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How Does Your Freight Invoice Audit Provider Measure Up?

In today's ever-changing transportation environment, companies are investing more than ever to ensure they have reliable freight invoice audit processes that control costs, manage complexities, provide visible transparency, and ensure compliance.

Supply chain optimization has become a core focus for most shippers. Still, freight bill complexity, frequent market changes, and a lack of connected, traceable processes can make it difficult for companies to navigate the maze of freight costs. As challenges grow and compliance takes center stage, shippers increasingly seek outside help to solidify their freight invoice audit processes. 

Freight invoice audit providers help you avoid overcharges by keeping a watchful eye on your transportation spend and activity. However, not all freight invoice audit companies are the same. Discerning among them and selecting the right one has become increasingly difficult, making the vendor selection process more challenging and time-consuming than ever before.

The good news is that there are certain qualities and capabilities that can make a freight audit provider stand out from the rest. Whether you want to tighten up your system and organization controls (SOC), protect your data, improve traceability for a single shipment, or adopt a more proactive overcharge management approach, the right freight audit provider can do all this and more.

Here are seven things to look for when selecting a freight audit provider:

1) SOC 1 and SOC 2 compliance with end-to-end process validation. 

SOC 1 compliance concentrates on financial controls, whereas SOC 2 compliance concentrates more extensively on availability, security, processing integrity, confidentiality, and privacy. Your freight invoice audit provider should invest time, energy, and spending into these internal controls. 

"SOC 1&2 compliance should be table stakes when it comes to demonstrating your commitment to freight invoice audit processing integrity," says Brian Cupp, Director of Operations at IntelliTrans.

2) Dashboards and alerts to provide easy visibility of expiring rates or shipments not matching existing rates. 

Capabilities for managing freight rates vary dramatically between companies, but it is usually a set of reference data available to be queried on demand. This leaves companies spending unnecessary time pulling, compiling, and making relevant rate data visible.

To add to this challenge, as truck capacity markets change rapidly, rate negotiations are happening more quickly, causing the data sets to change. Companies often find they must depend on a rate analyst to make adjustments on a timely basis when they are overwhelmed and overworked. As rates change quickly, there is a risk of paying a freight invoice under an old contract rate or, even worse, a higher tariff rate.

A freight invoice audit company should provide a robust set of reporting and shipment transaction alerts to make rate exceptions easily visible.

"It is always easier to deal with the financial discrepancy when the shipment is created vs. two to three months later when discrepancies are uncovered or when an accounts receivable report hits your desk," Cupp said. "Being able to avoid month end, quarter end, and annual close surprises will make you the best friend of your accounting department."

3) Flexible, traceable processes that meet your company's specific needs.

Shippers have a wide variety of carrier requirements based on the ever-changing needs of their customers. Some arrangements require the provision of a signed proof of delivery, for example, and others must provide a wide range of reference numbers and information to confirm delivery. To further add to the complexity, this data often resides in disparate systems or depends on carrier capabilities that are inconsistent across the carrier base. Your freight audit provider should have the system, processes, technology, and data integration capabilities to manage this web of complexity. 

"Your provider should offer transaction traceability throughout a shipment's lifecycle, from cost accrual to approval and final payment, making sure shipment data aligns with the financial transactions along the way," Cupp said. "It is critical to have the shipment transaction data, freight accrual, and invoice data in the same system. Shipment exceptions like diversions, product returns, and loading or unloading times should inherently be connected to the freight audit processes to enable shippers to flag cost discrepancies not easily detected when these data sets are separated."

4) Pinpoints rate discrepancies quickly and addresses them before they become real problems.

As a customer, you aim to pay the right amount at the right time. This commitment goes both ways. For instance, the rail carrier that undercharges for a particular shipment may not audit its bills for 6-12 months and will wind up coming back a year later to ask you to pay the deficit. This can get expensive for the shipper that was "underpaying" the contract's agreed-upon rate for an extended period of time.

"Sometimes an undercharge is just as important as an overcharge in terms of financial liabilities," said Cupp.

5) Flexibility to manage complexities such as allocations.

An allocation requirement is a tool often used to negotiate better rates and can help when creating a preferred rate that may be agreed to with specific volume commitments. For example, a truck carrier may agree to a rate with the assumption the shipper tenders 25 or more loads per week to the carrier, or a rail carrier may negotiate a rate with a commitment to move at least 150 loads a month going through Chicago. In these cases, having accurate, accessible shipment data and dashboards to provide visibility into these commitments is critical in ensuring companies comply with the contracts they agree to with their carriers.

6) Robust data and cyber security.

With phishing attempts, ransomware, and other cybercrime hitting companies every day, freight audit providers increasingly need constant threat assessments. By installing robust cybersecurity measures, a tech-enabled freight invoice audit provider should be able to demonstrate their commitment to assessing and responding to these evolving threats.

7) A single, consolidated technology and processes for all freight data.

Surprisingly, companies still use spreadsheets, paper invoices, and disparate point solutions to run their transportation operations. Financial information about a shipment may reside in an enterprise resource planning (ERP) system that's not directly associated with the shipment. A plant logistics specialist or transportation billing specialist may have piles of paper invoices stacked up on their desk at the plant or a mill. At the same time, another employee at the corporate office may be tasked with verifying rate accuracy.

"Logistics personnel are extremely busy people. They wear a lot of hats and are responding to constant emergencies while trying to keep shipments billed and moving. Adding pressure and time to their day to coordinate data from disparate systems to approve invoices accurately is not ideal," Cupp said.

Good freight audit providers streamline this process by providing a single, unified platform where invoices are received electronically, matched to the rated shipments, and paid on an agreed-upon schedule. The system should also offer user-friendly dashboards and a mobile app that can be used for invoice approvals and to take pictures of bills of lading or proof of delivery information.

"Look for a provider that puts these and other tools at your disposal," said Cupp. "This will not only enable a smooth freight audit process, but it will also ensure carriers are paid the right amount at the right time, keeping them committed to moving your freight shipments when it matters."


Finding the Right Freight Audit Partner Today

In this dynamic and cost-conscious business environment, complicated freight bills and changing regulations can make you question whether you're ever paying the correct amount for your shipments. By serving as a second pair of "watchful eyes," a good freight audit provider will help you identify and recover overcharges, negotiate better rates, reduce manual errors, and access the real-time data you need for sound decision-making across your end-to-end supply chain.

Learn more about what freight auditing services IntelliTrans provides, or contact us today to find out how we can support your organization with your freight audit solution needs.