How are shipment refunds being delivered back to you?

Shipping credits delivered refund

One way to tell how good your parcel auditing company is at auditing every single one of your shipments is to look at how they are getting refunds delivered back to you. There are three different ways in which refunds can be paid by the carriers. Credits are either applied to shipping invoices, your credit card or sent via a check in the mail. What exactly do these delivery methods mean for your business?

Credits applied to shipping invoices

Credits applied to shipping invoices indicate a fast, efficient audit and should be the method of refunding for the majority of refunds that your auditor is securing. Credits are provided to invoices that are unpaid. And for most shippers, there’s a few days gap between when shipping invoices are posted to the shipping account and payment is transacted on that invoice. Filing claims during this period is better because the credits lower the total amount of the invoice and filing the claims quickly increases the success rate of the refunds delivered. If you’ve ever had to make adjustments on your own invoices, you’ve found it much easier to update the balance due by applying a credit rather than issuing a refund on a paid invoice. The same is true here. Credits made to open invoices are easier.

Credits applied to your credit card on file

Credits applied to your credit card on file implies that you pay via credit card stored with the carriers and that payment has already been transacted on the open invoice. An important point to mention is there’s variance in the way that carriers handle refunds.  If all of your refunds are coming in the form of refunds to your credit card then that means your auditor is late in filing disputes and claims. You can evaluate the quality of audit that is being performed based on how the majority of the refunds are paid out to you by the carriers. And of course, getting no refunds at all simply because dispute claims aren’t being filed is a sign of a horrible audit.

Refunds sent via a check in the mail

The refund via check is indicative of a slow audit and claim filing service. So, if you’re getting your refunds via check or via credit card refund, it’s likely a sign of a slower audit. There is one thing to take note of. Accounts payable may be overpaying a carrier invoice simply because they are working from a paper copy of the original invoice rather than the updated amount where the credits were refunded on that invoice. In this case, the refunds will indeed come back in the form of check refund.

The key takeaways are know how your refunds are being credited and how those credits are being reported. Not all auditors willingly admit to their client the refunds they missed. If you think this could be happening to you, contact us for a free report that shows the prospective refunds available in your account and the refund capture rate that you’re getting currently.

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