Logistic costs are one of the highest operational expenses for companies, especially those dealing with global transportation. Managing them hence becomes a major concern for global companies.
The cost of transporting goods has been steadily increasing over the last few years, and that trend doesn't seem to be slowing down any time soon. But one trend that is in the control of the business leaders, is of reducing the freight bill errors and cost slippages in the process. In order to maintain profitability, it’s important for business owners to take an objective look at their freight invoice auditing practices and make any necessary adjustments. Doing so can help them optimize their logistics budget by catching billing errors before they become a problem.
Freight invoice auditing is the process of reviewing shipping documents, such as bills of lading and commercial invoices to ensure that they are accurate. The purpose is to identify discrepancies between the billing documents and what was actually shipped. Although some companies use protocols designed for general billing audits, it's critical that you select a freight audit protocol specific to your business requirements rather than relying on generic standard operating procedures (SOPs) created by industry groups or consulting firms.
Freight invoice auditing is important because it helps to optimize the logistics budget and reduce the chances of cost slippages (like errors or incomplete checks or duplicate billing and more). Freight invoicing is critical for logistical management, positioning organizations to react quickly and efficiently in today's fast-paced global economy. But complexities are always there, like a single carrier, operating under more than one contract with a customer or more than one shipper, can create more problems for freight bill auditing if not done properly. Though the process of freight invoice auditing can be quite time-consuming and tedious, but there are ways to make it more efficient.
Here are five best practices that you can implement to make your freight invoice auditing process more effective:
Use an automated freight invoice auditing software – By leveraging software programs designed specifically for this purpose, you can significantly reduce the amount of time spent on each invoice audit by eliminating tedious tasks like filtering through data to find errors. Automated software can also help you more easily identify common billing issues like incorrect rates, incorrect base quantities or even overcharges. If you are not investing in these powerful tools yet, then you will undoubtedly lose money due to billing errors; and you will be forced to spend countless hours sorting out the billing issues and reconciling your accounts.
These automated softwares makes it easy to track down the source of any issues by using built-in reporting features. For example, invoice auditing software might highlight items on an invoice that were incorrectly coded or billed, so you know exactly where to look first for any billing discrepancies. And once you've resolved these errors, they make it easy to automatically update the necessary changes via the shipping software and process payment for the clean invoice.
Outsource it to specialized freight invoice auditing partners – Another important option is to hire a freight invoice auditing service provider for documentation management to handle your freight invoice audits. Freight contractors who specialize in this will take care of the entire process for you, allowing your staff to focus on daily business operations, while ensuring an error-free freight bill payments system for you. Since an error-free system of processing invoices is crucial for maintaining a smooth workflow, it is important that this process is handled by experienced people otherwise it can prove to be costly since they'd most probably miss several key aspects of the audit procedure which could lead to further complications and expenses later on. As most automated software can only substitute the major chunk of the repetitive steps of the freight invoice auditing process, there still is an important phase of the process that needs to be manual.
Outsourcing your freight invoice auditing process ensures cost savings as well as increased efficiency within your company's operational impact along with greater accuracy. This way, not only do you save on time and money, but also on the overall hassle that goes into this auditing process.
Standardize the process – Creating a standardized process that’s followed by everyone involved ensures greater accuracy during audits and will help reduce the risk of human error. When possible, electronic processes are the best because they can be easily tracked and monitored. In addition to reducing human error during the auditing process, the standardization of the process also reduces delays and avoiding compliance issues. The use of technology in automating parts of the process will ensure that all data is received appropriately, increasing accuracy in freight audits. Combining this with proper training of employees in auditing best practices will further reduce errors that lead to financial loss or delayed payments. This standardized process should be communicated thoroughly between all parties involved, including carriers and 3PLs. By sharing what is expected during the auditing process, companies can work together to accurately audit transactions so there are no disagreements when it comes to payment disputes later down the road.
Stay on top of new technologies – The emergence of new technology can create both challenges and opportunities. It’s important to stay informed about the latest advancements that can help you perform a more effective audit, while also providing an opportunity for improving your freight invoice processes in ways that didn’t exist before. Similarly, you need to keep abridged on the latest technology changes on the data transfer between you and carriers or 3PLs so that your system or team are always prepared for handling these changes.
Use data analytics to spot trends – Analyzing an organization's freight invoice billing history can reveal key information about their spending habits, high-expense areas and allow them to make better-informed decisions moving forward. By keeping detailed records and performing regular audits, you are able to identify potential areas for improvement and take steps towards reducing the overall freight costs.
With the Covid-19 impacting the global shipping processes worldwide and freight costs increasing on a daily basis, it’s high time for organizations to optimize their freight invoice auditing process and reduce the errors and corresponding losses to nil.
Do you have a clear visibility over the freight charges that are everyday increasing your logistics expense bill? With the large volumes of freight invoices processed each moment, how do you ensure that there are no duplicate billing or extra unauthorized freight charges being crept into those bills?
Sometimes all the answers lie in having the correct team of experts for these intricate processes and thereby ensuring that optimized shipping processes becomes one of your strategic advantage. However, for an existing business to put together the correct team and maintaining them is at times time consuming and cost intensive.
Our Freight Pay and Audit Services powered by our highly efficient and automated freight invoice auditing software , ensures a cost-effective and less time-consuming way of ensuring that your team of freight audit experts are at your disposal always. So, you have a hassle-free process of freight bill audit and payment while realizing cost savings and enhanced productivity on a yearly basis. Ready to discuss your freight invoice auditing plans?