If you’re like many companies, you have a high shipping expenditure with carriers like United Parcel Service (UPS) and FedEx. The shipment logistics are confusing to follow, especially when comparing them against shipping invoices. There are different freight terms being utilized, unfamiliar statement formatting along with individuals not familiar with skills like how to read a bill of lading. Making a late payment means incurring a late payment fee, or worse. For example, your packages and logistics could be held up until payment is worked out. Many companies, in today’s world, don’t realize that there are ways to avoid a FedEx and UPS late payment fee, but it requires some understanding. The most recent method of organizing the madness is by using automated bill pay and a freight audit software to spot check.

Avoiding the UPS Late Payment Fee

UPS offers the following payment plans for its ground shipping orders and UPS Air Services:

  • Monthly Prepayment Plan
  • Weekly Prepayment Plan 
  • Special Payment Plan
  • Credit Extension Plan
  • Weekly Payment Plan 

Regardless of the plan, UPS will charge a late fee if they do not receive the shipper payment by the invoice due date. Their late freight payment fee will be 6% of the total past due balance from the invoice unless otherwise stated. The shipper must, then, pay the invoice within seven days after receiving the invoice that shows the assessed late fee. If your invoice is still not paid by the next invoicing period, they reserve the right to charge a late fee on all unpaid balances, which means a 6% fee on the total unpaid amount, including the late fee. They can also charge collection fees. 

The UPS invoice clearly states the payment date and late fee below the summary of charges, making it hard to miss and easy to find. 

UPS usually allows individual shippers to choose a payment method from this list for their shipping invoice: 

  • Credit card
  • Debit card
  • Check
  • Electronic funds transfer
  • Payment card
  • Letter of credit 

Cash is sometimes accepted. Some shippers use a billing account where a third-party is directly billed, or the UPS freight is shipped collect. In addition to paying when the invoice comes, UPS offers prepayment plans for estimated charges. It is important to note that the payment processor or bank may charge an individual shipper a processing fee. This shows it’s important to understand how your payment choices affect you to avoid something like an unexpected processing fee or similar.

Avoiding the FedEx Late Payment Fee

UPS’s rival, FedEx, does not charge a late payment fee – but that is changing. Their credit term cycle begins on the invoice date, and the shipper must pay the transportation charges within 15 days. FedEx’s rule is that if the shipper doesn’t pay the transportation charges within that time period, FedEx can hold back freight or parcels in transit until payment is received. That can be devastating to a business. If additional collection actions are needed, the shipper is responsible for the payment of those as well. If your company receives credit from FedEx, but then misses a payment, the credit may not be extended in the future. So pay on time!

As of January 2021, FedEx in the United States will start matching the UPS system general rate increases by charging a 6% late fee for those shipping with these services: FedEx Ground and U.S. FedEx Express. 

Like the UPS system, FedEx usually allows shippers to choose a payment method from this list for their shipping invoice: credit card, debit card, electronic funds transfer, check, Amex Express checkout, and PayPal. Some FedEx shippers use a billing account where a third-party is directly billed. For shippers that may forget to pay an invoice, automated billing using a credit card can be an excellent option to avoid a missed payment, and all that follows from that. 

Other Fees and Financial Things to Watch

The big carriers like UPS and FedEx charge fees for other types of services, in addition to late fees. Here are some you can expect to see on your invoice:

  • Prohibited item fees Placed on packages with a prohibited item or articles.
  • Fuel surcharge These charges change per week and are broken down by domestic ground and UPS Air Services, or international export/import for the UPS fuel surcharge. The FedEx fuel surcharges include FedEx Freight, FedEx Ground, Express Domestic and International.
  • Value Added Services Surcharge Value added services surcharges can include: currency conversion rates, delivery change requests, delivery confirmation, signature required, direct delivery only, Saturday delivery, proof of delivery, rebill fee, multiple delivery attempts for undeliverable packages, additional handling surcharge for items that are oversized or meet other criteria, and many others.
  • Dimensional Weight Pricing – The carriers may change pricing if the shipper incorrectly uses actual weight instead of dimensional weight 
  • Brokerage Fee – FedEx and UPS both charge a brokerage fee for sending items internationally. This includes customs clearance. 
  • General Rate Increase: Each year (or sometimes more often), the major carriers announce a rate increase, which is not a late fee, but still, a rate increase can be significant.

Tips for Avoiding Late Payment Fees

If a shipper knows they will have a late payment, they should reach out directly to the carrier to work something out, if possible. If you are a consistent and loyal customer, UPS may give goodwill credits to cancel out the late payment fees. This depends on if you paid the invoice shortly after the due date, or if it’s a small amount. Additionally, this cannot be a regular occurrence.

The autopay method offered by FedEx is useful for avoiding missed bills, but there are other issues to pay attention to. Someone should be checking those bills to ensure they are accurate, and that may slip by if the bills are automatically paid. Also, someone needs to monitor the autopayments to ensure money or credit is always available to pay them, or there could be a rebill fee. 

Parcel Pay and Invoice Audit Recovery Services

Some shippers find that the best option is to use a parcel pay program and audit service to handle all billing, auditing and carrier reconciliation. By outsourcing the payment function to a company like Shipware, a shipper will know that a responsible organization is on top of the payment issues. A company that receives, audits, processes and pays bills is going to have systems set up to handle the complexity of UPS freight and parcel invoice payments. They will have the same for other carriers like FedEx, DHL, and even regional carriers. Tracking invoices from multiple carriers can be overwhelming and confusing to some shippers’ AP departments. The invoices have varying due dates, and it’s hard to match the invoices to specific shipments. By outsourcing, shippers can often save money, by not paying late fees, having a more consistent payment schedule, and catching errors through the invoice audit recovery process. 

Shipware’s invoice audit recovery program uses a proprietary system to find errors in invoices that can often result in a refund. It could be that a delayed delivery misses the guaranteed delivery time, or negotiated discounts that change the shipping cost service are absent. Instances such as a delayed delivery need to be recorded because of the potential monetary savings that could be incurred.  

The freight audit process typically saves our individual shippers from 1% to 9% of their total invoices. We find these errors by auditing their invoices for multi-point audit of failure. Any refund is automatically credited to the customer’s account. Shippers love the program because it runs behind the scenes. Set-up takes a few minutes by connecting the carrier’s online billing account to our software. There’s nothing to download, and the audit process happens automatically. It costs nothing to use, and we don’t get paid unless you save money, as we receive a portion of the savings. Combine the parcel pay and audit recovery, and there’s full transparency in the invoicing with eyes monitoring every move. 

To learn more about invoice audit recovery and parcel pay, with no obligation, contact us online.