For many companies, shipping and handling costs millions, yet may not be given a lot of thought.

That could be leaving some serious money on the table.
Treat shipping and handling just like you would another product.
Ask yourself some of the following questions:

1. How are the margins on your shipping and handling? Are you making money in this category? Does your reporting give you that capability to be able to determine whether you are or not? If not, what do you need to do to get that type of reporting in place?

2. Drill down to a deeper level. It could be by product line, it might be by sales territory, it could be customer class or, perhaps, by country. Where do the shipping and handling margins vary the most? Are there particular soft spots where you’re losing money on shipping and handling that drag down the overall margins in this category for your entire company?

3. Are there times when you’re not billing the shipping and handling charges when you should be? Is there additional revenue you could be generating just by adhering to what your policies are?

4. How does shipping and handling stack up against the competition? Are there ways that you could further your shipping and handling in order to drive additional volume for your company? For example, consider the program that Amazon has. For a flat fee, you can pay for your entire shipping and handling cost for a whole year’s time. This could be a bargain for some people who receive a lot of shipments during the course of the year. It also helps to lock in customers and create some tremendous loyalty. If you’re already on a prepaid shipping and handling program where you have no further incremental cost as a customer, you’re probably more likely to just stick with Amazon and save the money on shipping and handling costs versus shopping around to somebody else.

Shipping and handling can be a significant revenue generator that can have impact far beyond just the shipping and handling, in other words bills into the product or service area. Take a good, hard look at the shipping and handling margins that you get. Perhaps, you might find some avenues where you can be more fruitful.

Jon Paul, MBA, CPA, CMC, CM&AA

President, Value Added Finance Resources
Bringing new insights on results and maximizing company value