As you venture into global markets with third-party logistic providers (3PL), you are quickly introduced to the challenges and intricacies of managing an international operation.

One of the most daunting and costly challenges? 3PL invoices.

An inaccurate invoice can result in error margins of up to 40%, a significant oversight that can amount to hundreds of thousands of dollars. But they can be notoriously difficult to understand, even for the trained eye.

To underscore the importance of 3PL invoice accuracy, let’s dive into what causes discrepancies, how Brand Access maps the errors, and the results of a well-executed audit.

Hidden causes of invoice errors

Through hundreds of audits from 25 different warehouses over the past 8 years, our team discovered a consistent trend: no invoice has ever been 100% accurate. Why? 

3PL services are incredibly complex. Client’s highly negotiated contracts and supplemental rate cards are buried in a “virtual file cabinet,” nuances surrounding unique client services are overlooked and even the most sophisticated software is unable to detect these intricacies.

While some errors may inadvertently benefit the client, the majority skew in favor of the 3PL, highlighting a lack of incentive for these providers to correct their processes. This is where an audit becomes invaluable to prevent revenue leakage and protect your bottom line.

Invoice error mapping with Brand Access

We’re no strangers to cracking the code on 3PL invoice errors. Some joke that we’re logistics detectives – but really, we just know what to look for. 

Our process begins by reviewing client contracts, supplemental rate cards, and client catalogs. 

From there, we extract data from these key categories:

• Contracted rates for warehouse services

• Packaging profiles

• Contracted Service Level Agreements (SLAs) and related performance-based penalties

• Inventory item shipping profiles

• Shipping rates

Our team then builds formulas to validate each invoice charge against a corresponding data point. Once an invoice is issued, all supporting data is exported from the Warehouse Management System (WMS) to validate the charges.

Through an even sharper lens, we establish inventory turnover rates. This process uncovers any unnecessary warehouse storage – slow-moving or obsolete – that’s costly to maintain. 

With this intricate data mapping process, we can point out all discrepancies to the client, line by line. This gives them a total discrepancy value per category that:

• Illustrates a clear picture of the most significant issues in the warehouse

• Prioritizes the big-ticket items when disputing them to the warehouse

While this is a powerful, conspicuous way to build a case for the 3PLs and justify the recovery of erroneous costs, we don’t stop there.

How due diligence pays off

On average, each item that leaves the warehouse in an outbound order will have undergone 10 individual auditing processes in its lifecycle. 
If an item is returned or in need of special services like kitting, then the audit process continues.

While it would be great to have a technical solution to automate some of these processes and we are certainly watching the advancement of AI, sometimes you need to just roll up your sleeves, bring out your calculator, and crunch the numbers. 

There is no technological cure-all to cover each base, just time, effort, and experience. 

It’s not that we do things the hard way – we do them the right way. Our Initial audits typically uncover disputable discrepancies ranging from 7-10% of the total invoice value, with some cases surfacing overcharges well beyond this range. 

Through diligent dispute resolution and ongoing auditing, we aim to reduce these discrepancies to below 3% within six months. Perfection isn’t realistic, but we’re dedicated to recovering as much money as possible for our clients – we view ourselves as an extension of their team.

The bottom line

While the importance of accurate 3PL invoices can’t be understated, it’s understandable that most companies don’t have the bandwidth and experience to perform 3PL invoice audits. 

They require attention, diligence, and ongoing maintenance to ensure your finances are secure and protected. The best way to tackle them is with logistics experts who live and breathe eCommerce. 

As your trusted partners, Brand Access empowers you to expand globally without compromise.