Small package and parcel shipping charges can account for up to 5 percent of a shipper’s total expenses, reports Gary Oswald of PARCEL Media. However, more shippers are taking advantage of the benefits of outsourced small package auditing. Initially, this looks like just another action to get more processes out from under one roof, but outsourced small package auditing actually provides many benefits to shippers of all sizes, and as a shipper, you need to know what these benefits are and how they could impact your operation.
Outsourced Small Package Auditing is Faster Than In-House Audits.
Some shippers may feel they have the time and resources available to audit small packages. But, how long and how quickly these audits take can be determining factors in if a carrier issues a refund. While the Trucking Industry Regulatory Reform Act of 1994 guarantees at least 180 days to request a refund for incorrect charges, have you thought about how many business days that is? In reality, 180 days becomes 125 days if you do not complete audits on the weekend.
Now, imagine your operation only conducts auditing processes on one day out of the week. This means you have 25 days of auditing over the course of 180 days, and if you have 100 invoices to audit per week, you could be losing an entire day’s worth of work. If you assume it takes 15 minutes to complete one audit, one staff member would only be capable of auditing 32 invoices in an eight-hour day. So, assume you dedicate two people to this job. That works out to a deficit of 36 invoices each week. Over the course of 180 calendar days, you will accrue 822 unaudited invoices, and if you can save 5 percent on each invoice, you would be looking at a savings of approximately $4,114. That scenario is only if your invoices average a cost of $100. Imagine how these savings grow exponentially over the course of one year and when your operation is conducting a significantly higher volume of small package shipping.
Outsourcing audits to a dedicated entity ensures all audits are completed as soon as possible, and you can free up members of your staff to perform actual work.
Auditing of Auditing
As described above, auditing takes time, but what takes more time than auditing hundreds of invoices? The answer is the audit to ensure the original audit is correct and request a refund from a carrier. If that sounds like a headache, it is because it is when you are trying to compete with major shippers and carriers for business. In other words, small to medium-sized shippers must consider how outsourcing all auditing processes can reduce their workload more than actually completing these audits and verification-audit audits in-house would cost.
If you had trouble following the previous sentence, you can see how redundant and mind-numbing the process can become. Instead, outsourced small package audits opens up spaces in your organization to grow.
Dedicated Management and Tracking of Costs Needed to Complete Audits
The task of auditing small packages is larger than auditing any other mode of shipping. More packages equal more invoices and audits. However, tracking the information in each audit is not the only thing shippers have to worry about.
For example, fuel charges vary by day and time, the cost per mile impacts the overall freight rate, and the carrier may have offered discounts at different times to shippers who followed up on invoices. Each of these extraneous factors play a role in how much work goes into each audit. As a result, completing audits in-house can place an additional strain on outdated, legacy systems and decrease the responsiveness of information technology departments and leased server space.
Ultimately, the task of auditing is comparable to creating a self-sustaining fusion reaction. The costs of doing it productively are not achieved until the investment cost (amount of audits being conducted) reach a point that is almost unimaginable. So, how does this relate back to outsourcing.
Outsourced small package audits are to organizations that have made a name for themselves in the scope of performing operations on the scale necessary to bring about a self-sustaining and positive ROI reaction for the auditing process. In other words, the high volume of work being sent to outside entities for auditing allows these outside entities to complete the audits at lower costs than completing them in-house. Essentially, these results give your organization a guaranteed ROI that can then be used to increase the productivity and capacity of your staff and operations.
By definition, small packages are going to be smaller orders than larger orders, creating an infinitely larger number of invoices than larger shipments. However, the importance of auditing shipments does not dissolve simply because the package is smaller. In many ways, auditing is more important to sustaining small package and parcel shipping than bigger modes of transportation. Outsourced auditing is faster, more efficient and costs less than in-house auditing in nearly every instance, and your organization needs to start thinking about how these benefits translate into lower charges for your customers, which will help grow your business at the same time.