Improve shipping charge revenue

The shipping charge is typically added to the bottom of an invoice, and frequently incorporates a substantial profit. The accounting staff usually calculates the amount of this charge when preparing invoices. If the staff forgets to include the charge, it could cost the company a large part of its profits.

There are several ways to ensure that a company generates a profit from the shipping charge. Here are several options:

  • Prelisted charge. The charge always appears in the default invoice template, so the accounting staff has to take action to turn it off. However, this may mean that the billing person automatically uses the pre-set shipping charge, when the actual amount may be higher.
  • Full pricing. Include the cost of shipping in the retail price of the goods sold, and tell customers that shipping is free. Though foolproof from an accounting perspective, it makes the prices of the company's products less comparable to those of competitors.
  • Reminder stamp. The shipping staff stamps shipping documents with a reminder message to charge freight; though this requires the shipping staff to remember to do so.
  • Billing checklist. Post a checklist in the billing clerk's office that notes every step in the billing process. However, it is easy to ignore this list.
  • Auditing. Audit a selection of invoices and have follow-up training with those clerks who have forgotten to include the shipping charge.

These options make it more difficult to forget that the shipping charge should be added to every invoice.

Related Courses

Bookkeeping Guidebook 
New Controller Guidebook