The Cost of Poor Reconciliation:
Why Invoices and Carrier Budgets Must Align

Whether it’s a small eCommerce business or a large multinational operating in the B2B space, all business endeavours are eventually measured by one unifying outcome – the numbers. Accounts departments are constantly tasked with providing accurate, up-to-date insights into the profit or loss generated by a company’s operations. Without clear data, decision-makers cannot manage costs or balance budgets against their goals.

There are few areas where this task faces more challenges than in the reconciliation of logistics costs and carrier invoices. We explore the importance of accurate, efficient reconciliation and highlighting tools that are available to help you achieve this.

Complexity of Carrier Budgets and Invoices

Carrier contracts are complex. Costs depend on multiple dynamic factors such as services chosen, fuel surcharges, parcel volume and discounts given. If multiple carriers are used; these layers of complexity can soon add up with their differing pricing structures, processes and points of contact.

This complexity increases the failure rate of accurately matching and comparing these invoices against a business’ contracted and budgeted expectations. And with these failures, discrepancies are bound to occur. These discrepancies may not seem like much initially – a small overcharge here, a missed discount there. However, over time and with volume can soon add up to significant sums.

Impact of Inaccurate Reconciliation

In addition to the immediate financial losses caused by overpayments of invoice discrepancies, there are numerous downstream impacts that can come about from inaccurate reconciliation:

Poor Financial Forecasting

Accurate reconciliation gives businesses a clear picture of what their logistics expenditure is and the true cost of sale for their products. Without it, businesses may be operating on an incorrect assumption that their set price point has enough margin to cover shipping costs. They may then find at the end of a quarter, costs have significantly exceeded their expectation due to invoice errors.

Cash Flow and Resource Management

An accurate reconciliation process ensures that cash flow remains steady by preventing both overpayments and the need for complex, time-consuming corrections. This is particularly crucial for businesses that rely on a steady cash flow and have limited staffing capacity to meet operational demands and pursue growth opportunities.

Disrupted Relationships with Carriers

Carriers might become reluctant to work with a business if it is regularly disputing invoices due to inaccurately reconciled invoices, or is failing to meet agreed payment terms due to disputes over charges. This may result in held shipments, late payment charges or even higher fees in retaliation. A smooth reconciliation process ensures transparency and fosters a relationship of trust with your chosen carriers.

Simplifying Carrier Invoice Reconciliation

Reconciling carrier invoices can be a time-intensive, manual process. This is especially true when managing multiple contracts, carriers, and invoicing systems. Accounts teams may spend hours sorting through complex contracts, cross-referencing budgets, and spotting discrepancies. The workload can lead to oversight of significant errors.

To simplify this process, automation is key. Tools like GFS Validator can transform reconciliation efforts, making them faster and more accurate.

Full Transparency of Carrier Spend

Developed by our in-house finance team, GFS Validator leverages over 20 years of multi-carrier budget management expertise. It automates the comparison of invoices against agreed tariffs, identifies inconsistencies, and flags incorrect charges.

With secure, instant access to an archive of invoices and all costing data, GFS Validator also helps you filter, sort or group invoice data so you can view specific cost lines, saving your team time and minimising the risk of human error. This transparency also enables you to optimise your carrier budgets to best suit your business needs.

GFS Validator is available as part of our Enterprise Carrier Management suite. If you are looking for a multi-carrier delivery solution that gives you full control of your customer delivery experience, we would recommend combining it with GFS Selector and GFS Manager for a full end-to-end integration.

To stay competitive in today’s market, businesses must prioritise transparency, efficiency and accuracy in their reconciliation efforts. By addressing the complexities of carrier invoices head-on and implementing best practices with automated reconciliation, you’ll be better positioned to manage costs effectively and scale your operations with confidence.

If you are looking to streamline your reconciliation process and effectively manage your carrier budgets, contact one of our advisors today!