Nobody wants to pay more for shipping than they have to. Jeff Pape, Senior Vice President, head of global transportation product and marketing with Minneapolis-based U.S. Bank., said shipping companies, “...want to know that their freight rate, and accessorial and other costs are in line with the market.” To accomplish this, large shipping companies should consider completing freight and parcel invoice audits, which will examine any internal issues as well as what competitors are paying for moving the same loads.
Utilizing freight and parcel audit software to gain these insights is one route to review your business’s shipping practices. But is it the best option out there? Not necessarily. In this article, we’re looking at freight audit and payment software—what it can do for your company and its shortcomings.
What is FBAP?
Freight Bill Audit and Payment (FBAP) involves checking freight bills and their corresponding shipments for accuracy. It can be a game-changer in a company’s supply chain, as an audit can review multiple areas where funds are commonly lost unnecessarily. Some of these audit checkpoints may include:
- Fuel surcharges
- Additional handling
- Zip Code Transit Times
- Prepaid Fees
- Labeling Charges
- Late Fees
- Holiday Delivery Charges
- Currency Conversion Fees
- Dimensional Weight Changes
- CT Tracking (Combined Transport Tracking)
- Insurance Fees
- Damage Claims
These are just some of the many areas this type of parcel invoice audit will examine. At ShipSigma, we have 50+ audit points that we go through for our customers.
Shippers can use a freight audit and payment software to do this or hire a specialist to assist with this process. The overall goals of good freight audit and payment providers and software should be to monitor your carriers’ performance, identify errors and areas for improvement, and ultimately recover shipping costs from those insights. Let’s take a look at the freight audit process using this kind of software and why hiring an outside auditor and platform might be the better route to take.
What Is the Freight Audit Process Using Freight Audit Software?
Conducting a freight audit using software will typically go through these steps:
- Collecting Freight or Parcel Invoices - If it’s your shipping company’s first time conducting an invoice audit, it’s best to gather 6-12 months worth of invoices in electronic format.
- Organizing Invoices - Group each invoice using different categories, such as vendor, date, or any other areas that may be important to your business. This allows easier tracking of benefits or cost savings that result from the audit. A good freight audit software will allow you to organize invoices within the software or do it automatically.
- Spotting Overcharges and Errors - There are so many ways a company can be accidentally charged or overcharged; this is the stage where the freight audit can catch those issues.
- Quantifying the Data - After identifying possible errors and overcharges, the freight audit software will quantify any differences between what your company is paying versus what it should be paying. This provides a big picture of lost shipping spend and a basis for carrier contract negotiations.
- Analyzing the Data for Areas to Improve - Not only should an audit search for errors and overcharges, but it should also find areas for improvement. For example, perhaps the delivery surcharges over the recent holiday season were especially steep and higher than anticipated. Analyzing the data gathered during an audit may lead to alternative shipping methods for the next holiday season that are less costly. This is the part of an audit that many companies find to be too time-consuming and complicated, which is why it can be a good idea to hire an outside expert like ShipSigma to assist with this analysis.
- Implementing and Maintaining Cost-Saving Measures - After an audit, you should have actionable insights on what to do next to save on your company’s shipping costs. However, the auditing process should not stop here. Continuous auditing is key to maintaining any savings your initial audit may have found. At ShipSigma, our AI-powered platform automatically scans weekly FedEx and UPS invoices, performs an audit, and automatically files claims to save you money. This process preserves your savings, builds upon them, and puts more money back in your pocket to use for other business ventures.
Looking for a Freight Audit Expert? ShipSigma’s Got You Covered
With fluctuating gas prices and rising shipping costs, our goal at ShipSigma is to find all areas where your company can save on shipping. With ShipSigma’s shipping insights and analytics platform, you can fully understand the financial impact of your shipping footprint and carrier agreement.
Even better, our services go beyond basic parcel invoice audits or the abilities of simple freight and parcel audit software. Using information gathered during the audit process, we assist our high-volume shipping customers with their carrier contract negotiations. Many on our team are former employees of UPS and FedEx, giving us additional wisdom you won’t find in basic shipping audit software. If you’re looking to save an average of 25% on shipping costs, give our services a try for free today. It works so well, we guarantee it.