Shipping Audit Checklist

For companies that ship a significant amount of parcels each year, getting the most out of shipping costs should be a top priority. Ensuring their accuracy can save companies money in the short- and long-term—maximizing profits and revenue.

But how do you optimize shipping costs? Along with carrier contract negotiations, performing a parcel invoice audit or a shipping audit at regular intervals is an excellent way to minimize shipping costs. But what is a shipping audit, and what should be included in a checklist to ensure thoroughness and accuracy?

The stakes have never been higher for shipping cost management. In 2021, shipping costs increased 25%-50% compared to 2020, and costs continue to rise. Combined with ongoing supply chain challenges, businesses are facing unprecedented pressure on their bottom line. Fortunately, modern audit software combined with strategic contract negotiations can help companies save up to 25% on high-volume shipping costs—recovering thousands in overcharges and positioning your business for long-term savings.

What Is a Shipping Audit?

A shipping audit is the process of checking, analyzing, and validating each one of a company’s shipping bills and invoices for information related to overcharging, service failures, and other errors in the shipping process. Regularly performing parcel audits can help companies minimize their overall shipping costs and increase company revenue. When performing such an audit, companies should look for the following:

Late Deliveries: Carriers like UPS and Fedex offer service guarantees and set delivery dates. Anytime a package is delivered late, companies may be eligible to file a claim.
Damaged Shipments: Any shipments that arrive damaged may be eligible for a claim.
Lost Shipments: Shipments marked as “lost” may be eligible for a claim.
Duplicate Charges: While most billing charges are automated, mistakes do still happen. Any audit should include checking for duplicate charges.
Incorrect Charges: Keep an eye out for surcharges associated with deliveries that were incorrectly marked as residential but should have been marked as commercial.
Address Corrections: Shipping carriers may charge for address corrections (such as an incorrect zip code or apartment number). Analyze invoices for any address corrections. Ensure the address corrections were necessary. If they were not, companies may be eligible to file a claim. If the address is a recurring shipment, update it to avoid correction charges in the future.
Faulty Dimensional Weight Charges: Companies should ensure that the appropriate dimensional weight of each of its parcels is charged appropriately. This includes both weight and dimensions.
Incorrect Rates: Check to ensure the appropriate carrier discount—as per the company agreement—was applied to each shipment.

While there are other discrepancies that may appear on a shipping invoice, such as additional handling charges, area surcharges, or fuel charges, the list above should provide a wealth of data and information for companies to optimize their shipping costs. At ShipSigma, our Parcel Invoice Audit & Reporting platform can automatically identify invalid charges and put money right back into your company’s profit–all with no long-term commitment required!

Understanding Audit Software: Manual vs. Automated Approaches

When used to analyze shipping costs, audit software makes the process of reviewing shipping invoices, bills, and transactions significantly more efficient. Rather than manually combing through hundreds or thousands of line items, audit software automates data comparison, discrepancy identification, and claims filing—transforming what used to take days or weeks into a process that runs continuously in the background.

The Four-Step Audit Process

Whether you're conducting a manual audit or using software, every thorough shipping audit follows the same fundamental framework:

1. Gather Payment Data

The foundation of any audit is comprehensive data collection. Most companies benefit from gathering and organizing invoices and shipping expenses from the last 1-5 years. This historical view provides enough data to identify patterns, seasonal trends, and recurring issues that impact your bottom line.

With audit software: Automated data ingestion pulls invoice data directly from carrier systems or your accounting software, eliminating manual data entry and organizing information instantly.

2. Compare to Contracted Rates

Once your data is organized, the next step is comparing what you've actually paid your carrier against what you're contractually obligated to pay. This comparison reveals rate discrepancies, unauthorized surcharges, and instances where negotiated discounts weren't properly applied.

With audit software: The system automatically cross-references every line item against your carrier contract terms, checking thousands of charges in seconds—a task that would take a manual auditor weeks to complete with the same accuracy.

3. Identify and Resolve Discrepancies

This is where the real savings emerge. Common discrepancies include overcharges for incomplete services, duplicate billing, incorrect dimensional weight calculations, and service failures like late deliveries, lost packages, or damaged shipments. Each of these represents money you're owed back from your carrier.

With audit software: Advanced algorithms check 50+ audit points automatically, catching even subtle discrepancies that human auditors might miss. The software flags each issue, categorizes it by type, and calculates the exact refund amount you're entitled to claim.

4. Form Insights

Beyond recovering overcharges, the audit process reveals valuable patterns in your shipping data. Are certain routes consistently late? Is one carrier performing better than another? Are dimensional weight charges increasing? These insights become powerful leverage when it's time to negotiate your next carrier contract.

With parcel audit software: Reporting dashboards visualize trends over time, benchmark your performance against industry standards, and highlight opportunities for operational improvements—insights that would be nearly impossible to extract from spreadsheets alone.

