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Business director assessing the value of a shipping audit as a cost containment strategy

Is Pursuing Vendor Refunds a Good Cost Containment Strategy?

While online shopping and fast shipping times have allowed your company to expand its customer base, the cost of shipping products seems to rise each year. Each year, shipping companies raise their costs between five and six percent. Then during the 2020 holiday season, FedEx added a $0.30 surcharge for every package you sent out. Is the cost of shipping really a necessary evil, or are there ways that you can save money or receive refunds?

The reality is that you need a cost containment strategy to help ensure that you aren’t paying any more than you need to spend on shipping. It might be that pursuing vendor refunds and a shipping audit is exactly what you need. “What is a cost containment strategy,” you might ask? Read on to learn more. 

What Is a Cost Containment Strategy? 

With a cost containment strategy, a company sets and maintains a specific spending level to reduce costs. Also, the business looks for ways to reduce current costs without damage to the company’s long-term growth or brand loyalty. The goal is to reduce the amount that you’re currently spending on shipping to meet the budget you set for it.

This might involve a cost analysis for the shipping category or even the company that you use to ship your products. Another option is a shipping audit to check your records and see if you’re entitled to refunds due to delayed or lost shipments. 

Why Do Shipping Companies Give Vendor Refunds?

If you decide to do a shipping audit as part of your cost containment strategy, you might wonder when and why a shipping company will give you a refund. Most companies have a contract with their shipping company that outlines the cost of each available service. 

Most of the available categories of shipping come with a guaranteed shipping time. For example, if you ship a package from Atlanta to Boston, the shipping company might guarantee its arrival in five business days. A package that arrives on the sixth or seventh day would be eligible for a refund in shipping costs. 

Another reason that a shipping company might give you a refund is due to a lost shipment. If your customer never received the package, it’s entirely possible the shipping company will refund the cost of shipping along with the cost of the products inside (up to a limit listed on your contract). In fact, package theft has become a real issue for consumers, shippers, and shipping companies. 

Sometimes, a package is damaged during shipping. This is similar to a lost shipment. The shipping company should refund the shipping costs. They may also pay for damaged items up to the limit determined by the contract. 

There might be other reasons that you might receive a refund outlined in the contract that you signed, which makes a shipping audit essential as part of your cost containment strategy. You want to save as much money as you can when it comes to shipping, and audits help ensure you aren’t overpaying. 

Vendor Refunds From a Shipping Audit

To put your new cost containment strategy into effect, it’s a good idea to start with a shipping audit. A shipping audit is an excellent way to run a cost analysis on the advisability of pursuing shipping refunds. Here are a few of the benefits of this type of audit:

Late Shipments

As part of the audit, you’re going to discover instances of late deliveries, especially around holidays. Today’s customers are pretty tech-savvy, and they begin tracking their package almost as soon as it leaves your warehouse. The customer might take a delayed shipment in stride and never let you know.

The audit should show this. It also gives you the chance to reach out to the customer and apologize for the delay. You want to make sure that they’re happy with their purchase and continue buying from you in the future. 

Duplicate Shipments

Sometimes, a shipment gets scanned twice but only one shipping label is used. If you’re billed for both labels but only sent out one package, you need a refund. The shipping company shouldn’t bill you twice, but it does happen.

Miscalculated Surcharges

These surcharges can make up a large portion of your shipping bill. Sometimes, the shipping company doesn’t calculate them correctly. Also, you might notice a single line item covers multiple charges but not all of these charges apply to your shipment. 

Miscalculation of Dimensional Weight

You know that the size of the box that holds a pound of popcorn is a lot larger than the box holding a pound of gold. This is why the shipping company will sometimes charge you for the dimensional weight of a shipment. This is a common area where you’ll find mistakes during your audit. 

Pursuing vendor refunds can be an important component of your cost containment strategy. You might find that your shipping company is overcharging you on many packages. 

At Util Auditors, we understand how important it is to keep your shipping costs under control. We’re ready to help. We have a highly successful track record of reducing monthly costs and obtaining substantial refunds from providers of electricity, gas, waste removal, telecommunications, shipping, merchant processing, water/sewer, workers’ compensation insurance, and even 401(k)/403(b) plan administration fees. Contact us today to learn more. 

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