Up to 80 percent of all carrier invoices include discrepancies. That’s significant. It’s time to stop leaking money from these billing discrepancies and other freight and transportation invoicing errors.
Modern technology makes finding and solving these problems easier, preventing the loss of money. Technology creates more efficient and effective freight bill audit processes that help companies recover dollars connected to billing errors.
This article details how technology improves the freight audit process and its benefits. We highlight how Intelligent Audit provides automatic AI-powered audits and controls to create real-life benefits like improving freight recovery, catching overspending, reducing unnecessary fees, and reducing employee intervention and loss.
The Role of Freight Bill or Invoice Auditing in Transportation Spend Management (TSM)
Let’s start with the basics. What is freight audit processing? This is the process of scrutinizing freight bills to ensure everything on them is accurate and matches freight contracts. Every detail must be examined, including rates, fees, discounts, shipping weight, amounts, etc. This type of audit catches mistakes in billing, allowing shippers to fix any problems with their carriers.
This process fits into transportation spend management (TSM), which involves collecting and analyzing all transportation data to keep track of logistics spending. Managing freight bills is one part of the complete spending picture related to transportation. Traditional freight bill auditing is important and can help a company manage transportation spend. Nonetheless, companies need modern technology to have a strategic TSM process.
The Switch from Traditional Freight Bill Audits to Strategic TSM Buoyed by Modern Tech
More modern freight auditing is technologically driven, allowing you to move from simply catching errors like the wrong address or weight, leading to higher spending, to a strategic method of optimizing transportation spend management (TSM). Optimized TSM allows you to view carrier performance, and analyze and optimize the logistics network to reduce total costs by using carriers and setting up your network, so shippers strategically manage transportation spend.
TSM uses technology to provide a data-driven strategy for better logistics. It gives an accurate and efficient way to analyze data and use insights to optimize your logistics performance and spend. Through this approach, you can more quickly and easily identify the factors affecting freight spend and find ways to create the most value and satisfaction for customers.
A traditional freight bill audit is necessary but limited. It looks at invoice details, comparing bills to contracts and pricing structures. This important process ensures the contract was carried out correctly and the shipper paid the correct shipping rates, fees, and so on. This process allows you to catch any mistakes or identify unexpected fees or surcharges. Carrier contracts are complicated, and carriers often use different terms and methods for carrying out the same services. This makes it difficult to compare. A freight invoice audit can help identify an opportunity to switch carriers or services.
TSM encompasses all parts of the global transportation network spend, acting as an essential part of optimal supply chain management. And the greater the complexity of your supply chain, the more a data-driven, high-tech strategy like this is needed.
TSM includes a comprehensive look at all parts of your transportation spend to improve your company through greater efficiency, optimization, and less spending. Using a technology-driven method backed by data helps you manage transportation on a large scale like a pro rather than simply reacting as problems arise.
Traditionally, staff members go through freight bill data line by line, comparing it by hand to agreements and pricing structures. This is time- and energy-intensive, taking resources away from other staff duties. In addition, people are likely to make mistakes and fail to catch something during this process.
Modern technology, on the other hand, driven by machine learning, can automatically go through large amounts of data to find discrepancies and check against agreed rates and fees. It quickly, easily, and accurately identifies changes to fees, unexpected surcharges, mistakes, and other issues. This happens on an ongoing basis and works much better than staff carrying out traditional freight audits from time to time. Through machine learning, teams realize when a problem is happening early on so they can address it before it worsens. In contrast, traditional audits are likely only to discover a problem long after it has been ongoing and created large-scale spending. A main challenge of the old system is that it is reactive, whereas technology allows a company to be proactive.
The Modern Technology Driving the Evolution of Freight Bill Audit Tactics to Strategic TSM
Modern technology makes traditional methods easier and more accurate and also enhances them to provide more than just a time-to-time freight invoice audit. Here are some of the high-tech solutions paving the way forward:
Machine Learning for Anomaly Detection
Machine learning technology can find anomalies on its own and alert the team to their existence. Alternatively, teams can also use ML to uncover the source of known problems. In both cases, anomaly detection catches problems such as human error resulting in an incorrect shipping quantity or unexpected carrier fees. It allows the company to fix the problem to reduce unnecessary spend.
Machine learning works in an unsupervised way to look through logistics systems to find anomalies that do not fit the norm. This technology works much faster and better than humans, bringing transportation management to another level.
Reduction of Employee Intervention and Loss
Automated technology ensures that employees only need to act if the technology uncovers an issue. This method is easier, more accurate, and more efficient than employees manually carrying out freight bill audits. During the manual process, people are likely to miss something, increasing freight spending over time. It may feel like the shipper is losing control and unable to independently meet transportation spend management goals.
Reduction in Auditing and Payment Costs
Using modern technology helps reduce auditing and payment costs. Companies can achieve this through technology that provides a comprehensive and systematic three-way contractual audit of more than 150 data points across all transportation modes globally, down to the penny.
