3PL billing: Everything you need to know

3PL billing is a most important and most challenging part of a 3PL business. Here we are going to identify what is 3PL billing and its challenges, the 3PL billing process, and other valuable details.

what is 3PL?

3PL stands for third-party logistics.

3^rd party logistics commonly known as 3PL or TPL.
The simple explanation of 3PL is when considering a company, it is outsourced warehouse and distribution facilities from 3rd party. so the company acts as a client of 3rd party logistics provider. The company(client) does not maintain a logistics department or warehouses. Because that company has outsourced logistical activities from third-party logistics companies.

For further knowledge of 3PL you can read the post What Is Third Party Logistics(3PL)?: Everything You Need To Know

what is billing?

The word billing can say as a charge or payment for services or products.

what is 3Pl billing?

third party logistics providers get revenue through 3pl billing and invoicing after offering services to their customers.In other words it is a payment or chargers of 3PL services.

why 3Pl billing is more complicated and more challenging?

3PL providers are offering a wide range of services such s warehousing, packaging, labeling, distribution, and logistics services as well as a return management process.

with the different services offered it is a big challenge for a billing process to right bill the right customer. It is not an easy task when having a lot of customers and services automatically you have to sign more contracts and agreements with different types of billing and invoicing rules.

end of the day 3PL providers gain revenue from the 3PL billing process if any case an incorrect bill is offered to a customer,with overcharges customer is definitely dissatisfied, and no return back to your business.

in another hand, if you bill lower than the actual cost of service it will effect your business revenue. So we can say 3pl billing process is a more critical part of a 3PL service provider.

Next, we will identify the challenges of the 3PL billing process.

Challenges of the 3PL billing process

wide range of services offering

different customer agreements

ensure transparency of the bill

human errors

consolidate invoicing

data accuracy and communication

handling multiple warehouses, space

variable labor cost

value-added services

time-consuming

3PL billing process

signing a contract with customers-Before enter into a business you need to sign an agreement with your customers. It may vary from customer to customer. Agreements include payments policies, rules, and regulations
Collecting data on activities and services that are offered- need to collect all the data regarding transactions and services. may you have more than one warehouse and a large number of transport and logistics providers. So it would be best if you collected all the costs regarding relevant invoicing, for the data entering to the invoice need to collect customers’ data. such as name, address, and telephone number. etc.
Calculate the chargers for each and every transaction– need to add all the costs of activities and services.
Generating invoice-Now you have all the data regarding activities and customers according to the payment policy now you can generate the invoice.
Invoice Handover to the customer and get payment– need to hand over the right invoice to the right customer. Then you can collect the payments without any restrictions. if there is an error regarding the invoice customer will be dissatisfied.

How to face or overcome 3PL billing challenges successfully?

using new technology

using 3PL billing software

3PL billing software integrated with accounting software and existing ERP or WMS system.

What is 3PL billing software?

3PL billing software can be integrated with functions of the 3PL business and it helps to bill process in the 3PL business. Most of the 3PL software can automate the billing process to avoid human errors and ensure accuracy. Commonly 3PL billing software is offered as a part of WMS(warehouse management system), inventory management systems, or ERP systems. But there is a standalone 3PL billing software also.