3PL Billing Best Practices with Shipsidekick

Understanding 3PL Billing

Third-party logistics billing is complex because you're charging for multiple types of services, each with different metrics and frequency. Unlike retail businesses that simply charge for products, 3PLs must track and bill for receiving pallets, storing cubic feet of inventory, picking individual items, packing orders, and shipping packages. Each activity has associated costs and should be billed appropriately.

Shipsidekick's billing system is designed specifically for this complexity, allowing you to configure rates for every warehouse activity, track usage automatically, and generate accurate invoices without manual spreadsheet calculations. The system captures data as work happens, ensuring you're billing for every service provided.

What Shipsidekick Billing Covers

Shipsidekick allows you to set up rates for all standard 3PL services, creating a comprehensive billing solution that matches your actual operations.

Storage Billing

Storage is typically the foundation of 3PL billing. Shipsidekick tracks inventory volume using cubic measurement, giving you precise data on how much space each customer's inventory occupies. You can bill storage daily, weekly, or monthly based on average or peak inventory levels.

Cubic storage tracking is more accurate than pallet-based storage billing because it accounts for actual space used. A customer with five half-full pallets doesn't deserve the same storage charge as a customer with five completely full pallets. Cubic tracking ensures fairness and maximizes your warehouse space utilization.

Receiving Charges

Every time inventory arrives at your facility, there's labor and administrative cost involved. Shipsidekick allows you to bill for receiving activities based on pallets received, cartons processed, or units counted. You can also charge for special receiving services like quality inspection, relabeling, or photography.

The system automatically tracks receiving activity as your team processes inbound shipments, eliminating manual counting or estimation of billable receiving work.

Picking Fees

Picking is a per-item or per-order charge for retrieving products from warehouse locations. Shipsidekick tracks every pick made through the mobile app, giving you exact data on how many items were picked for each customer.

You might charge a base pick fee per order plus a per-item fee, or use tiered pricing where the per-item rate decreases at higher volumes. The system accommodates various picking rate structures to match your business model.

Packing Charges

Packing fees cover the labor and materials involved in preparing orders for shipment. This might be a flat fee per order, or vary based on package size, complexity, or special requirements like gift wrapping or custom inserts.

Track packing activity through Shipsidekick as orders are processed at pack stations, ensuring accurate billing for packing services provided.

Shipping Fees

While customers typically pay for actual carrier charges, many 3PLs add a handling fee or markup to shipping costs. Shipsidekick tracks shipping expenses and allows you to apply your markup structure, whether it's a percentage, flat fee, or tiered based on shipping method.

You can also bill separately for shipping supplies like boxes, poly mailers, and packing materials. The system tracks what packaging was used for each order, enabling accurate material cost recovery.

Flexible Rate Structures

One of Shipsidekick's most powerful features is the ability to configure different rate structures for different customers. Not all customers are equal in terms of volume, complexity, or strategic importance, and your billing should reflect that reality.

Shared Rate Plans

Shared rate plans apply standard pricing across multiple customers. This approach works well for smaller customers or when you want to simplify rate management. You create one rate card and assign it to multiple customers, ensuring consistency and reducing administrative overhead.

Shared rates are ideal when you're starting as a 3PL or when you have many similar customers with comparable volume and service requirements. They make pricing transparent and easy to explain to prospective clients.

Individual Rate Plans

Individual rate plans allow you to create custom pricing for specific customers based on their unique circumstances. A high-volume customer might receive lower per-unit rates while a customer with complex special handling might pay premium rates.

Individual pricing makes sense for your largest customers where custom negotiations are expected, customers with unique service requirements that don't fit standard pricing, or strategic accounts where you're willing to adjust pricing to win or retain the business.

The flexibility to mix shared and individual rate plans means you can have a standard rate card for most customers while maintaining custom agreements with key accounts, getting the best of both approaches.

The Digital Wallet Feature

Shipsidekick's digital wallet is a game-changing feature for 3PL cash flow management. Instead of chasing payments after invoicing, customers maintain a prepaid balance that invoices are automatically deducted from.

How the Digital Wallet Works

Each customer has a digital wallet within Shipsidekick where they can deposit funds. When you generate an invoice, the system automatically withdraws the invoice amount from their wallet balance. This automation eliminates payment delays, reduces administrative time spent on collections, and provides predictable cash flow.

Customers can add funds to their wallet via credit card, ACH transfer, or other payment methods you've configured. The wallet balance is always visible to both you and the customer, creating transparency about available funds and upcoming payment obligations.

