Freight audit and payment is an essential component for any global shipper. For those companies that operate in these complex supply chain networks, the effectiveness of your freight audit and payment process can directly affect costs. The process as a whole is no easy task, and improper management will increase your organization’s transportation spend.
A deep understanding of transportation charges—and the shipping industry as a whole—is crucial for mitigating potential over-charges and increasing your business’s bottom line.
Why Freight Bill & Audit Pay (FAP) is Essential
Managing and processing FAP can be a time-consuming, enormous undertaking for companies, especially when done manually. For organizations that send and receive tens of thousands to millions of shipments each month—often through a variety of systems and carriers—this process leads to inefficiencies, errors, and excess costs.
It’s nearly impossible to audit every single bill by hand, meaning your company could be missing frequent miscalculations and errors in cost estimates, which certainly add up over time. Relying on logistics services or freight forwards can be just as risky. In fact, freight cost estimates based on these services can vary as much as 40% from actuals, making it difficult to accurately plan for your business.
Yet, many companies still haven’t partnered with a freight audit and payment service to help automate FAP, ensure accuracy, and gain deeper insights. To avoid oversights in cost, understand transportation spend, and remain compliant with carriers and local laws and regulations, your business needs an efficient freight audit and payment process.
Freight Audit and Payment Options
As your company seeks to avoid overcharges and miscalculations, you’ll want to consider your options for freight audit and payment to determine which best suits your organization.
In-House Freight Audit & Payment
FAP can be handled by an internal team that is dedicated to managing and processing bills for your organization. You’ll need to onboard and train employees to handle a variety of tasks, including:
- Establishing pricing rules for all transportation modes
- Uncovering duplicate charges
- Verifying charge rates
- Ensuring routing compliance
- Resolving claims
These in-house processes are often completed using paper invoices, which prevent your team from gathering and utilizing valuable, actionable data that can be tracked by a technology solution. Invoices are also complex and require industry and modal knowledge that your internal team may not possess.
Transportation Management Software (TMS)
Some companies try to use their transportation management software to perform basic freight audit and payment. These tools allow your team to calculate cost savings for shipments, compare carrier costs, and track shipments. It’s important to note that TMS systems typically approximate your rate structures, which means your company still has to deal with rate miscalculations.
Even teams using TMS software to aid FAP are at risk for errors, as they still require manual input. Your staff will need a high level of industry knowledge to properly input data, and the tool will need to be configured to align with your company’s rules and regulations.
TMS software certainly has many other limitations, as well, such as the inability to capture and manage key data, perform contract reviews, and handle claims resolutions.
Outsource to a Freight Audit and Payment Provider
A dedicated freight audit and payment provider eliminates manual processes and supports the goals of your supply chain staff. These services offer the tools and expertise required to manage global shipping transactions across multiple transportation modes and regions. They combine the benefits of TMS software with strong auditing experience, leading to overall cost savings for your organization.
But FAPs go above and beyond TMS software in terms of capabilities. In fact, some FAP providers go a step further with transportation spend management. There are several unique capabilities total transportation spend management offers that TMS software doesn’t.
Transportation spend management
Proper FAP is a foundational building block for total transportation spend management. Transportation spend management is a set of solutions that offer a comprehensive, multimodal, and global ability to manage transportation and transportation-related spend.
Transportation spend management benefits include:
- Data capture, management, and enrichment
- Transportation spend allocation
- Payment management
- Data compliance
- Contract review
- Industry, modal, and regional audit oversight
- Invoice adjustment and claims resolution
- Accrual visibility and accuracy
- Rate management
A comprehensive transportation spend management program begins with an investment in the right freight audit and payment provider. Outsourcing your FAP to a provider with transportation spend management capabilities means gaining contract optimization support, supplier and employee compliance, network optimization, and load consolidation, which are all critical value drivers that can result in immediate savings.
