Exploring Parcel Auditing
June 24, 2019 •ShipSigma
What Does it Mean to do a Parcel Audit?
The word “audit” tends to cause the majority of people anxiety. Normally it’s associated with taxes and loss of money. In this instance being audited is a positive thing that can save your business a ton of money every year.
Parcel invoice auditing is a fairly basic business practice of examining your shipping bills in order to see exactly what and how you're being charged for shipping. During parcel auditing the objective is to analyze shipping invoices in order to locate billing mistakes, invalid shipping charges, and entitled refunds. Using this data you'll also be able to negotiate better rates with carriers.
Why Bother Auditing Your Shipping and What Does a Parcel Auditing Company do?
As much as one would hope that reputable shipping companies like FedEx and UPS would do all that they can to save you money, that’s not their main priority. Even when carriers guarantee delivery within a certain window of time or your money back, there isn’t a system put in place that tracks late deliveries in order to automatically process your refund. This would be far too convenient for you and the carriers would lose money. There are even times when a business might not know that a shipment was late. The carrier isn’t going to inform that business and so a refund would never be filed in these instances. This could be the case with hundreds of shipments a year and a business might never know.
In order to receive a refund for a late parcel delivery you have to deal with filing paperwork. This is something most people don’t want to take the time to do for one shipment let alone hundreds, and shipping carriers are banking on this. They’re hoping that businesses would rather eat the costs then go through the extra steps to file for a refund.
This is just one reason why parcel auditing companies are so useful. Not only will a parcel auditing company analyze your invoices and shipping history to find all of the instances where your business is entitled to refunds they will also discover billing mistakes, invalid fees and better shipping practices in order to help your business save money.
How much does Parcel Auditing Cost?
Traditionally parcel auditors receive a percentage of the amount that they saved your business. For example, let’s say your business shipped 10,000 packages last month, each with a $15 average base shipping cost. If the parcel auditing company discovered that the carrier failed to deliver 5% of your packages within the guaranteed delivery window that’s 500 instances where your company should have received a refund. 500 packages at $15 per package equals $7,500 in refunds which is then split with your auditing company.
Using a parcel invoice auditing service is just good business. They only get paid if they find you savings and it’s money that would have been forgotten about otherwise! There’s nothing to lose and everything to gain. At ShipSigma we use our proprietary software to help you get back as much of your hard earned money as possible. Our cutting edge technology will help you find every cent of yours hidden under the proverbial couch cushion. Contact us today for a free evaluation.
Frequently Asked Questions About Parcel Auditing
How do I know if I am owed a refund from my shipping carrier?
Carriers do not automatically track late deliveries or process refunds; businesses must identify and file each claim themselves. A shipment delivered outside the guaranteed window will go unrefunded unless the business discovers it. Reviewing your shipping invoices against carrier service commitments is the only reliable way to surface owed refunds.
What types of errors do parcel auditing companies find in shipping invoices?
Parcel auditors identify billing mistakes, invalid shipping charges, and instances where carriers failed to meet guaranteed delivery windows. They also uncover better shipping practices that reduce costs beyond the refund recovery process. The result is savings across multiple cost categories, not just late-delivery refunds.
How do parcel auditing companies get paid?
Parcel auditors work on a contingency basis, receiving a percentage of the refunds and savings they recover on your behalf. If no savings are found, no fee is owed. This structure means businesses take on no financial risk by engaging an auditing service.
What happens when a carrier fails to meet its guaranteed delivery window?
The shipper is entitled to a refund, but carriers have no system in place to automatically process those refunds. Businesses must file claims themselves, and carriers rely on the fact that most businesses will not take the time to do so. This is the primary gap that parcel auditing services are designed to close.
Can shipping invoice findings be used to negotiate lower carrier rates?
Audit data on billing patterns, service usage, and zone distribution gives businesses concrete evidence for carrier rate discussions. The audit report identifies not just refunds but also the pricing factors most relevant to a shipper's volume and delivery profile. Businesses that combine refund recovery with rate renegotiation achieve compounding savings over time.