Simplify Your Third-Party Logistics Business: A Guide to the 3PL Billing Automation Solution by Avantiico

Introduction

Both large and small businesses rely on third-party logistics (3PL) service providers to enhance their distribution capabilities and reach more customers faster. However, major enterprise resource planning (ERP) software providers have neglected to meet essential needs specific to 3PL logistic operations. Avantiico has addressed this issue with the purpose-built 3PL Billing Automation solution. The 3PL software is built on standard Microsoft Dynamics 365 Finance and Supply Chain Management and addresses the unique needs of 3PL companies. The solution provides a simple user interface that automates all billing and operational processes, including real-time data collection automation, capturing charges, creation and management of invoices, and automated 3PL billing. Streamlining and automating all of these 3PL processes eliminates tedious manual tasks, resulting in significant time and cost savings for your business.

3PL businesses can streamline their 3PL warehouse & financial operations with the 6 core features of the 3PL Billing Automation Solution:

In this post, we’ll dive deep into how our customers are saving millions of dollars per year and significantly improving cash flow with the custom-built solution for 3PL companies.

What does the 3PL industry look like today?

3PL, or “third-party logistics,” is an industry that is growing significantly. According to a recent study by Statista, the 3PL market is estimated to amount to $13.6 trillion by 2028, illustrating the potential massive growth of the industry. Agility and efficiency are critical for a business in today’s accelerated pace of growth, and 3PL businesses need to digitally transform all their processes to optimize cash flow and productivity. Automation is imperative for third-party logistics companies to stay competitive, quickly, and accurately close month-end and bring in new revenue streams. The 3PL Billing Automation solution by Avantiico is proven to help 3PL warehouses and providers achieve all this and more.

Let’s explore in detail how the core features of the 3PL Billing Automation Solution by Avantiico automate and streamline all manual financial and operational processes.

Setup and Administration of Contracts with Complex Rate Structure

The 3PL Billing Automation Solution simplifies the entire customer contract setup and management processes by allowing contract terms, fees, and charges to be set and then automatically charged to the client. Everything is centralized within D365 Finance & Supply Chain Management, making it easy for 3PL companies to find all contract information in one place. There are key contract features, charges, and fees the 3PL Billing Automation Solution takes care of, which are split into four types: one-time, time-based, calculation-based, and transaction-based.

One-Time Client Contract Charges

An integral feature of the solution is client contract charges, where 3PL businesses can define what is being billed, how those charges are calculated, and their invoice timing. These are defined at the customer account level and defined as a one-off or on a weekly, monthly, quarterly, or annual basis. Periodic charges can be billed based on contract terms, such as on a specified day. For example, on a specific weekday, the first day of the month, a specific day in each quarter, etc. Additional fees can be specified, such as account setup fees and facilities initiation fees, service level agreement (SLA) fees, account management fees, monthly minimum charges, and accuracy fees.

Transaction, Calculation, and Time-Based Charges

Additional charges that the 3PL Billing Automation Solution manages for 3PL businesses are transaction-based, calculation-based, and time-based charges. These can include 3PL storage, receiving, and 3PL shipping charges. They’re determined based on contract terms but can also be based on item setup. These items are defined by customer ownership, climate control requirements, item velocity, and other classifications. For receiving charges, they can be defined in any storage unit, on an individual level, by case, pallet, etc. The Avantiico solution supports many transaction-based charges around receiving, storage, and shipping. Examples of fees include:

Receiving Fees

Receipt
Inspection
Labeling
License plating
Put-away
Any other user-defined charge times
All receiving fees are calculated automatically, in real-time, and posted immediately

Storage Charges Based On

Peak storage usage in a month (as calculated by a daily batch job)
Average storage usage in a month (as calculated by a daily batch job)
By inventory turns (based on a low, normal, or high-velocity definition)
Storage fees can be charged by item classification and climate control requirements
Storage charges are calculated in the storage usage table at the item/customer level
All storage fees except those based on daily batch jobs are calculated automatically, in real-time, and posted immediately.