Why This Matters for Your Checklist

The shipping audit checklist outlined below provides the tactical framework for what to examine in your invoices. Audit software takes that same checklist and executes it automatically, continuously, and with greater accuracy than manual processes can achieve. Think of the checklist as your audit roadmap—software is the vehicle that gets you there faster and more reliably.

Whether you choose to audit manually, invest in software, or partner with a third-party provider like ShipSigma, understanding this process ensures you're maximizing every dollar spent on shipping. These insights also become invaluable during carrier contract negotiations [blocked], helping you secure better rates and terms based on data-driven evidence.

What Is an Audit Checklist for Shipping?

When preparing for and performing a shipping audit, it can be helpful to have a shipping audit checklist to ensure consistent and accurate auditing. Simply put, an audit checklist is a list of activities and tasks that must be performed during each audit.

How do you create an audit checklist for shipping? Simply use information below to build an audit checklist template that can ensure shipping audits are performed consistently.

Step 1: Request Detailed Invoices

If you don’t already, it’s critical to have detailed invoices when performing a shipping audit. Carriers will typically offer these in CSV or PDF formats.

Step 2: Establish a Timeframe and Organize Invoices

Next, gather the necessary information and determine the timeframe you will audit. For example, you may look at invoices from the past three or six months.

Step 3: Categorize the Expenses

Before beginning the audit, group your invoices by type and by vendor so you can keep any claims that need to be made separate and organized. You may also find it helpful to sort the invoices by date.

Step 4: Look for Errors or Overcharges

Using the list above, look for errors or overcharges on each invoice.

Pro Tip: While manual audits can catch many of these issues, audit software can check 50+ audit points automatically, including nuanced discrepancies like faulty dimensional weight calculations, unauthorized accessorial fees, and rate inconsistencies that are nearly impossible to spot manually. This is where automation delivers exponential value—catching errors that would otherwise slip through and compound over time.

Step 5: Review Your Current Rate

After checking for errors and overcharges, you should also check to ensure that you are being charged your current carrier discount rate.

Step 6: Analyze the Data

In addition to any errors or overcharges, companies may also use a shipping audit to analyze the data for any consistent trends. Are you noticing price hikes? Regular address corrections? Do shipping costs seem to be trending upward? Any of this information may be used in future carrier contract negotiations.

Choosing the Right Audit Approach: Software, Services, or Both

Once you understand the audit process, the next critical decision is determining the best approach for your business. The right solution depends on your shipping volume, internal resources, and strategic priorities. Let's break down your options.

Types of Shipment Analysis

Before selecting an audit approach, it's important to understand which type of shipping you're optimizing:

Parcel Auditing

Parcel shipments refer to individual packages going to separate addresses—the domain of carriers like UPS and FedEx. Parcel invoice audits focus on recovering overcharges from service failures, billing errors, and contract discrepancies. The insights gained from parcel audits are particularly valuable during carrier contract negotiations, where documented evidence of service failures and cost patterns can secure significantly better rates and terms.

Freight Auditing

Freight shipments involve pallets or groups of packages going to the same destination. The freight market offers more carrier competition than parcel, which means businesses have greater leverage when shopping rates. Freight audits help identify which carriers consistently deliver the best value, service quality, and reliability—making it easier to switch carriers or negotiate aggressively based on competitive alternatives.

In-House vs. Third-Party Audit Services

The next decision is who will manage your audit process. Each approach has distinct advantages and limitations.

In-House Audit Considerations

Some businesses opt to designate an internal auditing team, believing it will save money. The in-house approach requires purchasing parcel audit software and assigning team members to manage each step of the audit process—from data collection to claims filing.

Potential advantages:

Direct control over the audit process and timeline
No sharing of proprietary shipping data with external parties
Team develops deep expertise in your specific shipping patterns

Common challenges:

Ongoing software maintenance and system updates require IT resources
Risk of clerical errors, especially during manual data entry or claims filing
Missed insights due to limited visibility into broader market trends
Opportunity cost—your team's time may be better spent on core business activities
May actually cost more in time, missed savings, and unclaimed refunds than anticipated

While the prospect of cutting costs by keeping audits in-house seems enticing, many companies find that the investment in software, training, and ongoing management ends up costing more—in both direct expenses and missed opportunities—than working with specialists.

Third-Party Audit Services

Working with an audit service provider like ShipSigma means partnering with specialists who handle the entire audit process on your behalf. Third-party providers combine sophisticated software with expert analysis, freeing your internal teams to focus on what they do best.

