To ship goods to customer´s central warehouse and leave distribution to points of sale up to him is undoubtedly a great way to simplify daily logistics operations. In such case, the client is charged a fee for using his customer´s distribution centre. The DC fee amount may vary for different customers, and the company needs to have control over customers´claims and billing. For these purposes, we created the Distribution Centre Fee Management Tool.
Why Distribution Center Fee Management Tool
Distribution centre fee is usually calculated either as a percentage of the value of the distributed goods or as a rate for distributed unit, such as a kilogram. Our client uses several types of rates for different customers and different types of goods. In order to have control over fee amounts to be paid to individual customers as the client needs to have a clear overview of customers´claims. It serves both as a basis for monthly financial accruals and as a tool for controlling of incoming invoices from customers.
How does it work
In each country where our client operates, he collaborates with several customers on a DC fee basis. The Distribution Centre Fee Management Tool automatically processes data on all the goods shipped to customer distribution centres.
Data on shipped goods comes from client database systems. It is collected from multiple sources. After being inserted the data automatically go through a series of calculations in the Tool. The outcome is an overview of customers, where the amount of the fee each customer can claim is calculated. The data is sorted by months and is tracked separately for each market segment because each market segment has its specific cost centres in the client’s accounting books.
On the credit side data about paid fees enters the Tool. The difference between the sums of claims and paid fees forms the financial accrual every month. The tool includes a list with costs sorted by cost center, account and customer. This list meets all requirements of the budget supervisor.
The Distribution Centre Fee Management Tool is also used to control incoming invoices from customers. A designated person compares the invoiced amount with the claim calculated in the tool.
Some customers do not charge fees for the use of their distribution centres on a regular basis. This presents a challenge for the closing financial statement of specific years. The Tool also keeps track of claims from the previous accounting period and there is the possibility of cancelling of unbilled claims.
We are in charge of the regular updates of the Distribution Center Fee Management Tool and of preparation of the accrual for logistics department every month. In the field of finance management in supply chain, we have also developed a number of other solutions for our clients, such as the Accrualing Tool or the Financial Planning Tool.