding and software development when changes need to be made, reducing ongoing cost and the time for development.

Does Your 3PL WMS Software Billing System Have Query Functionality?

One of the most cutting-edge types of 3PL Billing functionality is query functionality.  This enables users to select any data element from any table or entity within the warehouse management system as a billing parameter or attribute.  This enables billing to be customized to an incredible degree, ideal for unusual or complex billing strategies.  This means that tags and user defined fields are no longer necessary, making the billing process much easier to set up and execute.

Using a 3PL Billing module or system that relies on workflow typically enables the billing process to be automated, saving valuable labor hours, cost and time.  Automated 3PL billing tends to be more accurate, eliminating the need for correction of errors which can delay the revenue cycle.

The Value of a 3PL WMS Billing Wizard

One feature of a 3PL warehouse management system that can make it easier for users to set up 3PL billing is the 3PL Billing Wizard.  Typically, this feature works by stepping the user through a series of questions with options that can be selected.  As the user answers questions and selects fields, the system automatically sets up the billing for each customer to meet the specified requirements.

Relying on a 3PL Billing Wizard helps to save time, increases accuracy and helps to cut down on the time it takes to onboard new customers and initiate the revenue cycle.  With a 3PL Billing Wizard, users do not need any special skill or intense training to set up the billing for new customers.

3PL Billing Capabilities

 Here are some items often important to 3PL customers.  Can your 3PL WMS billing module handle these frequent customer requirements?

 

3PL Warehouse Management Software Billing Strategies

3PL Billing, Agreements and Invoices

  • Automatic production and email of invoices directly to clients
  • Management of the detail of every customer agreement
  • Activity-based billing to capture and bills automatically for every service performed
  • User-configurable billing and rates without IT or development assistance
  • Tracking of all charges on a client basis
  • Automatic calculation of charges to eliminate mistakes

3PL Billing Reports and Dashboards

  • Providing detailed client-specific reports on demand
  • Revenue projections on a per customer basis
  • Cost projections per client
  • Customized billing reports and dashboards

Can Your 3PL Billing System Create Multi-Year Contracts?

If a contract expires, is your WMS still executing billing?  Often 3PLs complain that they do not realize that their warehouse management system has stopped billing when a contract expires.  Having a 3PL WMS that can create and execute multi-year contracts with or without annual increases is invaluable to your operation and can help ensure that your business continues to bill and collect for all the services you provide.

Conclusion:

Because of the complexity of their operations, number of clients and ability to handle various, multiple commodities, third party logistics providers need to have highly flexible, configurable 3PL Billing capabilities in order to satisfy the specific needs of each of their customers.

About the Author:

Laura Olson

Director of Sales and Marketing, Datex

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