Shipping costs can seriously dent your revenue, especially when up to 20% of carrier invoices have expensive mistakes. These errors can lead to major overspending and reduce your profits. That’s why a solid auditing process is crucial. Let’s explore how parcel audits can catch these costly errors and boost your business’s profitability, putting more money back in your pocket.
Shipping costs: a key challenge in e-commerce
Shipping costs are a significant part of expenses for e-commerce businesses, usually making up 10-15% of the total order value. Keeping these costs in check is crucial for staying profitable. However, many businesses struggle to manage these expenses due to limited time and resources, making manual invoice auditing nearly impossible.
The world of shipping logistics is complex, with costs influenced by factors like weight, distance, delivery speed, and additional services. Without a streamlined system to compare rates over time and across different carriers, overspending becomes a real risk. Trying to juggle contracts and rate comparisons manually is a recipe for errors and unnecessary costs.
This lack of insight can lead to significant overspending. When you can’t easily determine if you’re getting the best rates or if there are billing mistakes, you might end up paying far more than necessary.
What is parcel auditing?
Parcel auditing is the process of reviewing and verifying shipping invoices to ensure their accuracy and to confirm that you are not being overcharged. This involves checking for a variety of errors that can occur on these invoices, such as incorrect shipping rates, miscalculated taxes, or duties.
The goal of parcel auditing is to identify and rectify these discrepancies, ensuring that you only pay what you should for shipping services. By doing so, you can prevent unnecessary expenses and maintain better control over your shipping costs.
The impact of invoice checks on your business’s profitability
Shipping invoice errors can be a hidden drain on your business’s profitability. These mistakes mean you are often paying more than you should, which eats into your profit margins and affects your overall financial health.
By implementing an invoice checking process, you can catch these errors, claim refunds, and give your profitability a significant boost. In fact, with a thorough parcel audit and some expert advice, you could save up on your shipping costs.
Types of errors on carrier invoices
- Incorrect shipping rates: Rates charged sometimes do not match the agreed-upon rates in your contract.
- Incorrect surcharges: Additional fees that should not apply can be mistakenly added, inflating your costs.
- Missed delivery promises: If deliveries do not meet the guaranteed timeframes, you may be entitled to refunds, but these are often overlooked.
- Tax or duty calculation errors: Miscalculations in these areas can lead to overpayments, particularly with international shipments. For more information on handling international shipping and customs, read How to ensure smooth customs clearance for e-commerce shipments.
Why auditing carrier invoices is challenging
Auditing carrier invoices isn’t easy. You have to deal with a huge number of invoices and complicated shipping contracts. Here’s a closer look at why this task is so tough:
Uncertainty over carriers meeting contractual obligations
One major problem is not having control and transparency over shipping costs. Businesses often don’t have clear insights into what they actually need to pay for each shipment, beyond the general terms in their contracts. This lack of clarity makes it hard to check if the charges on invoices are accurate.
Shipping contracts are also complicated, with terms that vary based on things like shipping volume, delivery speeds, and extra services. Manually tracking these details is overwhelming and can lead to mistakes and unverified costs.
Difficult to spot errors for thousands of invoice items
For businesses handling thousands of parcels each month, manually checking each invoice for errors is almost impossible. Calculating shipping costs becomes very time-consuming and difficult when using multiple carriers and methods. With so many invoices, even a small error rate can lead to significant financial losses over time.
The manual auditing process is not only time-consuming but also requires cross-referencing each invoice with contracts and other documents. This labor-intensive approach is prone to human error, making it hard to ensure complete accuracy.
How to automatically check carrier invoices and save on shipping costs
Detect wrongly charged shipments automatically
Automated parcel auditing tools make the difference on how you manage shipping costs. These tools scan invoices for discrepancies with high accuracy, ensuring you only pay what you actually owe. This method is not only faster than manual checks but also much more precise, allowing you to spot and fix errors quickly.
Using advanced algorithms, automated auditing tools can catch common issues like incorrect shipping rates, unwarranted surcharges, and missed delivery promises. This thorough approach helps businesses avoid overpaying and recover funds that might otherwise be lost due to billing errors. Implementing such a system provides peace of mind, knowing your invoices are always accurate and your shipping costs are under control.
Predict shipping costs to save money
Automated auditing tools can also support cost prediction. By analyzing historical data, businesses can forecast future expenses, helping them manage budgets more effectively and negotiate better terms with carriers. For instance, if you have an estimate of how many parcels you’ll be shipping over a certain period, you can use this insight to secure bulk rates with carriers.
A practical example of this in action is XXL Nutrition. By using predictive insights, they were able to negotiate more favorable shipping rates, significantly reducing their overall logistics costs. Accessing accurate shipping data not only aids in budget planning but also enhances financial stability and operational efficiency.
“We are shipping approximately 1.3 million parcels this year. For us, this is a great tool that saves a lot of time and money and also shows the performance of a parcel service, so that you can raise the alarm in time.”
René van der Zel, Founder, XXL Nutrition
Use insights to make better shipping decisions
Automated auditing tools can be part of a complete shipping intelligence system that helps you see patterns in your shipping activity. By looking at your shipping data over time, you can get a better understanding of your logistics costs, allowing you to make smarter decisions.
Imagine discovering that one of your carriers consistently overcharges or misses delivery deadlines. With this knowledge, you could switch to a more reliable option and save a lot of money. Or, if you notice that shipping costs spike during certain seasons, you could use this insight to plan better for peak times and streamline your logistics.
Sendcloud’s parcel audit tool (one of our Shipping Intelligence products) makes this easy. It automatically analyses invoices to spot wrongly charged shipments, compares rates across carriers, and provides detailed reports on your carriers’ shipping performance. This helps you spot patterns, avoid overcharges, and make informed decisions about which carriers or shipping methods to use. Plus, it offers daily, weekly, and monthly shipping cost forecasts, making financial planning a breeze.
Curious to know more? Schedule a free demo with our team to see how Sendcloud’s parcel audit tool can save up to 15% on the total cost of your shipping.
