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Save Millions in 3PL with Automated Freight Reconciliation

Automated freight reconciliation in Microsoft Dynamics 365 Finance & Supply Chain Management, as part of the 3PL Automation Cloud by Avantiico, streamlines 3PL operations by efficiently resolving discrepancies in freight billing. This feature reduces administrative costs and enhances accuracy, allowing providers to quickly adjust and charge back errors. By automating the freight reconciliation process, 3PLs can maintain financial integrity and build stronger relationships through transparent and consistent billing practices. Discover the impact of this powerful tool on 3PL profitability and operational efficiency

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Steve Stallings

Introduction

Companies leveraging the automated freight reconciliation features of the Microsoft Dynamics 365 Finance and Supply Chain Management 3PL Automation Cloud Solution by Avantiico are realizing savings of millions of dollars annually. This article breaks down the 3PL industry issue of manual freight reconciliation and how the 3PL Automation Cloud by Avantiico solves this to increase 3PL provider profitability.

The Challenge in Third-Party Logistics

3PL providers generate thousands of value-added services daily for material handling and related processes on behalf of their clients. These value-added services result in thousands of billable activity invoices. One of the highest volumes and, by far, the most expensive of these billable activities is the cost of freight services by parcel and Less-than-Truckload (LTL) carriers. These are also some of the most complex charges to manage, making freight reconciliation a critical process for 3PL providers.

Complexities in Freight Charges

One 3PL provider using the 3PL Automation Cloud by Avantiico sends invoices to their customers based on initial freight estimates of greater than $3 million per month. However, weeks, and potentially months later, when they receive carrier invoices, those amounts rarely match due to accessorial fees and other charges. This discrepancy highlights the need for effective automated freight reconciliation. To add complexity, the same tracking number may be invoiced several times by a carrier as new charges are added over time, including returns processing and regenerated labels linked and matched to the original freight bill.

The High Cost of Manual Freight Reconciliation in 3PL Operations

Historically, reconciling these freight bill discrepancies has been a time-consuming and costly manual process. Those discrepancies often become additional costs in a General Ledger (GL) liabilities account. In the example, the 3PL provider using the 3PL Automation Cloud by Avantiico had previously absorbed those freight invoice discrepancies, representing between $250 thousand and $400 thousand per month.

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The Solution: Automated Freight Reconciliation Using The 3PL Automation Cloud for D365 F&SCM

3PL freight reconciliation automation process diagram

By utilizing the Automated Freight Reconciliation module within the 3PL Automation Cloud for Microsoft Dynamics 365 Finance & Supply Chain Management (D365 F&SCM), the 3PL provider has reduced cost and processing time. The solution:

  • Automatically compares and reconciles differences between tracking number estimates and actual freight invoices
  • Captures those differences as additional billable activities
  • Charges those amounts back to their 3PL clients, thus reversing the accrued freight liability and avoiding those costs ending up in their GL altogether

This saves the 3PL provider an average of $250 to $300 thousand per month, or approximately $3 to $3.6 million annually, while also reducing manual effort and errors associated with manual freight reconciliation.

Benefits of Automated Freight Reconciliation For Third-Party Logistics Providers

Many third-party logistics providers use a pre-defined contracted freight cost per shipment. Auto-match discrepancies can refine those estimates, reducing future discrepancies. This not only improves billing accuracy but also enhances overall logistics spend management.

What is Freight Reconciliation & Why it Matters in 3PL

Freight reconciliation is the process of comparing carrier invoices with the initial freight estimates to identify and resolve discrepancies. In the context of 3PL operations, effective freight reconciliation:

  • Ensures accurate billing
  • Reduces financial liabilities
  • Improves cash flow
  • Enhances client relationships by providing transparency

Automating this process with The 3PL Automation Cloud for Microsoft Dynamics 365 Finance and Supply Chain Management eliminates manual errors and saves significant time and resources.

Conclusion

Implementing automated freight reconciliation within 3PL operations streamlines the reconciliation process, resulting in significant cost savings and improved logistics spend management. By implementing the 3PL Automation Cloud for Microsoft Dynamics 365 Finance & Supply Chain Management, third-party logistics providers can effectively manage complex freight charges and enhance their profitability.

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