Modern supply chains are under increasing pressure to cut costs and improve customer service levels. Traditional linear supply chains were relatively simple in execution: moving products from the manufacturer to end-user. Now, supply chains are increasingly complex, reflecting a circular supply chain, bending at countless angles, and meeting the demands of omnichannel and e-commerce. Meanwhile, freight bill auditing is growing more accessible and more affordable, not to mention automated notes Inbound Logistics. Auditing is a new best practice for the modern shipper, and failure to implement a program will only lead to higher freight spend. Unfortunately, such complexity contributes to higher freight spend, and all too often, carriers and logistics service providers may make mistakes in invoicing. However, a freight bill auditing program can isolate these problems and recover lost revenue.
What’s Wrong with Not Conducting Freight Bill Auditing?
Not conducting a freight bill auditing program might seem like a more straightforward solution. After all, freight spend is inevitable. Moreover, today’s consumers expect fast, free shipping. This leads to the assumption that the current freight spend will rise unimpeded. Yet, errors continue to occur. Carriers may double bill invoices, bill for incorrect classification of freight, and even assess extra fees for inaccurate weights. While shippers may have a paper trail of shipment data, arguing with a carrier over billed charges can seem useless. After all, shippers cannot fulfill customer orders without the carrier. The reality is simple; carriers know these problems exist. Much of the errors can be traced back to human mistakes, and carriers have developed entire processes to handle invoicing errors. Of course, it is up to the shipper to identify such problems.
The Importance of Freight Accounting Management to Reduce Costs
Freight Invoice Audits Recapture Revenue
Freight bill auditing is a complex process that allows shippers to recover lost revenue deriving from errors and inaccuracies within freight invoicing. A robust auditing program must go line by line within the freight invoice in shipment details to ensure the invoice aligns with the original shipment data. While shippers may make mistakes when classifying or otherwise tendering a shipment, the majority of data remains valid. As a result, auditing freight invoices means looking beyond data gathered by both the carrier and the shipper to identify potential problems and submit chargebacks. The key to making freight carrier invoice auditing successful lies in ensuring the money spent on an auditing program does not exceed the revenue recovered.
Best Practices in Freight Auditing to Increase Recaptured Revenue
To keep freight bill auditing under control, shippers should follow these best practices.
- Weigh and reweigh all shipments to ensure accurate weights are used when tendering a shipment. A shipper may also undergo what several of our Cerasis Rater TMS users have done: get a dimensionaliser that integrates into our TMS to have confidence all weights are accurate, virtually eliminating freight invoice areas for weights.
- Calculate the correct dimensions of each shipment. Again, a dimensionaliser, although an upfront investment, can give you nearly 100% accuracy on dimensions, and allow you to more easily scale your business as freight classes continue to move from the traditional 18 class chart to the newer 11 class, dimensional-based table. With new calculations for dimensions in LTL freight, your staff may be unaware of these recent changes and could lead to keying errors that are missed with no freight bill auditing mechanisms in place.
- Take the time to learn the individual carrier process for submitting requests for chargebacks or invoice corrections. Methods by carrier may vary widely, and it is challenging to keep up with these various processes by yourself. We’ve found at Cerasis our shipping customers are appreciative of the fact that our team deals with many carriers, thanks to our dedicated carrier relations department, quite often, and have these processes documented and commonly as understood like the back of one’s hand.
- Review each invoice to ensure all data matches with original shipment details, including mode, date, delivery confirmation, exceptions and resolutions, weight, dimensional weight, classification, and more. Double-checking can slow down the processing of shipments; however, with a TMS that is integrated into your ERP your ability to have these details accurate only increases. When added with the previously mentioned dimensionaliser, you won’t have to double-check as often, because the technology gets the particulars accurate every time.
- Compare an invoice to all other invoices to ensure the invoice is unique and not a duplicate. Invoice duplications checking is another time-consuming practice for a busy freight shop that doesn’t have extra bodies in place to conduct such exercises. An outsourced freight accounting service, especially when included with the use of a TMS, like what we offer with our solutions and technology at Cerasis, will automatically detect if you have a duplicate with our pre- and post-audit functions.
- Leverage automated auditing services that actively review digital invoices to recognize potential problems.
- Connect your auditing software or process to your transportation management system (TMS).
- Outsource freight bill auditing and transportation accounting in general to dedicated service providers, such as Cerasis, which also offers the advantage of lowering costs of freight auditing practices in the first place.
Recapture Revenue from Reweighed and Reclassified Freight With Freight Bill Auditing Now
Shippers that do not implement a freight bill auditing program are losing money. Statistically, an error will occur at least once per day, and that assumes shippers only move 36,000 units per day. Instead of leaving money on the table, invest in dedicated freight bill auditing services, as well as an advanced TMS, to recover lost revenue, and keep your invoices on track and accurate.