How to spot supplier overcharges on construction invoices
Overcharges on supplier invoices are rarely dramatic. They are a unit price a few per cent above the agreed rate, a fuel levy nobody agreed to, or a price per length where you agreed a price per metre. Each is small. Across a year of invoices they are not.
In short
- Most overcharges are small: a unit price a few per cent above the agreed rate, a charge nobody agreed, or a price in a different unit.
- Compare each line's unit price, and its unit, with the rate in force on the invoice date, not just the total with the quote.
- Before you raise one, rule out a misread scan or an out-of-date rate on your side, then send evidence the supplier can check.
Rates that drift from the schedule
The most common one. A supplier's system carries a list price, your agreed rate lives in an email or a spreadsheet, and invoices go out at the list price. The fix is to compare each line's unit price with the rate in force on the invoice date, not just the total with the quote.
Charges nobody agreed
Freight, fuel levies, small-order fees, pallet and hire charges. Some are fair and agreed; some simply appear. If a charge is in your agreement, check it against the agreed amount. If it isn't, it's a question for the supplier, not an automatic dispute.
Units that change
A rate agreed per metre and billed per six-metre length, or per bag and billed per pallet, can look right at a glance and be badly out. Check the unit on the invoice against the unit in the agreement before comparing prices.
GST and tax-invoice slips
GST that is more than ten per cent of the price, or GST on items you agreed would be GST-free. Also check the invoice is a valid tax invoice, or you may not be able to claim the GST back at all.(ATO: Tax invoices; ATO: When you can claim a GST credit)
Raising it fairly
Before you raise anything, make sure it's the supplier's error and not a misreading of a scan or an out-of-date rate on your side. Then send the evidence the supplier can check for themselves: the rate you agreed, their own invoice's line, and the difference. That gets a credit note far faster than a general complaint, and it keeps the relationship intact when you are the one who got it wrong.
How CostCode helps
CostCode checks every line against the rates you agreed and the charges you agreed, raises only differences above a dollar floor and a percentage floor you set, and holds the invoice with the evidence attached. A query to the supplier quotes only what the supplier can check (the agreed rate, the arithmetic on their own invoice, a duplicate), and it goes only when a person in your team reads it and presses send. Supplier email is off until you turn it on.
Questions
What's the most common overcharge?
A unit price above the rate you agreed, usually because the supplier's system billed its list price. Comparing each line with your schedule catches it.
Is every unexpected charge an overcharge?
No. Freight or a levy may be in your agreement, or reasonable to ask about. Check what you agreed before disputing it.
What should I send a supplier about a wrong rate?
The agreed rate, the line on their invoice and the difference: evidence they can check themselves. Check your own reading of the invoice first.