With increased e-commerce shipping, high consumer expectations for delivery, and challenges in the supply chain, companies need optimized transportation systems and freight services. One of the fundamental ways to achieve this is through collecting and analyzing data — which can, in part, be done through a regular freight audit. Quality, relevant shipping data shows what is going right and needs improvement for better shipping services.
Consistently carrying out freight audits allows one to collect data from shipping invoices. Over time, freight audits have become more comprehensive and focus more on analysis, making it easier to use the data to improve processes and business decisions. Freight audits can improve visibility into the supply chain, the accuracy of payments, and more.
This guide gives you an actionable freight audit checklist to follow.
Shippers can pick from one of three methods of auditing a freight bill:
Auditing manually has been a traditional way of carrying out this process.
Your in-house team uses cutting-edge software to audit invoices, track payments, and collect and analyze related data.
This method hands off the audit and analysis process to a third-party partner with the expertise and trustworthiness to best manage the process.
Whether you have a single person or small team taking care of auditing internally, you're using software to manage the process, or your company is outsourcing audits to a third party, an invoice audit checklist is pretty similar.
It's best to have a system in place to log and upload invoices as they come throughout the year. If you haven't been doing that so far, start this continuous process now and also collect and log the past year's invoices. Keep in mind that the claim window is generally 180 days.
After logging invoice data, categorize it by breaking it down by vendor and date range. Look at the vendor information to compare new charges with old ones, which helps you notice and analyze whether shipping costs have increased, decreased, or mainly stayed the same.
Categorized data is the basis for further analysis. At this point, setting up benchmarks reveals how well the numbers match the standards. You can analyze expenses, usage goals, reduction goals, or whatever benchmarks are relevant to your needs.
A primary component of the shipping audit checklist is checking the invoice data for errors and overcharges. Review the information to check for numerous ways carriers could have overcharged you or made a billing mistake.
Common rate issues on invoices include:
The next step is to total the costs of potential errors to determine whether billing is at the correct rate and includes applicable discounts.
The way you pay can play a part in freight audits. Freight Payment is a platform that helps collect accurate information on invoice payment history, service issues, and other relevant data. It provides transparent invoice information for both shippers and carriers. It enables contractual audits across extensive data points.
Consider the types of data points to include in an audit. Think of data that helps with goals like reducing costs, streamlining processes, and making decisions.
Here are good data points to include in an invoice audit checklist:
Advanced technology greatly helps companies carry out their freight audits. Technology takes tedious, time-consuming, and inefficient processes and streamlines them. Not only does technology make collecting data easier, but it also simplifies the processes of tracking, analyzing, creating reports, and carrying out audits. Using the right technology should be part of every good shipping audit checklist.
Freight audit technology can take over to automatically carry out processes related to audits and recovery. Machine learning processes massive amounts of data independently and accomplishes anomaly detection, finding mistakes, overcharges, and such that occur within invoices. It achieves this goal much faster and better than humans can.
This technology works even better than periodic freight audits because it continuously checks data in real-time, catching problems faster and allowing your company to resolve them as quickly and best as possible. The sooner you make a claim or communicate with the carrier, the more likely you will fix the problem effectively.
You can also use freight technology to carry out freight audits anytime you choose, and the data is accessible whenever you need it. You gain access to more high-quality data through integration across systems and can improve collaboration between departments, companies, and carriers.
Also, a tech-based freight audit and recovery service can automatically start the recovery process when an audit uncovers discrepancies.
By failing to collect and track invoice data, shippers can miss out on mistakes and changes that add up to high costs. Using a freight audit checklist like the one above helps you keep up with those invoices and analyze the data contained within them.
While small shippers can often get by with manual audits, a larger or growing company needs more support to keep up with the continuous invoices and discrepancies they contain. Technology and third-party audit support can take over this burden to provide an efficient process that more easily catches problems and recovers associated costs.
Set up a call with one of our experts to discuss how Intelligent Audit can help your business uncover opportunities for cost reduction and supply chain improvements through automated freight audit and recovery, business intelligence and analytics, contract optimization, and more.
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