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Delivery Charges

What are Delivery Charges?

Delivery charges are additional fees charged to cover product transportation and delivery expenses. They can include the cost of shipping and handling to pack and transport goods, along with associated expenses. Fees may appear as a separate line item on an invoice and may be paid to the vendor or directly to the shipping company. 

Delivery charges vary across carriers and vendors, but most fees depend on these factors:

How do Vendors Calculate Delivery Charges?

Delivery fees have been on an upward trend since the pandemic, exacerbated by rising fuel prices and inflation. Every year carriers adjust base rates and implement a general rate increase (GRI) that typically increases shipping fees by 4 to 6% annually. 

Implementing an annual price hike allows shipping companies to adjust for inflation and offset the rise in operating costs. 

Aside from this adjustment to the base rate, shippers and vendors may charge add-on fees. 

Surcharges implemented by carriers may include the following. 

How Do Freight Costs Affect Businesses?

B2B order deliveries are bulkier, palletized and delivered via freight. Regulations in some industries where companies procure raw materials internationally or handle hazardous materials may require special handling and more complex processes – making it more expensive to arrange deliveries.

When freight costs increase, the total cost of manufacturing or selling a product or service will also go up. 

Dealing effectively with price changes requires companies to:

What Can AP Teams Do To Understand Delivery Charges? 

Businesses have to understand what they are paying for – the base delivery fee, fuel rates, regular surcharge, service fees, peak season surcharge, and other fees. With the increasing need for cost transparency, more businesses turn to automated accounts payable solutions. Smart technology allows your AP team to dig deeper into expense data for enhanced cost and variance analysis. 

With the right tools, AP departments can improve delivery charge forecasts using historical data and by adjusting for inflation. At the same time, automation makes it easier to audit invoices and spot irregularities and errors in delivery charges.

Manage Freight Costs Better With SoftCo

As freight costs increase, AP teams need to proactively monitor and validate price changes without getting slowed down by manual reviews. Understand your costs without sacrificing speed by using SoftCo’s Procure-to-Pay solution. Process invoices faster and more accurately, even with unexpected delivery surcharges.