As the supply chain evolves and expands into a globalized web of interconnected links, the associated paper trail becomes increasingly complicated. While freight accounting may have looked simple in the past, varying strategies have flooded today's market. As the complex and costly transportation landscape dictates that each shipment might require a different method, it's easy for freight invoice errors to fall through the cracks.
Some freight invoice errors can be simple and easy to fix, such as the wrong billing address or incorrect data. Other common but more complicated errors are:
Supply Chain and Demand Executive further explained, "In fact, assessorial fees that aren't in the contract are among the most common reasons shippers reject invoices and either short pay or delay full payment to carriers." When left with little lead time, it is easy for a company's freight bill financing process to miss critical details resulting in a long-term headache with a carrier or during tax season.
Because of the complexities of the freight invoicing process from carrier to carrier, it is difficult for a shipper to know precisely how often errors occur on their own. It is important to catch freight invoice errors as errors happen frequently. Having invoices rejected really holds processes up. Because many companies don't utilize internal or outsourced freight auditing, it's unknown how many freight invoice errors go about wholly unnoticed. Supply Chain and Demand Executive stated that, "Industry analysts believe the number lies between 15-66%. One in every four invoices gets rejected and has to be remediated." These statistics vary significantly from the average maximum threshold of modern machine learning anomaly detection in freight auditing, which tends to max at 4%.
While the above numbers are staggering, it's no surprise to supply chain professionals who have to vacillate between opposite shipping methods, such as zone skipping and hub injection, depending on the freight type, carrier capacity, and quoted costs. Freight professionals understand there is no magic formula to get all shipments to their final destinations with the same techniques, but often approach freight invoicing as if there was. When errors arise, shippers are more likely to look for a new carrier rather than analyze their own freight invoicing process.This also does not make the problems go away, it just hides the issues temporarily.
Although carrier-responsible errors are abundant, ultimately, it's up to the shipping company to build a system that creates a mutually beneficial partnership between both sides of the supply chain.
While shippers already have a lot on their plates, ignoring freight invoice errors can be a source of unnecessary added costs adn time in the present and the future. As high gas prices encourage an already growing inflation, shipping companies must refuse passivity to enable cost control and maximize profit margin. Here are four steps to start with:
Without a freight analytics expert on the team to comb through the past, present, and future freight invoices, shipping companies will continue to bear the brunt of missed accounting opportunities. Join the movement of companies trusting Intelligent Audit, a company with over 20 years of experience creating a smoother process for shipping professionals. Start a conversation with Intelligent Audit today to reject passive income loss and actively address your freight invoice errors.
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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