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What are Surcharges?

Surcharges refer to extra fees or additional charges on top of the total cost of services or goods purchased.

Advertised pricing often does not account for these surcharges. As a result, companies receive invoices showing higher amounts than the expected procurement cost.

Merchants impose surcharges on customers to offset charges that cut into their profit margin. For many vendors, the only way to maintain profit margins is to pass extra fees to their buyers. As a result, companies across different industries apply surcharges, although the reasons may vary.

How Do Surcharges Work?

Vendors impose fees to cover extra charges that may not be directly related to the production of goods and services. For instance, companies may charge surcharges to clients paying with a credit card to cover merchant fees. 

Freight companies may require additional delivery fees to make up for higher fuel or transport costs. For other vendors, surcharges could result from regulatory fees imposed by the government. 

Regardless of the purpose of these extra fees, surcharges should appear on the final invoice. However, each vendor may have a different way of presenting these fees. Some will have one line item for surcharges, while others may include the breakdown of all the add-on fees. 

Types of Surcharges

More companies started imposing surcharges during the pandemic, but the practice has continued. Some of the most common surcharges include:

How Do Surcharges Affect The Accounts Payable Department?

As the department responsible for tracking and reconciling costs, AP teams struggle with the increasing number and type of surcharges. 

Surcharges mean additional work for AP due to the following:

Manage Unexpected Surcharges with SoftCo

SoftCo’s P2P solution streamlines the surcharge reconciliation process by using pre-set rules to reduce judgment calls and machine learning to learn patterns from previous transactions. Leverage intelligent systems to explore price variances faster, maintain proper documentation, improve vendor communication, and effectively manage surcharges.