ShipSigma Blog

What is the Purpose of Audit Software

Written by Deyman Doolittle | May 7, 2022 1:00:00 PM

In 2021, shipping costs were 25%-50% more than they were in 2020, and they are only getting higher. On top of the supply chain issues persisting from COVID-19, your bottom line could be impacted by extra charges from your carrier. Late, damaged, and lost shipments all affect your profits and reputation—despite it being your carrier’s responsibility to get your products to their destination. To add insult to injury, you probably received a hefty bill for those inadequate services.

Luckily, you can recover those costs with a freight or parcel invoice audit. In fact, using freight or parcel audit software combined with contract negotiations can save your business up to 25% on high-volume shipping costs.

What Is a Software Audit?

When used to analyze your shipping costs, a software audit makes the process of reviewing shipping invoices, bills, and transactions more efficient.

What Is the Software Audit Process?

Software audit processes share the same major steps: gathering payment data, compare to contracted rates, identify and resolve discrepancies, and form insights.

  • Gather Payment Data: Gathering and organizing invoices and expenses from the last 1-5 years will provide enough data for most companies’ audits.
  • Compare to Contracted Rates: Compare how much you’ve been paying your carrier to how much you’re contracted to pay them. Luckily, your software will remove the tediousness from this step and do the comparison for you.
  • Identify and Resolve Discrepancies: Have you been overpaying for incomplete services? Shipments that become lost, damaged, or late are often the carrier’s responsibility—not yours. These extra costs can easily go unnoticed, but once you find them, you can request a refund from your carrier.
  • Form Insights: While sorting through the discrepancies between your payments and contracted rates, you may notice patterns. Is your carrier often delivering your shipments late or to the wrong addresses? Were there mistakes made on your end that could be fixed for future shipments? Use what you learn in this step when it comes time to negotiate a new contract for a potentially better rate.

Software audits of your shipping process can give invaluable information about the extra costs that spring up along the way, but the most important part of the process is that you act on what you learn.

Types of Software Audit

When it comes to auditing software, you’ll encounter different programs with different capabilities. Here are some of the major features or common uses to look out for:

Type of Shipment

While most software audit programs can be used for either parcel or freight analysis, how you use the insights you discover may differ between the two.

  • Parcel: Parcel shipments refer to individual packages going to separate addresses. UPS and FedEx are the major carriers for parcels, and the insights gained from a software audit can help with contract negotiation.
  • Freight: Freight shipments refer to pallets or groups of packages going to the same destination. There are more competitors when it comes to freight, which means more carriers to choose from and the better you can leverage your insights from software audits.

Scope of Service

Some businesses choose to purchase an auditing software program and then use it themselves; other businesses decide to outsource the entire auditing process.

  • In-House Audit: Some businesses opt to designate an internal auditing team in an effort to save money. For in-house teams, they are responsible for each step of the auditing process—with the help of the auditing software. While the prospect of cutting costs seems enticing, deciding to take on the audit yourself can end up costing you more time and money in the long run due to ongoing maintenance, clerical errors, and missed insights.
  • Third-Party Services and Consulting: Working with an audit service provider like ShipSigma can ensure that your business gets the most out of your audit software. Third-party providers aid in or take on the entire process, freeing up your team members to focus on what they do best. When it comes to insights, third-party providers often have access to a wider view of logistics trends, so they can identify the best opportunities for savings.

When deciding which software and service level is right for you, consider how much your internal teams can take on and how much you hope to get out of the process.

Benefits of Audit Software

Using an audit software program has many advantages over conducting a manual audit:

  • Digital organization and sorting capabilities
  • Workflow program integration can allow for automated data updates
  • Compares relevant payment data to contracted rates
  • Eliminates human error

These benefits all add up to one advantage for your business—saving you money.

Disadvantages of Audit Software

Auditing software can take a lot of the heavy lifting off your team, but there are some things that can’t be automated:

  • Your team may still need to regularly update payment data
  • Your team will need to be able to analyze the data for long-term insights

Most of these disadvantages can be overcome by working with a third-party audit service provider.

What Should I Look for in a Software Audit?

When choosing the right software for your business, ask the following questions:

  • Can this program fully automate the auditing process?
  • Will this program reduce the cost of every shipment, or will it only have incidental value?
  • Will I be locked into a long-term contract?

The needs of every business are different, so be sure to have a clear idea of what you hope to get out of your software as you search.

Discover Unmatched Insights with ShipSigma

At ShipSigma, we maximize your returns from freight or parcel audits. Here’s how our combined software and audit service saves you big and recovers incorrect charges for late shipments, invalid surcharges, and lost and damaged packages:

  • Fully automated weekly invoice audit
  • Checks over 50 audit points for contract compliance
  • Automatically applies savings to your checking account
  • Compares your situation to global shipping trends to find future saving opportunities

See the savings for yourself and try it free today—no long term contract required.