Why “We’ll Fix It Later” Is the Most Expensive Billing Strategy
Written by Steve Stallings, 3PL Presales Solution Specialist
Pushing billing improvements to next quarter doesn’t save money. It means paying for the problem in the meantime.
There is rarely a convenient time for a 3PL to overhaul billing. There’s always another customer to onboard, another warehouse to bring online, another contract with a unique rate structure, or another value-added service for operations to support. As long as invoices keep going out the door, it’s tempting to call the billing process good enough, so the improvement gets pushed to next quarter, and then to next year.
That decision costs more than it looks like it does. Disconnected systems and manual processes make it harder to maintain control, bill accurately, and protect margins as the operation grows.
The Invoice You Never Send
The most expensive invoice may be the one that never gets created. A warehouse performs the work, an employee completes the transaction, the customer receives the service, and unless that activity is connected to the customer’s contract and pricing rules, it doesn’t get billed. Missed billable events and inaccurate billing are both sources of revenue leakage, and the problem is sharpest with value-added services. A 3PL contract can include charges for receiving, inspection, labeling, storage, kitting, and many other activities, and when billing depends on people remembering what to charge, every unrecorded item is work that created value and never became revenue.
Some customers using 3PL Automation Cloud have recovered 15 to 25% of their revenue leakage. You can’t recover margin on revenue you never invoice.
The Bill for Waiting Keeps Growing
Missed charges are only one side of it. Manual billing also takes people to collect information, interpret contracts, validate rates, investigate exceptions, correct mistakes, and assemble invoices, so underbilling cuts revenue while the cost of collecting it goes up. That’s how a warehouse can get busier while its margins keep shrinking.
Waiting makes it worse, because growth is what makes the problem harder. More customers bring more contracts, and more contracts bring more rates, services, exceptions, billing frequencies, and pricing structures. More warehouses and systems mean more operational data that has to reach billing correctly, and postponing the fix keeps adding complexity while supporting it with yesterday’s process.
The Costs That Don’t Show Up on an Invoice
An invoice can’t become cash until it’s created and sent. Manual billing bottlenecks contribute to invoice disputes and delayed payments, while automated billing can shorten billing intervals from weeks to days. With payment delays from invoice disputes eliminated as well, one of our 3PL clients saw $1.25 million per month in reduced DSO, more than $15 million in the first year.
Errors create a second billing process too. When a customer can’t follow a charge or a rate is wrong, billing has to trace the activity, interpret the contract, and issue corrections, so the 3PL ends up running one process to create invoices and another to explain, correct, and defend them.
Then there are opportunities you can’t confidently pursue. A billing model that works for today’s customers may not scale to tomorrows, whether that’s a prospect with sophisticated value-added service pricing or an existing customer asking for a new service. A manual billing organization sees complexity as more administrative work, while a highly automated one sees more ways to monetize its services.
What Fixing It Early Looks Like
The right time to improve billing is before manual processes break down, while there aren’t yet years of accumulated contracts, spreadsheets, special pricing arrangements, and workarounds to untangle. Fixed early, the customer contract connects to the operational activity and then to the financial transaction, and exceptions get flagged without turning the whole invoice cycle into a manual review.
How Avantiico’s 3PL Automation Cloud Closes the Gap
3PL Automation Cloud brings contract management, operational activity capture, and automated warehouse billing together with Dynamics 365 Finance & Supply Chain Management, so warehouse operations and other value-added services translate more directly into financial outcomes. Contracts support custom pricing criteria, units of measure, warehouse combinations, and billing periods, with automated billing triggers based on transactions, time intervals, or other defined triggers, plus automated escalations, renewals, and terminations. The Billing Engine applies the customer’s pricing rules, creates sales orders and invoices automatically, and flags unassigned billable activity for review while the rest of the billing process keeps moving.
Billing is what turns a 3PL’s operational work into revenue. So the question isn’t whether your current process can survive a little longer. It’s how much revenue, margin, cash flow, and opportunity you’re willing to sacrifice before you fix it.
Take a Look at Automated 3PL Billing
See how 3PL Automation Cloud connects contracts, warehouse activity, and invoicing in Dynamics 365 F&SCM. See it here: https://avantiico.com/solutions/avantiico-solutions/3pl-automation-cloud/?utm_source=msdw&utm_medium=article&utm_campaign=3pl_fix_it_later