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.
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:
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.
Conducting a freight audit using software will typically go through these steps:
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.
A freight audit reviews billing items including fuel surcharges, additional handling fees, labeling charges, late fees, holiday delivery charges, currency conversion fees, dimensional weight changes, insurance fees, and damage claims. These checks compare what a company is actually paying against what it should be paying to surface discrepancies and overpayments.
How many months of shipping invoices should I gather before my first freight audit?For a first-time freight audit, gathering 6 to 12 months of invoices in electronic format gives auditors a sufficient sample to identify patterns, recurring errors, and overcharges. A broader invoice history also establishes a stronger baseline for quantifying total shipping spend and any amounts owed back.
Can freight audit data be used to support carrier contract negotiations?Quantified audit data provides a factual basis for carrier contract negotiations by documenting the gap between current charges and what a shipper should be paying. Auditing specialists use this documented evidence to pursue improved contract terms directly with carriers.
How often should a company run freight invoice audits to maintain savings?Continuous, ongoing auditing is required to preserve and build upon the savings identified in an initial freight audit. A one-time audit surfaces issues, but recurring audits catch new billing errors, monitor carrier performance, and prevent overcharges from accumulating over time.
When does outsourcing invoice auditing to a specialist make more sense than using an automated platform?Outsourcing makes sense when the data analysis and follow-through steps exceed the bandwidth of the shipper's internal team, particularly for identifying cost-reduction opportunities beyond simple billing errors. Specialists also provide carrier contract negotiation support that automated platforms do not offer.