Freight Audit and Recovery Solutions
These solutions automate issue identification, claims submission, and recovery, eliminating costly mistakes and finding hard-to-find ways to save. For instance, they can identify billing discrepancies, accessorial charges, duplicate invoices, rate variance, incorrectly billed shipments, and a variety of other factors affecting cost.
Modern technology opens up freight spend visibility, giving companies a clearer idea of their transportation spend and the factors that affect it. Machine learning can work independently to find abnormal price increases and the root causes, allowing teams to respond quickly. Technology finds these issues much faster than a human could. Sometimes, people on their own may never fully understand the problem or take an extended time to do so, exacerbating the issue. Through freight spend visibility, shippers can better optimize their transportation spend management.
Management by Exception
Automated invoice variance technology allows a shipper to pivot from a reactive approach of putting out fires to a strategic method of managing transportation spend, with technology as a partner to support the shipper.
Intelligent Audit Technology
Intelligent Audit offers shippers unmatched freight audit, recovery, and data-driven analytics to match today’s uncertain times. It helps companies obtain real benefits like optimizing the entire logistics network. In terms of cost savings, it allows a team to achieve real-time spend visibility while reducing wasteful spend and recovering costs. Intelligent Audit’s freight audit software solution is automated to use machine learning to find discrepancies and solve them to save and recover money.
Modern Freight Bill Audit Practices Empower Logistics and Transportation Optimization
Through ingestion, normalization, and data analysis, what may start as a simple freight bill audit practice transforms into smarter shippers with data at their fingertips. Through modern technology, these shippers have access to information on which carriers are performing best, which company sites seem to have recurring issues and how to fix problems at the root cause level. Technology like anomaly detection quickly and easily uncovers root cause problems so they can be addressed efficiently.
Areas in Freight Bill Auditing That Provide Benefits
There are numerous ways that the freight audit process helps a company and improves transportation strategies. These are some of the top things you can achieve:
Make Strategic Spot Bids
Freight bill audits with predictive planning and analysis help companies find the best carrier rates, as the carrier’s rates and fees vary significantly for the same services. Accurate freight audit data helps shippers navigate the spot market in today’s ever-changing market. They can use data to pivot and make adjustments.
Smaller spot bids make up one of the adjustments shippers can make, as they allow shippers and carriers to adjust better as needed to changes in the market. This type of contract is becoming increasingly common, and shippers can use freight audit data to negotiate these contracts best.
Another benefit is that when your team has the correct data, you can use it to find the best carriers for your needs. Sometimes, this means choosing different carriers for each load, and data makes this adjustment possible and easier. You can better compare head-to-head between carriers and services, as data normalization helps make sense of each carrier’s rates and fees.
Companies can do better at managing truckload spend and other modes through technology. You bring data to the table with carriers you can use to negotiate strongly. Also, once you work with a carrier, data-backed anomaly detection can automatically and accurately identify any problems so shippers can address them as soon as possible and minimize consequences.
Surcharges can significantly impact shipping costs, varying by carrier and service. Business intelligence and analytics within a technology-based freight audit bring visibility to these surcharges to help shippers manage them.
Shippers can normalize data across different carriers and platforms through BI and analytics. Having normalized data allows shippers to understand surcharges and best compare them. Tracking historical data and modeling future impacts by key performance indicators makes it easier for shippers to follow surcharges affecting different parts of the transportation system.
Business intelligence and analytics allow shippers to predict future events based on insights and market trends. This process helps shippers gain more control over surcharges and find opportunities for counteracting or lessening them. Shippers can also use normalized and analyzed data to gain insights into carrier performance and accountability, allowing them to make changes and fix problems as needed.
Reduce Parcel Costs by Using Tech to Build New Strategies
Data-driven freight bill audit practices offer the data analysis that can guide shipping practice changes to save money. For example, a company can develop a strategy that includes zone skipping, which provides a way to cut parcel costs. Zone skipping refers to combining shipments into a single shipment to travel together to a destination zone. This strategy skips multi-zone costs, as carriers often include extra costs for moving through zones.
One large-scale fashion retailer was able to save significantly through this technique. Intelligent Audit provided data analysis and data-backed strategies that helped the retailer save millions of dollars. These cost savings partly came from an order management system (OMS) that allowed the retailer to combine shipments. The consolidation opportunities alone accounted for more than $20 million in savings within the strategy.
Optimize Transportation Management
Modern companies are data-driven in all areas. They can move beyond the simple, important uncovering of invoice errors if they track and analyze the data effectively. Instead, they can pivot to optimization strategies that allow them to manage transportation processes better and save as much as possible.
Modern Technology Enhances Traditional Freight Audits
The principles behind a traditional freight audit make a lot of sense to benefit a company. Modern technology takes these ideas of finding mistakes to fix and ways to save and brings them to another level to fit modern challenges and business growth. Technology helps you find those concerns and opportunities more efficiently and accurately, providing data-driven insights to guide decisions going forward.Contact us to learn more about how modern technology could bring your transportation management to another level at Intelligent Audit.