Just as critical as reducing spend is your company’s ability to review and analyze key data points, which can be utilized for higher-level decision making. Freight audit and payment performed by industry experts with a modern tech stack ensures a solid process that captures in-depth details, resulting in additional long-term savings.
The Benefit of Freight Audit & Payment Services
Freight audit and payment services tackle the responsibility of reviewing your contract and routing compliance and managing all claims, regardless of location or transportation mode. By choosing the right provider for your business, you’ll reap a variety of benefits that in-house FAP and TMS software can’t offer.
In-house auditing and payment is time consuming and leaves your organization vulnerable to miscalculations, which can become expensive over time. Likewise, TMS software still requires manual processes that slow down transactions.
With the proper freight audit and payment service, these inefficiencies are eliminated through modern technology that supports high volume and extensibility to other systems, like TMS software and enterprise resource planning (ERP) systems.
In addition to these powerful tools that automate the process for cost-savings and visibility, freight audit and payment providers offer managed services from subject matter experts that understand complex supply chain challenges and take a white glove consulting approach. This means you’ll spend less time worrying about transportation costs and more time focusing on your business.
Your business decisions should be based on accurate, actionable data. Understanding and controlling your transportation spend begins with gaining visibility into a multitude of variables—from fuel surcharges to taxes to volumes to utilization. A freight audit and payment service with key tracking and monitoring capabilities ensures access to valuable data for essential insights that affect your bottom line.
Growth Aligned with Your Company
Your business is constantly maturing, which means your transportation spend management journey is evolving, too. An experienced freight audit and payment provider that offers robust solutions will have the ability to grow alongside your organization with scalable technology, a strong product roadmap, expert-managed services, and forward-thinking savings opportunities. By choosing the proper freight audit and payment service, your investment will be backed by powerful tools and consultants who can supplement your team for success.
Successful freight audit and payment processes decrease the inefficiencies and errors that lead to increased transportation spend. By relying on a provider that is well-versed in freight auditing and offers modern technology solutions, you’ll have the right support and data to begin reducing balance dues and rebills. Your investment in a strong FAP solution will help you realize immediate savings of 3-5%, and overall transportation spend management—which unlocks 10-15% savings opportunities—as your journey evolves.
Key Capabilities of a Freight Audit & Payment Provider
Not all freight audit and payment providers are created equally, so it’s essential to consider some key capabilities that drive success when choosing a service for your organization.
Verification of Charge Rates and Claims
Your procurement and supply chain teams have worked hard to negotiate specific contracts—but that’s only the beginning. The hard part is verifying that the bills are compliant with those contracts. The right technology can utilize different validation methods based on data to determine the validity of residential surcharges, oversize charges, and more in the carrier invoice.
Establishment of Global Pricing Rules for Auditing
You’re likely sending and receiving shipments through multiple modes of transportation, which means you’ll need a complex set of pricing rules for proper auditing. A rich freight audit and payment service will create those rules based on both modal and contract specifications, which allows for complete audits of base rates, fuel charges, and more.
Invoice Duplication Detection
It can be tedious and time-consuming to manually identify duplicate charges on each individual invoice, but uncovering these errors is another essential part of the audit process. Freight audit and payment solutions can automatically detect duplicate invoice numbers and shipment identifiers to guarantee your balance dues are accurate.
Validation of Routing Compliance
Global shipments, both inbound and outbound, need to be compliant with routing rules. This can be difficult to track and manage for multiple shipments, transportation modes, and regions. A freight audit and payment provider that uses flexible business rules to verify the right carriers and services for every shipment allows you to rest easy knowing that you’re always compliant.
Resolution of Claims
Claims resolution is a time-sensitive process and, if done incorrectly, can result in higher balance dues. It’s critical that your freight audit and payment service can resolve claims quickly to reduce those dues and rebilled charges. Look for a solution that uses both a pre- and post-payment resolution approach based on carrier and region specifications, and can work directly with carriers and logistics service providers (LSPs) to review disputes. A powerful service should provide both industry and modal auditors to avoid oversights and reduce errors over time.