A Guaranteed Service Refund Waiver, or GSR Waiver as it is commonly referred to, is a contract provision that has been appearing more and more in new contracts from your Parcel transportation and logistics providers.
Should your company agree to accept such a waiver?
By agreeing to the waiver provisions in your contract your Parcel Carrier typically agrees to provide you with additional pricing incentives to reduce your annual freight spend. In return, you forfeit your company’s right to file claims for refunds for late deliveries.
This doesn’t sound so bad, does it? You get some extra savings on your annual parcel spend and you don’t have to worry about auditing your invoices to submit claims for late deliveries. Everybody wins…or do they?
According to industry experts, every year an average of $2 Billion goes unclaimed in late delivery refunds from the major Parcel Carriers. It all comes down to the numbers.
Will my company benefit from signing a GSR Waiver?
The answer is, it depends. If you are saving $30,000 per year in additional discounts by signing a GSR Waiver, but losing $100,000 per year in Guaranteed Service Refunds, it’s obviously not worth implementing that provision in your contract.
The best way to know is to have an audit performed on your invoices. Logistics Consulting companies have the know-how and technology tools to quickly and efficiently audit your company’s parcel invoices to determine which avenue is most beneficial to your company. Most often, it takes less than 30 minutes to gather the information needed for the audit and about two months to get a comprehensive analysis performed that will arm you with all the pertinent information you’ll need to make the proper decision.
We always say, “knowledge is power!” And in that regard, here is a great example of how Knowledge truly paid off for one of our clients.
Recently we initiated an audit for a new client’s Parcel Carrier invoices. The company had an $8 million annual parcel spend. After our comprehensive audit, we uncovered that even with their GSR Waiver,they were entitled to and actually received approximately $8,000 in refunds. However, had they not had the GSR Waiver in their contract this company would have received refunds of approximately $500,000 for a year. $8,000 vs $500,000. That’s not chump change! And, the most important fact we uncovered is that the client had no way to identify just how much savings they received in additional discounts, if any, not to mention losing complete visibility of the Parcel Carrier’s delivery service.
So before you sign away your company’s right to file and receive refunds for late delivered packages, make sure the additional pricing incentives far outweigh the potential refunds the company would receive by not agreeing to the waiver.
And, one final point! Most shippers that do sign away their right to file claims for late deliveries also often do not feel it is necessary to audit their Parcel Carrier invoices because of the waiver. That too is a big mistake because it takes away the shipper’s ability to audit for many of the other refundable errors that occur on a regular basis.