Shipping Charges

Shipping charge (typically one per order)
Handling fee (maybe one per order or one per order line)
Packaging Materials (can be one per order or one per order line)
Labeling/branding fee (can be calculated based on quantity, volume, weight, by order, by order line, or by charge unit, like a UPS dimensional/weight calculation)
Item Classification fees can define shipping charges for classifications such as: hazardous, fragile, special handling, etc
All storage fees except those based on daily batch jobs are calculated automatically, in real-time, and posted immediately.
Shipping rates can be defined by carrier and level of service for data such as the shipping charge, branding fee, packaging materials, shipping document formats, etc.
Other user-defined fees (many other user-defined fees can be created)
Shipping charges are automatically triggered when the packing slip is posted.

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Purchasing Billable Activities

In addition to the charges listed previously, 3PL providers bill their clients for handling and shipping their products based on agreements for warehouse operations. This billable activity may include charges for packing, shipping, labeling/branding, kitting, and freight. With the 3PL Billing Automation Solution by Avantiico, other warehouse-related fees such as monthly minimums, location replenishment, cycle counting, peak or average inventory levels, and one-time setup charges can also be included in the contract.

Additionally, this billing solution allows the 3PL Providers to bill their clients automatically for specific purchases made on their behalf, such as client-specific packing materials, containers, handling equipment, safety equipment, documents, inspections, and certifications. This enhances the automated 3PL billing process, encompassing more business transactions beyond the warehouse than before. Another powerful tool that 3PL businesses can take advantage of in tandem with the 3PL Billing Automation Solution is Power BI. Metrics and data for all billable activities can be visible in an easy-to-read and user-friendly report from Power BI. With these reports, 3PL companies can easily analyze billable activities, including carrier fees, top customers by revenue, and even top billable activities by revenue.

Escalation and Auto-renewal Dates

Predefined contract escalation dates can be used to change contract billable rates over time using a simple percentage of the US Employment Cost Index (ECI) as the basis. These changes are typically scheduled to take effect on an annual or semi-annual basis. Auto-renewal dates can also be predefined based on contract-specific rules so that as a contract reaches its expiration date, it is renewed at the negotiated contract rates and does not default to (higher) list prices between expiry and next contract effective start dates. List prices protect the 3PL provider from inadvertent zero-cost transactions after expiry, and auto-renewal protects their 3PL clients from higher list prices.

3PL Contract Termination Date

The Termination Date feature is an integral feature of the 3PL Billing Solution. Previously, each contract header and line only had an Effective (start) Date and an Expiration (end) Date, like other D365 Finance features that require effective date ranges. Upon reaching the expiration date, the price for the contract line would drop to zero, which meant users had to plan ahead to replace the current contract or extend the expiration date to avoid manual corrections.

The Termination Date is accompanied by a List Price for services, which is usually higher than the negotiated contract price. When a new contract is not negotiated and its Effective (start) date is not set before the previous contract’s Expiration (end) date, the price for services changes from the contracted rate to the List Price until the Termination Date is reached. This feature shifts the responsibility of getting a new contract in place to the 3PL client and reduces the pressure on the 3PL Provider, as business can continue from the Expiration date to the Termination date at a higher price, providing better margins.

Once the termination contract date has been set, businesses can then implement a Diverse Rate Structure, which are different charges and fees that are automatically charged to the client. By using Diverse Rate Structure, 3PL companies can improve cash flow and find new revenue streams for their business.

WMS Integration

In order to serve customers of all kinds globally, the 3PL Billing Automation Solution integrates with Microsoft D365 warehouse management software (WMS), as well as all other leading WMS. This includes but isn’t limited to Manhattan, Accellos/High Jump, Oracle, Softeon, TechSys, and SAP.

