Shipping is a significant but poorly controlled expense for many businesses. Invoices are often paid without a detailed examination because there's no other account to compare them to.
Scope
Expected cost calculation: Calculation of the freight cost according to the tariff at the time the shipment is planned. This calculation serves as a reference against which the invoice will be compared.
Additional charge management: Regular calculation of items such as waiting time, fuel surcharge, delivery to the door, address changes, and returns.
Cost allocation: The distribution of the cost of multiple deliveries carried by a vehicle to the customer and product based on weight, volume, distance, or value.
Revenue management for transportation: Comparing the transportation fee charged to the customer with the actual cost. Measuring the impact of free delivery thresholds on profitability.
Invoice reconciliation: Automatic comparison of the carrier's invoice with the shipment records in the system; listing of discrepancies.
Self-billing: The invoice is generated by the sender, instead of the carrier, from agreed-upon data. This fundamentally reduces billing disputes.
Cost analysis: Tracking delivery costs based on region, customer, product group, carrier, and order size.
Reflection in order profitability: Ensuring that shipping costs are included in product and customer profitability calculations at their true value.
The unseen drawback of small orders.
Shipping costs are not directly proportional to order size; even for a small order, a vehicle needs to be used. Therefore, even if the product margin is positive, small orders can result in a loss when delivery costs are deducted.
When delivery costs can be calculated on a per-order basis, businesses see this and manage it with the right tools: minimum order amount, small order fee, order consolidation incentives, or region-specific delivery days.