Freight Invoice Facts to Know About When Billing Errors Occur

When delayed at a rail crossing, a train can appear to have countless cars. Yet the tracks available to the trains stretch drastically further than the eye can see. Often, the general public's view of freight transportation is similar. With a sudden large intake of truck or rail transportation, society moves on with their lives, understanding only a fraction of the supply chain in its entirety.

The Bureau of Transportation Statistics reported that, "Freight shipped across the U.S. borders with Canada and Mexico by all modes of transportation was valued at $112.5 billion in February 2022, [...] up 17.2% from pre-pandemic February 2020 ($95.95B)." The statistics only consider train and rail across the North American borders; therefore, domestic freight and international air and ocean freight are their own additional multibillion-dollar businesses. With so much money moving across the country and globe, supply chain professionals must prioritize a proficient freight invoice and payment processing system.

The State of the National Supply Chain and How Small Errors Cause Big Problems

With a global pandemic continuing to place bumps on the track and the Russia-Ukraine war negatively impacting sourcing and other capabilities, disruption is the most common occurrence within international and domestic supply chains. On April 18, 2022, the Supply Chain Dive reported on a recent survey of over 150 supply chain executives finding that, "Nearly four-in-five (79%) respondents report 4% or more of their revenue was lost to supply chain disruptions over the past three years."

With efforts to maximize transportation spend optimization at an all-time high, minor errors can ripple across the dysregulated supply chain into waves that can be catastrophic to a business and local economy. When a freight bill is inaccurate, delays to amend the mistake can push payment past average payment windows that minimize cash flow enough to harm the entire quarter. Misplacing an LTL or omnimodal cargo invoice can cause carrier confusion, resulting in lost valuable freight. If those who don't know how to make transport invoices incorrectly present one right before an overseer unexpectedly gets COVID-19, businesses can be at a complete standstill for a week or two, drastically affecting their business rapport. Accurate documentation isn't just the difference between a great and subpar accountant; it's about protecting long-term business resiliency in an ever-changing system.

Freight Invoice Errors- What You Need to Know

Those who audit freight invoices understand that today's supply chain has complicated the freight invoice process. Consistently rising fuel costs have pushed rates, fees (and the accountant's blood pressure) higher and higher. This section will introduce ten common cargo invoice errors that can be proactively addressed and retroactively corrected to promote business resiliency.

1. Documentation and Paperwork Errors

Of all the errors that can occur on a freight bill, the most expected is simply within the initial documentation. Consistent incorrect dates, locations, and spelling errors are unnecessary occurrences when so many AI analytical tools are readily available to verify manual work for errors. These errors alone can merit the need to outsource freight auditing in order to better discover the source of consistent paperwork errors and minimize them in the future.

2. Detention Errors and Overcharges

Although it's impossible to avoid all freight charges, some can be! Knowing how to make transport invoices better equips freight owners to differentiate between fitting and overpriced freight charges. While carriers tend to have complete control over rate surcharges, contracts should address other aspects, such as third-party charges. In addition, analyzing the history of freight errors from detention, demurrage, and the like can reveal when it's time to seek new carrier partners available for quick load-ins and load-outs.

3. Extra Costly Accessorials

Accessorial charges can cause a transport invoice to get out of control. Freight accessorials encompass work performed by a carrier outside of the expected dock-to-dock transportation. Shippers and BCOs who maximize better transportation strategy can minimize the need for accessorials by ensuring their items are packed correctly into the container to reduce handling activities. Many carriers have pulled up to a destination over the past two years with no receiving employee there due to a supply chain talent drought. Accurate freight and carrier tracking ensure that someone will be ready at the dock to unload and let the carrier get on its way.

4. Missing Discounts and Savings

Although discounts may seem like a thing of the past amidst this year's rapid inflation, supply chain professionals still care about maintaining mutually profitable business relationships. Whether this is a shipper-of-choice or carrier-of-choice discount, or one related to a network affiliation, shippers and BCOs need to keep track of financially beneficial agreements. A business-to-business freight invoice auditing session will help address any inconsistencies in applied discounts to clear the air and positively impact future business interactions.

5. Improper Freight Classification

When a company decides to audit freight invoices, they might be surprised to see red flags regarding possible National Motor Freight Classification® (NMFC®) violations. Shippers who don't prioritize reviewing industry transportation data might not realize they fail to meet requirements such as correctly labeling a shipment's NMFC number, description, and freight class. While these labels have some impact on correct storage, they are predominantly used for accurate pricing. Incorrect NMFC numbers and freight class can lead to shippers being overcharged or retroactively charged for past freight bill errors.

6. Duplicate Charges and Freight Invoice Submission

So what is freight invoice processing within reverse logistics operations? A cargo invoice can get very convoluted amidreverse logistics, so it's vital to separate all necessary charges and submit individual transport invoices if required. Duplicate shipments on the same invoice can cause a lack of clarity; therefore, a team member should audit freight invoices with precision. Minimizing the duplication of freight invoices also promotes data security by reducing the amount of information floating around in the cloud.

7. Taxes, Tariffs, and Customs Fees

Another common source of freight invoice errors lies within international freight contracts. When a freight contract does not address approximate tariffs, taxes, and customs fees, unexpected expenses can leave shippers unsure of what numbers are accurate. However, by ensuring that all freight contracts consider these fees and are up to date , some shippers and BCOs might have a price break with their business partners.

8. Small Overlooked Yet Repeat Errors

Although the aforementioned common errors are pretty comprehensive, machine learning anomaly detection helps discover any other errors that fall through the cracks. Invoice-related emails that bounce back or fall into spam are no longer a surprise but an exception that a human can address. By making the manual practice (or AI rule) of comparing the carrier bill of lading to the freight invoice and all communication contacts in between, shippers can experience fewer minor errors along the way.

9. Lack of Auditing and System Checks

Errors are abundant in spaces without freight invoice auditing. Despite the complexities, international freight audit software can address active errors and provide actionable data that will streamline future invoice processing. FAP analytics can provide routine system checks to ensure there aren't any hidden errors. The best auditing partners will utilize AI and ML logistical tools to not only retroactively collect, connect and correct the mistakes, but provide analytics to minimize future errors with an instant addressal option when mistakes are found.

10. Improper Transparency and Visibility

Unfortunately, poor freight visibility leads to poor collaboration. Without clear insight into the location of an in-transit load, shippers cannot see where the carriers are or what they're doing with the freight. Incorporating transparency in business dealings and visibility in transportation allows both sides of the team to run analytical measures to streamline top-quality service.

Reduce Invoice Errors and Streamline the Entire Process With Help From Intelligent Audit

While individual teams cannot change the chaos of the supply chain, shippers can minimize their personal disarray by addressing errors with freight invoice auditing. Start a conversation with Intelligent Audit today to learn how your company can benefit from this type of logistical partnership.