The 3PL Billing Automation Solution is built to be a warehouse-agnostic software for the industry, making it fit for any 3PL business regardless of their existing WMS. With the 3PL Billing Automation Solution, 3PL companies can experience more flexibility and an out-of-the-box 3PL software to manage all their manual and complex billing processes. The core feature of the solution is the 3PL Billing Engine, which powers 3PL businesses to automate and transform their day-to-day workflows.

3PL Billing Automation Engine

The core strength of the solution lies in its billing engine feature, which facilitates the automated creation of periodic sales orders and invoices. It collects charges and fees based on customer contract terms and has powerful processing capabilities to handle millions of orders and order lines every week and billions of dollars in inventory. To reduce manual tasks, billable activities are captured based on warehouse operations or scheduled billing time as defined in the 3PL billing schedules. These billable activities include:

These activities are then stored in a table to support customer billing. The billing engine deals with sales orders in-depth. Firstly, sales orders are automatically created with sales lines by billable activity type. This action can accommodate all transactions for a specified billing period. After the sales order is created, the invoices are auto-created at the end of the billing interval using standard accounts receivable features in Dynamics 365 Finance. To review, users can drill down into the details of billable activities in sales order lines. Invoice formats can be based on customer needs or a single invoice template. The 3PL Billing Automation Engine removes the manual and complex processes for third-party logistics companies, saving time and resources, speeding up month-end close, and bringing in new revenue streams.

Client Specific Fulfillment & Sales Order Process

The solution by Avantiico also adds functionality around fulfillment. Fulfillment requests can be received as EDI transactions, Intelligent Order Management (IOM) marketplace orders, or customer-specific .XML or .CSV files. These demands will then be converted into sales orders. In our solution, the fulfillment process uses the same standard entities as a typical sales process. Sales orders are identified by type, with prices excluded, so that they will not be reflected in accounts receivable. Packing slips will be customized and created to appear as if they were sent on behalf of the 3PL’s customer and include the end customer’s name and address. Pre-defined contract terms and shipping charges will be reflected on the formatting of labels and the packing slips. Leveraging the standard sales order process, steps such as releasing products to the warehouse, outbound order creation, picking, etc., can follow standard Dynamics 365 Inventory Management, Warehouse Management, and/or Transportation Management business processes.

Customer Branding

Avantiico’s Automated 3PL Billing Solution is ideal for 3PL clients who sell multiple brands and want to keep their accounting separate. This innovative feature allows clients’ products to be identified and sorted by Brand. In other words, contract lines can be classified as “invoice by brand.” This allows clients to receive automated invoices separated by brand with just as much ease as any other automated invoices.

With this feature, the collection of billable activities is fast and efficient, with near-real-time data collection and automatic organization of sales orders by client and brand. This streamlined process eliminates the need for manual efforts in the billing process, saving you countless hours of work.

Customer Portal

An additional powerful feature of the 3PL Billing Automation Solution is the fully integrated Customer Portal, which provides enhanced customer service, better communications, and insights to a 3PL company’s various customers. It presents customer invoices, 24/7 support, and onboarding for new team members. 3PL companies can view open invoices, check goods and services that have been provided and billed for, and dispute credit memos. The portal enhances the overall customer experience, providing clients with real-time information and fostering improved communication channels.

How Avantiico Solves for 3PL Companies’ Pain Points

The Microsoft Dynamics 365 Finance & Supply Chain ERP system includes the Warehouse Management System (WMS) and Transportation Management System (TMS) modules that are excellent solutions for companies that own their warehouses and distribution centers. These solutions include many impressive features for supply chain operations; however, they lack capabilities essential to the 3PL industry. The 3PL Billing Automation Solution built for Dynamics 365 Finance & Supply Chain addresses the gaps that 3PL companies face when evaluating ERP solutions. These gaps center around specific 3PL warehouse management and billing requirements that are associated with order fulfillment on behalf of a client. Avantiico’s 3PL modules for Dynamics 365 are available to all Dynamics 365 Finance & Supply Chain users. Request a demo today to find out how to simplify and streamline your 3PL businesses’ processes.