Freight invoice auditing and payment processing form a major revenue opportunity for shippers looking to cut costs. However, in-house versus outsourced freight audit and payment can have a significant effect on ROI. According to JOC.com, "Shippers that outsource some element of their freight audit and payment (FAP) process have lower average invoice processing costs than their peers who handle those functions internally. Specifically, Large shippers — i.e., those with $1 billion or more in annual revenue — reported processing costs 70 percent lower than their small shipper counterparts." Still, it can be hard to understand what a freight audit entails and how it adds value. Let's consider the fundamentals of what is a freight bill audit, why pre-auditing invoices are better, and how it boosts revenue streams.
A freight bill audit is a comprehensive review of invoice details to ensure accuracy. It verifies carrier bills against pricing structure and data from existing contractual agreements, validating any additionally applied accessorial and making sure the services are what you paid for. This applies to both contract and spot shipments across all modes and regions. The whole goal is to ensure shippers are billed for services actually rendered. Unfortunately, errors can and do happen.
The whole idea is to catch invoice errors prior to submitting for payment. This reduces the risk of overpaying and helps shippers maintain a positive cash flow. Additionally, increased accuracy and accountability through the continuous process of ingesting, normalizing, correcting, analyzing and applying data in the form of actionable insights leads to carrier performance measurement. As a result, shippers are better equipped to select the right carrier for each shipment.
A freight bill audit works by leveraging the various data sources in your tech stack to identify and correct errors in invoices, resulting in considerable savings, potentially becoming a profit center for shippers providing a massive ROI. In traditional audits, this is an exhaustive process requiring staff members to go line-by-line to check data and validate details. However, the process is much easier when running through an automated platform like Intelligent Audit.
Conducting a pre-audit comes with several strong advantages, including fewer:
However, auditing after invoices are received and payment has been made is associated with higher risks, including:
A freight bill audit through an automated process is much more than a more cost-effective way to ensure accuracy in billing. Since it relies on software and algorithms to process all data, an audit gives rise to increased visibility into freight spend and how shippers can lower such costs through several means, including:
Together, these value-added functions create new revenue streams for shippers.
Keeping carriers accountable and managing shipping spend all comes down to the effective use of a freight bill audit on all transactions. Shippers cannot afford to wait until after payment processing to audit invoices, and those that forgo auditing altogether are missing a major opportunity to lower costs. Connect with Intelligent Audit to reap the rewards of an automated freight bill audit process today.
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Applying Freight Audit and Payment analytics helps shippers understand their transportation costs and avoid unnecessary waste. Learn more today.
The right approach to freight invoice auditing can keep transportation spend in check and make for a smoother peak season.