Setting Minimum Wallet Thresholds

The minimum threshold feature allows you to require customers to maintain a certain balance in their wallet. For example, you might set a $5,000 minimum threshold. When the customer's wallet drops below this amount, they receive automatic notifications to replenish funds.

This threshold protects you from providing services without adequate payment coverage. If a customer's wallet approaches the minimum, you can pause fulfillment until they add funds, preventing situations where you've performed extensive work without payment assurance.

Different customers can have different thresholds based on their monthly billing volume. A customer who typically runs $20,000 per month in charges might have a $10,000 minimum threshold, while a smaller customer with $2,000 monthly charges might have a $1,000 threshold.

Benefits of the Digital Wallet System

The prepaid model fundamentally changes the payment relationship. You're no longer extending credit and hoping for payment. Instead, customers prepay for services, similar to how cloud computing platforms operate. This shift dramatically improves cash flow predictability and reduces bad debt risk.

The automatic payment process eliminates the time your team spends sending invoices, following up on overdue payments, and reconciling payments to invoices. These administrative savings compound significantly as you scale to dozens or hundreds of customers.

Customers benefit too. They maintain control over their budget by prepaying and tracking usage. There are no surprise invoices or payment deadlines to miss. The wallet gives them visibility into their spending patterns and remaining balance.

Common 3PL Rate Strategies

Understanding industry-standard rate structures helps you price competitively while maintaining healthy margins.

Tiered Volume Pricing

Tiered pricing rewards higher-volume customers with lower per-unit rates. For example, picking might be $0.50 per item for the first 1,000 items per month, $0.40 for items 1,001 to 5,000, and $0.35 for items over 5,000.

This structure incentivizes customers to consolidate their fulfillment with you rather than splitting volume across multiple 3PLs. It also reflects the economies of scale you achieve with larger customers.

Implement tiered pricing in Shipsidekick by setting up rate tables that automatically apply the correct rate based on monthly volume. The system handles the complexity of tracking volume and applying appropriate rates.

All-Inclusive Monthly Rates

Some 3PLs offer all-inclusive pricing where customers pay a flat monthly fee covering storage, receiving, picking, packing, and a certain number of orders. This simplification appeals to customers who want predictable costs and dislike itemized billing.

All-inclusive rates work best when you have good data on customer activity patterns and can price the package to ensure profitability. Include overage charges for usage beyond the included allowances to protect against underestimation.

À La Carte Pricing

À la carte pricing charges separately for each service component. This transparency allows customers to see exactly what they're paying for and understand how their costs correlate to business activity.

The downside of à la carte pricing is complexity, both in administration and in customer understanding. Invoices can become lengthy itemized lists that require explanation. However, this detail protects you from providing unpaid services and allows customers to optimize their costs by adjusting their requirements.

Minimum Monthly Charges

Many 3PLs implement minimum monthly charges to ensure small customers generate sufficient revenue to justify the overhead of managing their account. A minimum might be $500 or $1,000 per month, covering basic storage and administrative costs regardless of actual usage.

Minimums protect you from customers who store inventory but rarely ship, creating a situation where you're holding their products for minimal revenue. The minimum ensures every customer relationship is financially viable.

Setup and Onboarding Fees

Charge one-time setup fees to cover the cost of receiving initial inventory, setting up the customer in your systems, configuring shipping preferences, and training on your processes. These fees typically range from a few hundred to several thousand dollars depending on complexity.

Setup fees ensure you recover the substantial upfront investment required to onboard a new customer. They also filter out customers who aren't serious about the relationship, as committed customers understand and accept reasonable setup costs.

Best Practices for 3PL Billing

Track Everything in Real-Time

The biggest billing mistake 3PLs make is failing to capture activity as it happens. If your team performs special handling or additional services but doesn't log them immediately, you'll forget to bill for them.

Shipsidekick's real-time tracking through the mobile app and WMS ensures every receiving activity, pick, pack, and shipment is recorded as it occurs. This data flows directly into billing, eliminating the gap between work performed and work billed.

Invoice Regularly and Consistently

Establish a predictable invoicing schedule and stick to it. Most 3PLs invoice monthly, though some high-volume operations invoice weekly or bi-weekly. Customers appreciate knowing when to expect invoices and can budget accordingly.

Process invoices within a few days of the billing period close. Don't let invoicing lag weeks behind service delivery, as this creates cash flow gaps and makes invoice disputes harder to resolve when activity was weeks or months ago.

Provide Detailed Invoice Backup

Don't just send a total amount due. Provide detailed breakdowns showing exactly what was billed. For storage, show daily or average inventory levels. For activity charges, show quantities of items received, picked, packed, and shipped.

