Optimize transportation spend with freight audit & payment

Freight audits are used to examine a company’s freight bills, verify them for accuracy and to make needed adjustments. The process includes checking shipper information, mileage, carrier information, shipment weights, tracking numbers, bill of lading, discounts, price and more. If any errors are found on the shipper’s invoice, the company performing the audit can contact the carrier to correct the errors and supply a new freight invoice. The main job of a freight audit company is to ensure your freight invoice lines up with the costs you were quoted.

Freight payment is an accounts payable service for your company’s transportation invoices where your logistics or transportation team collects your carrier invoices and gets them to your accounting team to process each of the payments.

Many freight audit errors can cause a company’s freight costs to rise. A few of the most common are incorrect shipping discounts, duplicate invoices, incorrect shipping classification, incorrect freight rates, errors in tax and tariff calculations, incorrect mileage and incorrect accessorial fees. A good freight audit software or freight audit and payment company should be able to spot these errors quickly.

The freight audit process depends on the type used. A freight audit can be performed with a manual, automated or combination process. Here is a quick overview of each:

Manual freight audits
Manual audits are performed by staff members. They can sometimes be effective, depending on the experience of who is performing the audit, and that comes with a cost. This type of freight audit often lacks consistency which leads to mistakes and increased costs. Consider, the staff member could be spending their time on other tasks if the freight audit process was automated.

Automated freight audits 
Automated audits are performed by specialized software. This could be in-house software, or from a FAP vendor. Typically, automated freight audits provide more accurate and consistent data if the software is regularly updated and maintained. Additionally, this type of software can be electronically integrated with your carriers, streamlining the freight auditing process and saving you time and money.

Combination freight audits
A combination freight audit is any process that allows most of the auditing work to be completed by software solutions but still requires human, analyst interaction. Generally, the software performs the audit, and the analyst reviews it and identifies any errors.

Freight audits have become more complex over recent years due to many factors; technological advances, transportation modes and rapidly changing prices for needed resources such as fuel. These costs add new considerations to logistics. While freight audits may have been more manageable for companies to perform in-house years ago, this is no longer the case.

Due to the rising complexity of performing an accurate freight audit, human billing errors have become more common. With increased expenses and carrier rate changes, even a small error can cost a company greatly. The most common solution to the growing complexity of freight audits is to deploy freight audit software or to outsource the job to a freight audit company. These automated solutions lower the risk of errors, helping companies save time and money.

Lowering cost 
The most obvious benefit of a freight audit is that it can reduce transportation costs by catching freight bill errors and preventing overbilling and other issues. Inaccurate billing is more common than most people would think in the logistics world. This is mainly due to human error, using multiple companies, complicated contracts and other factors. A thorough freight audit is the only way to make sure that your company is not leaking cash.

Clear data insights
A good freight audit is driven by logistic data providing deep analysis and understanding of the costs of an operation. Modern freight audit software can keep track of and process large amounts of data, which can uncover a company's overall patterns, discrepancies, etc., for analysis. Freight audit software also keeps this data organized and stores it, making it easily assessable should an issue arise that needs to be investigated.

Clarity across your operations 
A well-performed freight audit will provide a big-picture view providing your business clarity about how to address issues and decide a course of action.

Saving time
We noted that a manual freight audit process is time-consuming and prone to human errors. Outsourcing your freight audit or using in-house software saves time that can be put towards other tasks of greater value for the company.