What FedEx’s New Late Payment Charge Means for Shippers—and How CTSI-Global Is Responding

In April of this year, one of the largest freight carriers in America suddenly announced that it would start assessing a late payment charge (LPC) of 6% on total past due invoice amounts. The announcement from FedEx would impact thousands of customers who were already struggling under the weight of ever-rising shipping costs. What’s more, the change would take effect in just three months.

Manually managing, tracking, and auditing invoices effectively is hard enough for shippers, and FedEx’s hastily implemented LPC added another layer of complexity—one that had the potential to be incredibly costly. Freight audit and payment software, which had always been advantageous, suddenly became essential to avoid unnecessarily overpaying for freight. But since this change was so unanticipated, rapid action was needed to ensure the software was equipped to handle this new process.

The problem with manual billing and payment processing

Manual invoice auditing is inevitably fraught with human error. Each carrier has different terms, conditions, discounts, and exemptions. Without standardization, even the most seasoned manual reviewer can make an expensive mistake. A few errors can have costly consequences—from base rate discrepancies and improperly classified freight to duplicated invoices and incorrectly applied LPCs.

It’s almost impossible to manage, track, and audit these charges manually. For one thing, the FedEx LPC only references the summary invoice in question. It doesn’t identify a specific tracking number for all orders open and past due.

What’s more, the FedEx LPC assessment is not standard for all clients. For example, the contracted payment terms some clients have with FedEx may exempt them from LPCs—though mistakes can still happen on the carrier’s end.

Finally, the sheer number of invoices at risk of incurring late fees can be overwhelming, as some clients have only short, 15-day payment terms with FedEx, making it difficult to process them all in time to avoid a late payment charge.

The challenge of avoiding a late payment charge

With decades of freight audit and payment experience, CTSI-Global knew that adapting our solutions to address FedEx’s late payment charges would be the best way to help customers navigate this fresh challenge. With a robust freight audit and payment solution, shippers don’t need to simply accept each claim as valid, agreeing to pay an additional 6% of the total order amount. Instead, they can rapidly process invoices to verify claims and dispute incorrectly applied charges. And given the short window of FedEx’s new LPC, shippers needed even greater visibility to resolve disputes efficiently as possible.

CTSI-Global swiftly developed and implemented a FedEx Dispute Logic and Reporting module to its proprietary software. Applying a combination of company-specific billing validation logic and artificial intelligence makes it easier for clients to automate and monitor invoices, providing the visibility they need to resolve disputes fast, without the potential for human error.

All shipping invoices are loaded into the system, where they can be retrieved in a matter of seconds and connected to incoming late payment charge invoices. Automated processes can then notify FedEx of a disputed charge, providing an opportunity to either confirm or deny the specific LPC. The system also proactively auto-pays verified invoices to avoid the 6% late payment charge altogether.

Since FedEx gave very little notice about its new late payment charge, we had to act rapidly to add this module to our software. “As a global freight audit and payment company, CTSI-Global was agile in its approach to manage this industry change and implement solutions at a moment’s notice for our customers,” explains Spencer Gore, Director of Business Analysis at CTSI-Global.

Your partner in navigating an ever-changing shipping ecosystem

Transportation costs will likely continue to rise. But that doesn’t mean shippers need to resign themselves to wasteful transportation spending and passed-down consumer price hikes. CTSI-Global is your partner in keeping costs under control. Whatever changes the market throws at you, we’re here to help navigate. Contact us today to get started.