Based on the research of inboundlogistics.com, freight costs can make up 10% of an organization’s expenditure. As a consequence of rising freight costs, an increasing number of organizations has been more proactive in controlling freight cost and have outsourced the freight audit process to freight audit specialists.
Inbound logistics details the freight audit process as follows:
“To begin the auditing process, a freight logistics company receives its clients’ freight bills directly from carriers. When the bills are received, either via electronic data interchange (connect services) or manually, they are entered into the contractor’s system, providing immediate visibility. Once the bills are entered, they are audited for accuracy. Auditors verify the bills’ validity, mileage, duplicate payments, accessorial charges, and use of correct tariffs. After auditing, the charges are coded and reconciled, and the bills are paid.”
Inbound logistics noted that for many companies, outsourcing could be the most economical way to properly audit and process freight invoices. They have also noted that the cost to verify, process and finally pay an internal freight invoice is around $11 and that the cost of outsourcing is around 5 to 10% of the internal cost, which does not include the cost savings from invoice discrepancies. The discrepancies can be as much as 8.8% of the freight invoices.
Cerasis Freight Audit Process for Optimal Freight Costs Savings
The diagram and process outlined below provides a brief summary of the Cerasis freight audit process:
- When the customer (shipper) uses the Cerasis Rater to create a shipment, we determine the expected charges for the customer and store the shipment information (freight data) in our database.
- Cerasis then receives an EDI or paper/electronic invoice (all invoices are EDI or scanned for cloud retrieval) from the carrier and match the freight invoice to its corresponding freight data invoice record. This completes the first validation.
- The Cerasis Rater then determines if the price invoiced matches the expected price from the freight data created with the shipment record.
- If the price on the received freight invoices does not match the freight data record created with the shipment record, a freight audit is initiated by your dedicated Freight Management Services CSR to determine the reason. That is the second validation.
- The third validation is initiated and completed with each weekly freight invoice consolidation process. In this process we additionally run a series of audit checks to ensure the freight invoice is correct with all necessary information and ready to present to our customers.
Upon completion of the freight audit process, many reports and freight data are made available in the invoice center within our transportation management system. The customer also has access to a wide variety of reports, from shipment compliance, which carrier was the least-cost carrier, no matter if the carrier was chosen, if not, and why the carrier was not chosen at time of shipment. Additional reports such as accrual, tracking, shipment history and many more are also available in our freight data analysis and activity report center.