Why You Should be Doing Regular Freight Audits

If you’re not already auditing your company’s freight invoices, listen up. Not historically known for its attention to detail, the carrier industry sends out a lot of inaccurate invoices. In fact, roughly 25%-30% of those freight bills include errors, according to Supply Chain Dive.

These errors can add up and impact a shipper’s bottom line. And while reviewing bills, identifying errors, and addressing them with carriers is arduous work, it’s well worth the time and effort for shippers of any size.

“For businesses already overloaded with logistics tasks,” Supply Chain Dive adds, “poring over each carrier document in an attempt to glean data and determine their validity is neither reliable nor feasible.”

The process of combing through carrier invoices to find billing errors, freight audits can turn up everything from incorrect tariff weight breaks to service level failures to unwarranted detention and demurrage charges. Similar to any other type of audit, the freight audit includes a thorough examination and verification of a specific account.

These audits can be handled manually, by a third-party (i.e., an accounting firm), or using an automated software platform. By automating freight audit process workflows, the latter provides accurate, in-depth data that can be used for more than just recouping money on your freight bills. A good freight audit process also helps companies:

• Leverage accurate reporting and advanced analytics
• Make the entire supply chain more transparent
• Get higher levels of visibility into logistics operations
• Spot market trends (i.e., rate increases, rate decreases, capacity issues, etc.)
• Forecast future freight costs
• Strategize more efficient shipping routes
• Optimize those routes and your overall shipping process
• Improve relationships with carriers (largely because disputed invoices are sitting around in “review” for months, waiting to be paid)

By auditing and paying freight invoices on behalf of shippers, IntelliTrans provides a valuable service that many companies ignore in favor of handling more pressing, core tasks. Rather than missing the opportunity to save money and leverage the benefits mentioned above, one shipper began using IntelliTrans to both audit and pay its freight invoices.

Reliant on a manual accounts payable (AP) process, the company was missing many payments to its carriers and also lengthening the time it took to pay those carriers. Additionally, inaccurate invoices were costing the shipper millions of dollars per year. The company wasn’t doing regular freight audits, which meant approximately 25%-30% of the invoices it was receiving included errors.

Wanting to get current with its carriers, reduce AP processing time, manage exceptions to the rule, and save money, the company automated its freight audit and payment services. It immediately began receiving accurate information that it could use to guarantee compliance and quickly resolve disputes and make payments.

The system also stores contract rates, tariff rates, accessorials, and fuel surcharges, all of which are cross-checked against freight bills. Finally, the company is using its transportation management system (TMS) to streamline the freight bill audit system and further improve accuracy, and automatically trigger freight bill remittances.

Moving to an automated freight audit system helped the company shave about 2% from its overall freight spend while also reducing to zero—from a previous $3 million—its past-due freight bills within just two months. This is just one real-life example of how regular freight audits can help shippers better manage their freight costs in any transportation environment.