Detailed invoices build trust because customers can verify charges against their own records. They also reduce disputes because customers understand exactly what they're paying for. Shipsidekick generates detailed invoice reports automatically, eliminating manual invoice preparation.

Communicate Rate Changes in Advance

If you need to increase rates, communicate changes at least 30 to 60 days in advance. Surprise rate increases damage customer relationships and can trigger contract disputes. Give customers time to adjust their budgets or consider alternatives.

Document rate changes in writing and obtain customer acknowledgment when possible. This documentation protects you if disputes arise about what rates were agreed upon.

Build in Rate Review Clauses

Include clauses in customer contracts requiring annual rate reviews or allowing rate adjustments based on cost changes. Labor costs, rent, and other expenses increase over time, and your rates must keep pace.

Annual reviews create natural opportunities to adjust pricing without awkward conversations. Customers expect periodic adjustments when they're built into the contract structure.

Monitor Customer Profitability

Not all customers are equally profitable even at the same rates. A customer with consistent daily order volume is more profitable than one with unpredictable spikes because you can staff appropriately.

Regularly analyze profitability by customer using Shipsidekick's reporting data. Identify customers who consistently generate low margins and consider rate adjustments or service requirement changes to improve profitability.

Address Payment Issues Immediately

When a customer's digital wallet runs low or they miss a payment deadline, address it immediately. Don't let unpaid invoices accumulate. A customer who owes $2,000 is far more likely to pay than one who owes $20,000.

Use Shipsidekick's minimum threshold alerts to identify payment issues before they become serious. Pause fulfillment if necessary to prevent performing extensive work without payment assurance.

Maintain Clear Service Agreements

Every customer should have a written service agreement documenting rates, payment terms, service level expectations, and termination provisions. This agreement is your protection if disputes arise.

Include specifics about what's covered in each rate, how overages are handled, when rates can be adjusted, and what happens with minimum commitments. Clear documentation prevents misunderstandings that damage relationships and profitability.

Setting Up Billing in Shipsidekick

Begin by defining your standard rate card for each service category. Determine your storage rates per cubic foot or pallet, receiving rates per pallet or unit, picking rates per item or order, packing rates per package, and any shipping markups or handling fees.

Create shared rate plans in Shipsidekick for customers who will use standard pricing. Configure the rates for each activity type and assign this rate plan to appropriate customers. This standardization simplifies rate management and ensures consistency.

For customers requiring custom pricing, create individual rate plans with their negotiated rates. Shipsidekick allows unlimited rate plan creation, so every customer can have exactly the pricing structure their contract requires.

Configure digital wallet settings including minimum thresholds, payment methods, and automated notifications. Set thresholds high enough to protect your cash flow but reasonable enough that customers don't feel you're requiring excessive prepayment.

Test your billing configuration with a pilot customer before rolling out to your entire customer base. Process a month of activity and generate an invoice to verify that rates are calculating correctly and invoices contain appropriate detail.

Train your team on how activity tracked in the warehouse flows through to billing. Ensure everyone understands that capturing accurate data in Shipsidekick directly impacts invoice accuracy and company revenue.

Common Billing Mistakes to Avoid

Don't underprice services to win customers. Low rates that don't cover your costs create unsustainable business that ultimately fails or requires disruptive rate increases. Price for profitability from the beginning.

Avoid complex rate structures that customers can't understand. If you need a 30-minute presentation to explain your pricing, it's probably too complicated. Complexity creates billing disputes and customer frustration.

Don't provide services outside your rate card without documenting and billing for them. "One-time favors" become expected services if you don't charge for them. Every service has a cost and deserves appropriate billing.

Never let customers run balances indefinitely without payment. The digital wallet prevents this issue, but if you're still using traditional invoicing for some customers, strict payment enforcement is essential. Services performed without payment are charity, not business.

Don't ignore small discrepancies because they're not worth arguing about. Small errors compound over time and become significant revenue leakage. Use Shipsidekick's automated tracking to ensure accuracy rather than accepting "close enough" billing.

The Bottom Line

Effective 3PL billing requires comprehensive activity tracking, flexible rate structures, and consistent payment collection. Shipsidekick's billing system handles the complexity of multiple service types, individual customer rates, and automatic payment through digital wallets. By implementing best practices around rate strategies, clear service agreements, and proactive payment management, you build a billing operation that's accurate, efficient, and supports healthy cash flow. The digital wallet feature transforms payment from a chase-and-collect burden into an automated, predictable process that benefits both you and your customers. When billing is done right, you capture revenue for every service provided while giving customers transparency and control over their fulfillment costs.