Freight management is a beast with many moving parts.
There are plenty of cracks for things to fall through as a consequence. One of the biggest of those comes right at the end of the chain – freight invoice auditing.
Matching your pre-agreed rate cards against the invoices you actually receive can be extraordinarily tedious and flat-out boring. It’s one of the least-liked jobs in any organisation which uses more than a couple of carriers to ship their freight.
In many cases, if auditing is done at all, it’s not done well. And we get why. It consumes labour, which is expensive and raises the question as to whether the effort is worth the payoff.
“Where is the ROI?”
So where do the problems occur?
Most of the issues with freight auditing happen as information gets passed along the supply chain.
Big shippers will have rate cards with many different carriers. The Accounts Payable team will often have these kept in a spreadsheet, on a PDF or in a filing cabinet—or someone will have to check the carrier’s website to see what a job should have cost. Already the inefficiencies are creeping in.
If the despatcher makes a typo or incorrectly weighs the shipment, your numbers go out the window.
If a job attracts a handling fee or surcharge, or there is extra equipment needed, the invoices won’t match up. Somebody needs to check the fine print at the bottom of the rate card for those.
And carriers can also make their own mistakes (they are people too!) which ever-so-slightly throw out the figures.
A few dollars here and there may even out—but are there bigger issues? Do you know? And how much could you save if you got ahead of them?
There are alternatives to digging through rows of data every month.
With the right approach, carriers can be easily held accountable and you can efficiently make some big savings.
To put it simply – poor or non-existent freight auditing is costing shippers time and money.
What’s the solution?
The issue should be attacked on two fronts – tech and mindset.
First, freight auditing needs to be treated as an essential function within the business. For most shippers, the process is clunky or it doesn’t occur at all. The person charged with freight auditing needs to be given the tools to do a great job and have some kind of stake in its success.
Next, the tech.
A job of this nature has to be automated. Expected costs captured at the point of despatch, compared against an invoice received weeks later, can’t effectively be done by eye.
The technology exists to make freight auditing easy, accurate and fast. Take advantage of it.
Here are a few things to look for from a prospective freight management system (FMS) provider.
Three freight auditing features to demand from your freight management system
1. Invoice input that works for you
Make sure your FMS platform allows you to reconcile your invoices in data format, not off paper. You want to be able to load a softcopy format of your invoice (all carriers should provide this in CSV or similar) directly into your system.
2. Easy discrepancy detection
You want your FMS to identify all significant discrepancies (say, those more than $1 over expected) for easy review. It should tell you if it’s been billed to the wrong zone, had the wrong pricing applied or has been check-weighed at more than what it actually was according to your despatch records.
3. Efficient Reporting of queries to carriers
Once you’ve identified an overcharge you want to be able to present it to the carrier in such a way that they can easily see their error and process the refund or credit.
A good FMS will generate a PDF report of all claimable discrepancies on an invoice which can be emailed to carrier. It should also give you the ability to designate invoices as being ‘part paid pending credits’. This allows you to stay current with your suppliers on accepted charges whilst not paying on disputed amounts until a resolution has been achieved.
If you could do it without adding any labour cost, would saving 5%+ on your annual carrier expenses make a difference to your business?
If so, then seeking out the right FMS is something worth thinking about.