How "Prepay and Add" Services are Costing Your Company Thousands
When you order a new piece of equipment or large fixtures, take a good look at the invoice from the manufacturer.
Does it say "shipping included"? If it does, without explaining line item costs, you could be paying tens of thousands of dollars more than you need to for the project. You might unknowingly be using "prepay and add" services from the manufacturer, which are completely unnecessary—not to mention an inconvenient option for you, the customer.
1. What is Prepay and Add?
Imagine that you are looking at the grand total on your invoice from the manufacturer, with shipping included. You might not give it a second thought that this is in fact the cost of the equipment. But with prepay and add services, the cost of equipment itself might actually be tens of thousands of dollars less—and you are getting a large bill for "freight" costs! But you won't see this as a line item expense on the invoice.
Additionally, you might need to pay for storage and installation once the shipment is delivered. This can be a huge headache if you're dealing with a high value shipment or equipment that needs to be kept sterile. Manufacturers often deliver on their schedule, not yours, so the problem is in your hands.
In sum, prepay and add services are hidden freight costs that are costing your company valuable resources. There is a better way to deliver your shipment.
2. Get Freight, Storage and Installation on Your Terms
Imagine getting that same equipment from the same manufacturer, but you decide to opt out of "shipping included." You end up paying less for the logistics than you would have for the hidden freight costs—and those logistics include freight, warehousing and installation on your schedule. You have just saved your company thousands of dollars and you no longer have to figure out how to store and install the shipment.
Prepay and add services simply do not make sense when you break down the cost of a project. Get smart about your logistics options, save money and make your shipments work for you.
Author: Augie Kim, Beltmann Integrated Logistics Project Specialist.