Updated 04-15-25
Key Takeaways
- Freight bill errors are common and costly — 15–25% of freight invoices contain mistakes that can lead to financial losses, delays, and compliance risks.
- Manual auditing isn’t enough — Finance and AR teams face challenges like bad data, invoice variability, and complex rate structures that make manual audits inefficient.
- Auditing has big benefits — Regular audits improve carrier relationships, reduce unexpected costs, increase visibility, and strengthen budgeting accuracy.
- A 5-step audit process is essential — Centralizing, standardizing, verifying, analyzing, and reporting invoice data creates a foundation for effective freight cost management.
- Technology makes audits scalable — Freight bill auditing software automates data validation, uncovers insights, and helps companies move from reactive to proactive supply chain planning.
- Trax offers a complete solution — Trax’s Global Freight Audit software streamlines auditing, supports compliance, and powers Transportation Spend Management for enterprise supply chains.
A freight bill includes the details of a shipping transaction. Leaders in the supply chain need accurate, timely freight bill audits to make good decisions.
Unfortunately, achieving reliable accuracy in freight bills is notoriously difficult. From inefficient handling to incomplete data, freight bills are rife with errors, undermining all desired outcomes for your freight audit.
Accounts receivable staff, up to finance leaders in an organization, are often charged with standardizing and streamlining the processes around freight invoicing. The only way these freight audit processes can be improved is through technology that automates audit data.
The Trax team is dedicated to providing better tools to supply chain leaders worldwide. Here is an overview of several core freight billing and auditing areas, including common problems with freight bills and how to audit them reliably.
Risks of Incorrect Freight Bills
Incorrect freight bills negatively impact numerous players along the supply chain. There are some marked risks associated with incorrect freight billing:
- Financial: Overpayments and underpayments threaten a company’s bottom line.
- Delays: Delivery delays are augmented not just by supply chain disruptions but also by billing issues.
- Loss of P&I cover: P&I is meant to cover lost or damaged services, but coverage can be lost due to excess billing errors.
- Loss of the right to limit liability: The Uniform Bill of Lading says that a carrier’s losses will be limited to $2 per pound. However, incorrect freight billing can cause carriers to be liable over the $2 per pound limit.
- Inaccurate insights: When the data is inaccurate, a company risks making bad business decisions.
How Often Do Freight Invoice Mistakes Happen?
The U.S. transportation system moves freight valued at over $54 billion per year, with the majority moved by truck and railway.
15-25% of freight invoices contain errors, which may include:
- Incorrectly calculated fuel surcharges
- Wrong calculation of weights
- Duplicate payments
- Incorrect exchange rates
- Billing errors
The average accounts payable service or accounts payable department handles vast numbers of carrier invoices and transportation invoices. These professionals try to implement a good payment process. Still, freight audits are essential to support supply chain planning, logistics management, on-time payments, and more.
A company's freight bills should be part of a bigger-picture data management system, and an auditing process is vital to making that happen. No accounting team can see all of the data errors or conduct manual auditing that sufficiently improves the freight audit and pay process.
Some of the most common freight shipment invoice errors include the following:
- Documentation/paperwork errors
- Detention errors and overcharges
- Accessorial charges
- Missing discounts
- Classification violations
- Unexpected tax, tariff, and customs fees
Because there are so many freight invoice mistakes that can occur and so many payment services and transportation invoices in the mix, auditing freight bills is crucial for capable supply chain management.
Freight Audit Process
The process of auditing freight bills is straightforward.
There are five steps to a traditional freight audit:
- Centralize all invoice data for review: Collect data from multiple sources and combine everything to get a full picture of the workflow
- Categorize invoice data to standardize the information: Once you have all the sources together, cleansed, and normalized, you can categorize invoices to create structure
- Verify all charges and items: Cross-check invoices with shipments
- Analyze data: Determine the type of descriptive, prescriptive, or predictive analysis necessary to achieve your goals
- Report: Depending on the nature of an organization’s goals, the audit process concludes by creating one or more comprehensive reports that display key findings
Leadership wants analytical reporting, but completing all of the invoices is often time-consuming enough. Delving deeper into freight cost verification and having a system for freight bill audit every time may feel intimidating at best.
However, to achieve high-level, well-informed supply chain planning, companies need to move from reactive to proactive freight auditing that accounts for all freight costs and paints a clear picture of a business's current financial situation.
By simply performing an audit in response to a problem, any organization in the supply chain falls prey to the risks mentioned earlier. By embedding a proactive freight audit process into your standard operating procedures, you will catch mistakes before they have a negative financial, operational, or legal impact.
Elite insights uncover key metrics like cost-to-serve, which capture the entirety of expenditures required to operate and provide a big-picture view.
Challenges to Freight Bill Auditing
Based on the steps outlined above, this may look extraordinarily simple.
While the principles are, most companies encounter major challenges to implementation.
The primary challenges to reliable freight bill auditing include the following:
- Bad data: Because carrier invoices are often incorrect, you may need a wider variety of trustworthy data sources
- A high volume of transactions: High volume can make it difficult to establish the ideal one-to-one relationship between shipments and invoices
- Excessive required approvals and paperwork: It’s common for teams to get lost in paperwork and spreadsheets when trying to crosscheck all of the numbers
- Invoice variability: Different carriers have different freight invoice formatting and structures
- Complex freight rates: Currency conversion, different terms by provider, fuel charges, and accessorial matrices complicate the freight rate system
Regardless of the challenges your organization has to overcome, the benefits of building a freight bill auditing system are numerous.
Benefits of Freight Bill Audits
When a company completes regular freight bill audits, it mitigates the risks associated with billing errors.
Here are some of the benefits of freight bill audits:
- Better carrier relationships: Carriers need reliable data to manage their resources. Providing accurate forecasts increases trust in carrier relationships.
- End-to-end visibility: By combining a variety of data sources, you gain global visibility into the supply management workflow. Performing regular audits lets you identify areas of weakness and proactively intervene.
- Budget management: By keeping your P&I covered and retaining your right to limit liability, you avoid the excess costs associated with billing errors.
- Catch errors sooner: By performing billing audits on a regular schedule, you reduce the chance of getting hit with large fees and extra costs. Catching problems early on reduces the negative impact of billing errors.
Freight Bill Auditing Software
While there are many benefits of freight bill auditing, the obstacles mentioned earlier can deter many supply chains from completing the traditional process regularly.
Freight bill auditing software is the solution. This technology easily overcomes the problems in freight payment and transportation costs related to volume, complexity, and invoice variability. Automation, access, and trained users paint a clear picture of logistics and offer enhanced visibility to all stakeholders.
The task is to choose a freight audit and payment software solution that supports your business goals.
Trax’s Global Freight Audit software is used by enterprise organizations around the world. Our sophisticated solution unlocks efficiencies, promotes compliance, and reduces supply chain costs by streamlining the audit process. We consider it the cornerstone of Transportation Spend Management.
Trax’s global freight audit solutions include data compliance, invoice audits, settlement, and program management. It is the full end-to-end solution for supply chain companies.
To learn how Trax’s solutions can benefit your business, contact us today.