Freight rate auditing is a complex and constantly changing process. While many businesses are still doing their own freight auditing, they are fast discovering that outsourcing the process is a more effective and affordable solution in the whole scheme of business strategy. Read on to learn more about some typical freight audit processes and how auditing costs at shipping level via the process of invoice verification is a flexible and popular choice.

What’s the freight audit process?

Here’s a common freight audit process:

  • A freight bill payment company receives its clients’ freight bills directly from carriers.
  • The bills are entered into the contractor’s system, providing immediate visibility.
  • The bills are audited for accuracy.
  • Auditors verify the bills’ validity, mileage, duplicate payments, accessorial charges, and use of correct tariffs.
  • The charges are coded and reconciled and the bills are paid.

Note: Some self-billing companies calculate their own freight costs and get invoiced by the freight forwarder via credit note. This way the freight forwarder – not the customer – takes on the responsibility of correct freight calculation. (Source: Wikipedia)

Freight audit on shipment or freight invoice level

There are two ways a company can audit its freight. The first is an audit at shipment level and the second is at invoice level. Whichever way a company decides to go depends on various factors such as destination charges, fuel levies, weights, kilo rates, pallet and carton rates or volume discounts.

For example, a company might have standard weights for standard packages. To make the process simpler, this company might opt to go for an audit at invoice level. This is known as invoice validation. On the other hand, a company with a complex shipping process may opt for a shipping level audit. This process is known as invoice verification. Many companies choose the freight invoice verification process because it is a flexible option.

Freight Cost Solutions™ Invoice Verification Software

The Freight Cost Solutions™ (FCS) Cost Verifier software is able to identify if you’re being overcharged and what freight rate discount level should apply to your rates.

Changing annual freight volume, sending location adjustments, product packaging, weight changes and a multitude of other factors can result in freight rates being unaligned with the correct discount level rates. Cost Verifier ensures that Freight Cost Solutions™ will achieve the correct discount level and rates.

In short here’s what cost verification software does:

  • Uses the shipment and package measurements.
  • Calculates against freight quotes.
  • Finally, compares against the freight invoice.

These are the features included in Freight Cost Solution’s Cost Verifier solution:

  • 9 per cent accuracy.
  • Calculates the cost of pick-up.
  • Calculates freight pick-up time.
  • Reviews origin and receiving depot, line-haul and delivery.
  • Analyse freight ‘Cube to Dead-Weight Ratio’.
  • Assessment for origin and delivery postcode Australia-wide.

11 benefits of using an independent freight rate auditor

The benefits of using the FCS Cost Verifier solution are extensive and result in multiple and recurring savings over time. Companies like Freight Cost Solutions™ leverage a large range of skills, software, know-how and experience that cannot be achieved by companies attempting their own in-house auditing.

These are just some of the benefits of using an independent freight rate auditor for calculating freight rates, creating extensive savings each month:

  • Outsourcing is the most affordable way to audit and process freight invoices.
  • Freight audit companies can save customers up to 60 per cent of their freight costs by finding invoice and duplication errors, applying the best rates and discounts, using the most suitable freight companies and much more.
  • Outsourcing costs just 10 per cent of what a company would pay to do the job in-house. (Source: Wikipedia)
  • An independent freight rate auditor can provide comprehensive reports so customers can make intelligent business decisions and work on other, more important parts of their business.
  • A freight rate auditor can reduce costs further by suggesting ways to consolidate freight providers and produce further savings.
  • A business can increase annual profits through better planning and costing of freight to their target markets.
  • An auditor will compare freight rate costs between carriers, help negotiate the best deals and find better rates.
  • Customers can create accurate business forecasts based on proposed cost calculations, freight rates and packages suggested by their freight rate auditors before they happen. This way, for accounting purposes, a customer can forecast freight cost accruals better.
  • Customers can reduce their risk and predict cash flow.
  • Customers can eliminate human error from the point of a freight quote right through to the payment process.
  • Businesses can enjoy tighter controls in business and their freight process generally.

 

Are you trying to do your own freight rate auditing in-house? Share your experiences in comments below.

 

BIO: Darren Ash is the owner and managing director of Freight Cost Solutions™. With a Bachelor in Social Science, Darren has a thorough understanding of the industry and he strongly believes in adding honesty and integrity into the freight rate process. With vast experience and expertise in freight and service capabilities, Darren and is regarded as a leading figure in logistics.