The 5 Best Practices for Freight Accounting

The 5 Best Practices for Freight Accounting

freight_accounting

The transportation and trucking industries are continuously evolving. According to the American Trucking Associations, “Trucks move roughly 72.5% of the nation’s freight by weight.” And that number is growing as e-commerce expands and more companies look to leverage ground versus air transportation to save on shipping spend. However, that complexity means an added degree of importance in all freight in accounting processes. 

As uncertainty plagues the industry, including the changes around California’s AB-5 legislation in summer 2022, it’s time for shippers to understand the tenets of proper accounting practices. Let’s take a closer look at what freight-in accounting is, why it relies on data integrity and accuracy, and a few best practices for managing it successfully. 

What Is Freight-in Accounting?

Freight-in is the literal definition of the costs associated with moving goods from suppliers to a receiver. That receiver may be a storefront, distribution center, urban fulfillment center, or residential delivery. As a result, freight-in accounting tracks and validates the costs associated with those movements before, during and after delivery.

Freight Accounting Requires Data and Accuracy 

Freight-in accounting is often used interchangeably with “freight accounting.” However, the complexity of freight management today, including a global network of suppliers, tens of thousands of potential carriers, regional and local services, and varying service level agreements, makes freight accounting subject to incredible risk for error. The slightest problem or mistake in data entry or sharing may result in compounding issues that add up to massive losses in reports. It’s not just OSD reporting or standardized risk that goes into freight accounting; rather, it’s the total sum of all costs and their accuracy as well as usefulness that helps retail supply chain leaders understand their true profitability after transportation expenses. 

Best Practices for Managing Freight Accounting Processes

Freight auditing is a simple principle that increasingly solves many problems associated with freight and logistics. Once considered complex, time-consuming, and tedious due to having to audit each activity manually, freight auditing has become much less burdensome thanks to advancements in artificial intelligence and machine learning.  New software developers have established a clear and concise process for comprehensive tracking, reporting, and auditing all freight data across all systems. For example, Intelligent Audit has spent years perfecting the process of tracking, understanding and applying freight accounting data to generate actionable insight for shippers. However, leveraging a few best practices for improving freight accounting in the day-to-day grind is always beneficial. These best practices include:

  1. Track all data in real time. The simplest need of any plan for tracking the typical freight expenses is to start with knowing when is freight an expense? While all transportation costs are expenses, there may be instances where chargebacks or service guarantees offset the expense. However, these instances require real-time notification and time-sensitive reporting back to carriers. Thus, tracking data in real time is essential to know what you’re likely to pay. 
  2. Integrate your systems to analyze and see all data trends. Tracking data in real time is only half the battle of freight-in accounting. Shippers must monitor the data across all their systems—all carriers and platforms alike. The unified data stream allows for a centralized analysis and business intelligence in freight expenses to identify potential trends. 
  3. Leverage machine learning to automate anomaly detection and correction. Like the ongoing need to identify trends within freight expense data, there’s the possibility that some errors could fly under the radar. However, advancements in machine and deep learning have given algorithms the ability to identify the slightest differences and correct imbalances before they contribute to massive increases in shipping spend. This is the premise behind Intelligent Audit’s automated anomaly detection and correction capabilities. 
  4. Streamline freight bill audit and payment with a single source of truth. Freight accounting also includes the processes of auditing and payment. Integration between these processes with a secure payment resource can reduce risk and ensure all carriers are paid on time every time. Of course, this depends on a single source of truth for tracking all activities and avoiding the pitfalls of “forgetting to pay an invoice here or there.”
  5. Know when to relinquish control and management of freight-in accounting. The final best practice for freight accounting is perhaps the simplest—and hardest—for shippers. Shippers must know when to relinquish some control over monitoring and managing freight expenses. In other words, they need the ability to share their information and allow a dedicated account manager to handle the legwork in accounting processes. Yet, business owners or operators may be reluctant to relinquish that control. It’s a delicate balance of managing everything. The key to success is working with a reliable partner—Intelligent Audit—to do it all in one swipe. 

Boost Your Freight Accounting Process With Intelligent Audit

Freight accounting is always going to be necessary for the modern supply chain. However, advanced platforms and service providers, including Intelligent Audit, are reshaping how the everyday shipper approaches accounting from a data-driven perspective and helping to drive shipping spend into retreat. Learn how your organization can take advantage of those functions by connecting with an Intelligent Audit expert today.

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