Top 5 Most Common Billing Errors That Block Today’s Supply Chain

While most of the recent strides in transportation technology have contributed positively to carrier and 3PL operations worldwide, today’s supply chain continues to fall victim to destructive errors in the billing process, which are unfortunately widespread and often experienced repeatedly within the same organizations. 

These data discrepancies may seem insignificant out of context, but they often cause undetected revenue leaks that threaten client satisfaction, brand reputation, and the bottom line.  

These are the five most common types of billing errors that currently plague transportation providers. 

#1. Consignee Address 

Oddly enough, the most common error we fix for our partners is the consignee address. Simply put, people make mistakes. It’s easy for the shipper's consumers to enter the wrong city, state, or zip code, and it is even more likely if those end-users shop on a mobile app with an auto-populating feature, in which they store more than one shipping address. As difficult as it may be in your position in the supply chain, establishing proactive measures to ensure that all information is captured in your billing system correctly will mitigate the risk of delays, avoid conflict with your customer, and help you get paid quickly.

Additionally, if the pickup or drop-off location is in an area with limited access, you may be able to apply penalties. Limited access areas can include camps, places of worship, educational institutions, construction sites, businesses outside of city limits, rural locations, etc. If an employee of a commercial business isn't open to the public or cannot assist with loading/unloading, this is also considered limited access. 

#2. Selecting the Correct Freight Term (Prepaid or Collect)

If the freight term is incorrect or not clearly stated on the bill of lading (BOL), it will be delivered to the incorrect consignee, causing issues for all stakeholders in the supply chain. In addition to jeopardizing the relationship with your customers (and likewise between them and their buyers), an incorrect freight term may significantly affect your inbound cash flow. 

Two terms are used to describe who pays for a specific freight shipment: 

• Prepaid: When a shipment is moved prepaid, the consignor or shipper pays the freight bill for the shipment it is moving for its customer and then charges its customer after delivery. 

• Collect: When a shipment is moved collect, the receiver is responsible for paying the freight delivery service. The receiver is often called the consignee. 

It’s equally imperative that the correct freight term is used when capturing the BOL in the bill entry system to avoid delivery and accounts receivable interruptions.  

#3. National Motor Freight Classification (NMFC) Errors  

The National Motor  Freight Traffic Association (NMFTA) may have standardized the classification system for transported materials, but that doesn’t mean it’s always entered correctly. Mistakes will likely happen, with 18 separate classes being assigned a shipping cost. Freight class is determined by:  

• Density 

• Stowability  

• Ease of handling 

• Liability

The NMFC code must always be listed on the BOL. If it isn’t listed, it is possible that your shippers’ freight will have to be reclassified. Sub-NMFC codes, denoted with a dash after the code, must match the correct freight class. Inaccurate descriptions of the items being shipped can lead to dangerous situations and extreme inefficiencies. Proper classification can influence your profitability. In conclusion, always confirm the NMFC code, freight class, and descriptions of your shippers’ cargo are correct. 

To learn how to do this quickly, read Quality (And Budget) Assurance: How To Confirm The Right Class For Your Shippers' Freight.

#4. Inaccurate Number of Pieces & Total Weight  

If your customers approximate the weight of their shipment and it ends up being incorrect, it may have to be reweighed. Reweigh occurs when the weight on the BOL does not match the scaled weight, which will likely lead to delays. To avoid this, encourage your shippers to: 

• Include the weight of the pallet in your total weight written on your BOL  

• Ensure accurate weight before shipping 

• If you would like to dispute with your customer, use manufacturer specifications in your defense  

The shipment is priced out by analyzing the dimensional weight or gross weight. You can charge the lighter items by dimension, as their dimensional weight is greater than the actual weight. This is calculated by multiplying the length, width, and height in inches and dividing it by various factors to determine the cubic weight of a given shipment ultimately. Alternatively, you may charge per gross weight, which is meant for heavier items.  

#5. Overlooked Discounted Rates

Shippers often take advantage of any discounts they can claim for processing their shipments. It’s imperative that you watch for and honor the discounts that apply. This will help all parties maintain confidence in the reflected rates and prevent delays (in both your customer’s deadlines and your DSO). 

To improve customer service and accelerate accounts receivables, you must make a deliberate effort to overcome hurdles in your back office.

These inaccuracies will impact your profitability. Instead of micromanaging your internal billing staff to uphold quality metrics, you may consider trusting a third-party billing expert specializing in accuracy and speed.  

For example, DDC’s partners report record-high accuracy rates, 40% cost savings on average, and rapid processing times. Additionally, our carriers and 3PLs reap the benefits of reallocating their previous billing resources to more strategic initiatives for business goals.