Key advantages:

Comprehensive service—from invoice ingestion to automatic claims filing
Access to broader logistics trends and market intelligence across hundreds of clients
Immediate expertise without training or learning curve
Better results through specialized knowledge of carrier billing practices
Typically pays for itself through recovered overcharges and better contract terms
No long-term commitments or software maintenance headaches

When it comes to insights, third-party providers have a significant edge. By analyzing shipping data across multiple industries and companies, providers like ShipSigma can identify cost-saving opportunities that single-company data would never reveal. This broader market view becomes particularly valuable during contract negotiations, where comparative benchmarks provide powerful leverage.

Key Benefits of Audit Software

Regardless of whether you manage audits in-house or partner with a third-party provider, audit software delivers significant advantages over manual spreadsheet-based audits:

Digital organization and automated sorting – No more hunting through email attachments or filing cabinets for historical invoices
Workflow integration – Seamless connections to carrier systems and accounting platforms enable real-time data updates
Automated rate comparison – Every charge is instantly compared against contracted rates, eliminating manual calculation errors
Error elimination – Removes human error from calculations, data entry, and invoice matching
Consistent processes – The same thorough audit runs every time, ensuring nothing slips through the cracks
Scalability – Handles growing shipping volumes without requiring additional headcount

These benefits compound over time. A manual audit might catch 60-70% of overcharges; sophisticated parcel audit software consistently catches 95%+ of discrepancies because it checks every invoice against 50+ audit points without fatigue, distraction, or oversight.

Potential Limitations to Consider

Even with software, some audit approaches have limitations worth understanding:

Data integration requirements – Some systems may still require manual data updates if full carrier API integration isn't available
Analysis capabilities – Software identifies discrepancies, but your team must interpret insights and translate them into strategic actions
Learning curve – In-house teams need time to master the software and understand carrier billing nuances
Maintenance burden – Software updates, security patches, and system troubleshooting require ongoing IT attention

Important note: These limitations are largely eliminated when working with full-service third-party providers who handle integration, analysis, and maintenance as part of their service.

What to Look for in Audit Software

If you're evaluating audit solutions—whether for in-house use or as part of a third-party service—ask these critical questions:

Can this program fully automate the auditing process?

Look for solutions that automatically ingest invoice data, compare charges to contracted rates, identify discrepancies, and file claims without manual intervention. Partial automation still leaves significant work on your team's plate.

Will this program reduce the cost of every shipment, or only provide incidental value?

Some audit tools only catch obvious errors like late deliveries. The best solutions analyze every aspect of your shipping spend—rates, surcharges, dimensional weights, address corrections, and more—to uncover savings on virtually every invoice.

Will I be locked into a long-term contract?

The most confident providers offer risk-free trials or month-to-month terms. If a vendor requires a multi-year commitment upfront, it may signal less certainty about the value they'll deliver.

How many audit points does it check?

Basic tools might check 10-15 common errors. Enterprise-grade solutions like ShipSigma check 50+ audit points, catching nuanced discrepancies that basic software misses.

Does it automatically file claims, or just identify them?

Identifying overcharges is only half the battle. The real value comes from recovering that money. Look for solutions that automatically submit claims to carriers and track them through resolution—putting money back in your account without additional work from your team.

How does it handle insights and reporting?

Beyond catching errors, does the software provide actionable insights about carrier performance, shipping trends, and negotiation opportunities? Robust analytics and benchmarking capabilities turn audit data into strategic advantage.

Making Your Decision

The right audit approach depends on your specific situation:

High-volume shippers ($100K+ annual spend) typically see the best ROI from third-party services that combine software automation with expert analysis
Mid-size businesses benefit from solutions that require minimal internal resources while delivering consistent savings
Companies preparing for contract negotiations gain significant leverage from third-party providers who bring market intelligence and comparative benchmarks to the table
Businesses with lean operations should prioritize solutions that deliver results without adding to their team's workload

At ShipSigma, we've designed our platform to deliver the best of both worlds: enterprise-grade parcel audit software combined with full-service support, all with no long-term commitment required. Whether you're just starting to audit your shipping costs or looking to upgrade from a manual process, the right approach should deliver measurable savings from day one.

Optimize Your Shipping with ShipSigma

Does the above sound like an arduous and time-consuming process? Are you quickly finding that manual shipping audits aren't returning the results you want? That's exactly why we built ShipSigma.

Our AI-powered parcel invoice audit platform goes beyond basic checks—it automatically:

Scans your UPS and FedEx invoices with a comprehensive 50+ point audit

Compares your actual charges against your contracted rates in real-time

Identifies service failures including late deliveries, lost packages, and damaged shipments

Automatically files carrier claims to recover your money every week

Provides actionable insights by comparing your situation to global shipping trends

Applies savings directly to your checking account—no hassle, no long-term commitment

Whether you're shipping thousands of parcels annually or managing complex freight operations, ShipSigma combines the power of automated audit software with expert third-party service—giving you the best of both worlds.

We believe in our platform, and we know you will, too. In fact, try it out for free to start seeing results and saving money today.

Shipping Audit Checklist