In the intricate world of parcel shipping, managing costs effectively is a vital part of maintaining a healthy bottom line for businesses of all sizes. A crucial aspect of this cost management is the process of order matching, where expected shipping costs are meticulously matched to actual shipping invoices.
This blog delves into the nuances of order matching, its significance in the realm of parcel shipping, and how businesses can seamlessly implement effective order matching.
The Role of GL Coding in Parcel Shipping
A GL code is an accounting practice that assigns a unique identification code to classify and track financial activity. In parcel shipping, GL coding categorizes expenses and revenues associated with shipping activities. For example, freight charges or fuel surcharges are assigned a GL code so businesses can easily track and analyze shipping costs over time.
By applying GL codes, businesses can uncover trends in shipping costs, simplify reporting processes, identify discrepancies, and streamline expense-tracking operations.
The Core of Order Matching
Order matching in parcel shipping is a process that involves comparing the estimated shipping costs of an order (as calculated at the time of shipping) against the actual costs invoiced by the carrier after delivery. This process verifies that what was ordered is what’s actually being shipped and billed for. This comparison is essential for several reasons, including:
- Accuracy in Billing: Order matching ensures that the billed amount by the carrier aligns with the initially quoted price, safeguarding businesses against overcharges.
- Budget Management: Accurate cost predictions help in better budget management and forecasting.
- Financial Transparency: Order matching brings transparency to the shipping process, allowing businesses to track where and how their shipping budget is being utilized.
A well-structured order matching process is critical to a business’s successful logistics operation.
The Challenges of Order Matching
Despite its importance, order matching is not without its challenges. There are 3 main roadblocks businesses are facing with order matching:
1. Complexity of Shipping Rates
Carriers often have complex and dynamic pricing structures based on variables like weight, dimensions, distance, and service type. This means that different carriers can charge vastly different rates for the same shipment. Without the right order management technology to detect shipping rate trends among carriers, businesses risk hurting their bottom line.
2. Fuel Surcharges and Additional Fees
It’s not uncommon for carriers to charge additional fees to account for unexpected issues like fuel surcharges, delays in transit, or damaged items. These fees can vary and may not always be included in initial estimates, which can inevitably impact your shipping budget and disrupt your order management processes.
3. Errors in Data Entry
Order matching can be a costly, manual process that can lead to mistakes in recording or calculating shipping costs. Increased manual labor reviewing parcel spending and a higher volume of errors in data entry can cause businesses to inaccurately record and anticipate shipping costs.
The challenges of order matching are evident, but implementing an advanced logistics and shipping management platform can help businesses mitigate them.
Implementing Effective Order Matching
To overcome these challenges and implement effective order matching, businesses can adopt several strategies:
- Automated Shipping Systems: Utilizing advanced shipping software that automatically compares estimated costs with actual invoices closes the loop and can significantly reduce errors and improve efficiency. With automated shipping systems, your internal team can forego manual data entry and focus on more important tasks.
- Regular Audits: Conducting regular audits of shipping invoices against estimated costs helps in identifying discrepancies and addressing them promptly. If there are credits available, a parcel audit software can recover those credits and identify overpayments automatically.
- Carrier Communication: Establishing clear communication with carriers, with detailed examples of discrepancies to understand their billing structures and any potential unexpected surcharges is crucial to implementing effective order matching. A parcel spend management software with carrier agreement comparison technology can evaluate carrier proposals with a side-by-side comparison so you can clearly note any inconsistencies, without having to drill down into each page manually.
The Role of Technology in Parcel Shipping
Advancements in technology play a pivotal role in streamlining the order matching process. Modern Shipping Intelligence software like Reveel comes equipped with features like automated invoice auditing, actionable insights, and advanced analytics. These tools not only facilitate accurate order matching but also provide valuable insights for future cost-saving strategies.
Automated invoice auditing breaks down the complexity of shipping invoices into a simple document that outlines everything businesses need to be aware of. With this breakthrough technology advancement, businesses can be automatically alerted of any errors or overcharges to ensure that they only pay for what they owe.
Modern shipping intelligence software can also uncover powerful insights on improving your shipping process to save time and money. Whether it’s discovering shipping carrier trends or alerting you of key areas where you can save money, Reveel’s technology is optimizing how businesses approach cost management practices. Also, factoring in 2024 rate increases where the average UPS customer will pay 7.72% and the average FedEx customer will pay 8.17%—instead of the announced rate of 5.9%—businesses need to save where they can.
The Bottom Line: Accurate Cost Matching Starts Here
Order matching in parcel shipping is more than a mere administrative task; it’s a critical component of cost management and operational efficiency. By ensuring that the expected shipping costs align with the actual invoices, businesses can maintain budgetary control, avoid unnecessary expenses, and increase financial transparency to bost their bottom line.
While the task may seem daunting, the benefits of diligent order matching in parcel shipping are undeniable. It’s a practice that not only keeps costs in check but also contributes significantly to the overall financial health and operational efficiency of a business. Order matching helps your business ship smarter, which is the core of Reveel’s mission. Reveel’s parcel spend management software takes the complexities of shipping data and transforms it into simple, actionable ways to save time and money. Get a demo here.