Coping with Carrier Late Fee Penalties
Recently, a small parcel audit client signed a new contract with UPS without any assistance. They based their contract negotiations off of the previous UPS contract, and just asked for better discount rates. While this is a whole other topic that deserves its own blog post, they did not look at the whole contract, and were soon shipping about 20 percent of their UPS SurePost packages without any discount at all. Dimensional weight basically bumped the low weight packages up to a weight range with no discount (a huge hole in the UPS contract that a contract negotiator could have spotted and corrected before the contract was signed.) With this volume shipping without any discount, they saw a huge increase in shipping costs that caused an immediate cash flow problem. They were not able to pay for their UPS invoices within three billing cycles! Once this happened, UPS started assessing late penalty fees that only exacerbated the cash flow problem.
When do UPS late fee penalties kick in?
UPS specifically sets the late payment fee terms in the UPS Service Guide. Late payment fees will be assessed if your payment is not received within 14 days of the invoice due date. This fee will equal six percent of the total past due balance (including, without limitation, any previously assessed, but unpaid, late payment fees) that is 14 days late. Basically, you can get a late fee for your non-payment of your late fees. A late payment fee will be assessed once on each invoice that is 14 days past due. Each late payment fee will be due and payable within seven days, following receipt of the invoice that first reflects the assessment of the late payment fee. The late payment fee is in addition to any collection costs that may be incurred by UPS in the final collection of charges.
When do FedEx late fee penalties kick in?
The FedEx Service Guide does not have any set guidelines like the UPS Service Guide does. The invoice date begins the credit term cycle, and payment for transportation charges is due within 15 days from the invoice date. If the account number is not in good standing, the package may be refused, held or stopped in transit until you make alternative payment arrangements. The money-back guarantee (GSR) policy will not apply in such circumstances. FedEx will hold your package and there is no late delivery refund possible! The shipper, and any other party who is liable, is responsible for all reasonable costs incurred in obtaining payment for services rendered. These costs include, but are not limited to, attorney fees, collection agency fees, interest, and court costs. I called FedEx billing to ask if there was a set late fee penalty, since this is not specifically stated in the FedEx Service Guide. The representative told me that there was no set fee like with UPS. She said “after a few months” of non-payment, FedEx would begin to send “a few” collection notice letters before it would be sent to the FedEx collections department.
How do I avoid late fee penalties?
Pay on time. That is the simple answer, but sometimes it is not possible. So what else can be done? Contact your representative and be proactive. Ask them to waive the fees in order to prevent further fees or debt.
UPS will sometimes issue goodwill credits for late penalty fees. Just call up the UPS billing department with the invoice information and ask for a goodwill credit. This works many times when you actually paid for the invoice shortly after the late penalty was assessed on a recent invoice. Most customer service representatives can do this for penalty amounts under $500, without manager authorization. UPS wants to keep customers happy and can sometimes be very understanding. If you choose not to use Refund Retriever to help negotiate your FedEx or UPS contract, then try to work that into the terms of your new contract. Ask for a reduction of that six-percent penalty, or billing terms longer than 14 days. Everything in a carrier contract is negotiable, you just need to know what to ask for.
What can Refund Retriever do for you?
Our proprietary, guaranteed service refund and billing mistake software can lower your overhead the day you sign up. Rising freight costs and transportation impact your bottom line. If your package is even 60 seconds late, you are entitled to a full refund for the shipping costs. Refund Retriever finds these late deliveries and ensures that you get a full credit. Contact 800-441-8085 to gain insight on your rising logistics costs.
About the author: Brian Gibbs is president of Refund Retriever. Since 2006, Refund Retriever’s small parcel billing technology has helped businesses lower FedEx and UPS logistics costs while providing a full suite shipping reports and discount rate analysis.