Updated 02-26-25
Key Takeaways
- Freight Costs Remain High – Despite some rate drops since 2022, moving goods is still expensive, impacting freight spend and vendor relationships.
- Freight Audits Ensure Accuracy – Audits verify invoices for errors, preventing overpayments and disputes. The process can be complex, especially as businesses scale.
- Tech-Driven Audits Improve Efficiency – AI-powered Freight Audit and Payment (FAP) tools streamline the process, reducing human errors and increasing visibility.
- Key Audit Steps – Organizing data, reviewing invoices, and catching discrepancies before payment ensures financial accuracy and strengthens vendor relationships.
- AI Enhances Auditing – Automating freight bill audits reduces costs, improves payment accuracy, and enables businesses to scale efficiently.
- Trax’s FAP Solution – Uses AI and machine learning to optimize the freight audit process, lowering costs and enhancing supply chain performance.
The global supply chain has been incredibly volatile over the past five years. While freight rates have dropped slightly compared to 2022, the cost of moving goods remains high. This impacts things like freight spend, cost allocation, and relationships with freight carriers. The cost of doing business in a modern freight market is high. Are freight bill audits the best way to get good intel?
The simple answer is – YES, but like most things within the supply chain, the freight audit process can be complex. This is especially true as your business scales, enters new markets, acquires new business, or expands its carrier network.
Freight audit and payment (FAP) tools are making the process easier. Many organizations remain behind the curve in moving toward advanced, tech-driven versions of traditional processes. Tech is the key to cutting the clutter. It’s time for data to tell you how to reduce transportation management costs.
Trax’s modern, digital-first FAP solution leverages AI and machine learning to streamline the freight bill audit process, catch errors, lower freight costs, and improve vendor relationships. With a digital process, visibility increases, and working with 3rd-party logistics providers (3PLs) becomes much more transparent and efficient.
Let’s talk it through.
Understanding Freight Bill Auditing
Before we discuss how freight bill audits work, we need to lay some groundwork and understand precisely what freight bill auditing is and is not. In its simplest form, a freight bill audit is a verification process that inspects the accuracy of each invoice submitted by a freight partner or 3PL.
As you dive deeper, an audit is substantially more complicated, as several factors impact the accuracy of an invoice. Items such as fluctuations in the market, clerical errors, incorrect product classifications, accessorial charges, duplicate invoices, and more must all be carefully inspected.
The key is gathering the right audit data to spot discrepancies within your transportation management systems.
Enterprise businesses need robust auditing processes. There are many moving parts. For instance, each vendor invoices according to its internal processes, each with its pay schedule, and all are outlined by an agreed-upon contract. Organizations with manual auditing processes must either invest in an additional workforce or implement technology to offset the added workload to meet payment deadlines.
Decisions based on those dynamics have a ripple effect. A larger workforce might yield gains, but the team must scale alongside a business. At scale, it’s entirely possible that not every invoice is inspected for accuracy, leading to billing errors that cause overpayment, chargebacks, and unnecessary freight costs.
On any scale, the right audit process ensures financial accuracy and fosters positive relationships with internal and external players. By verifying that payments are correct and timely, businesses reinforce essential relationships and build a system of predictability.
The Freight Audit Process
The fundamental process is the same whether you use human capital or leverage technology to conduct your freight bill audits. The difference is speed.
Timely freight audits do more than avoid billing disputes that can damage long-term relationships.
Step 1 - Organize The Audit Process
The first step in the audit process is to gather complete supply chain data. That may seem easy enough, but remember that with a manual audit process, this means waiting on third-party data supplied by each 3PL or vendor. As we have already covered, time is critical because payment is expected in a prenegotiated time frame.
To add to the challenge, invoice data received from each vendor may be (let’s face it, probably is) incomplete. This leads to information gaps that make evaluating carrier performance, transportation modes, and service level commitments difficult.
With a digital FAP process, there is a single source of truth. This makes it much easier to aggregate data and evaluate the accuracy of freight bills in real time. Tech-forward FAP systems are flexible, scaling up or down as needed.
Step 2 - Review Freight Invoices
Once invoice data has been collected, the process kicks into high gear, and each freight invoice is put under the microscope. Putting eyes on every line of every invoice is as tedious as it sounds.
Manual reviews are notorious for consuming time and resources. Even then, they aren’t bulletproof. Human error is just as likely in the review process as in the invoicing process. Line items can be overlooked and missed, especially when an auditor looks at a never-ending stream of freight invoices.
Automating the process with AI removes the potential for human error, significantly improving the accuracy of the review process. Contract compliance, fluctuations, and more are clearly defined within the FAP system, creating a process where errors trigger real-time alerts.
AI-driven FAP systems don’t just help improve accuracy—they also contribute to building better relationships with freight carriers. By ensuring timely and precise payments, businesses can avoid disputes, reduce friction, and foster goodwill, all of which are essential for maintaining long-term, successful partnerships.
Auditing Freight Bills
The goal of a freight billing audit is accuracy before payment. You don't want to end up with billing disputes, paying unnecessary fees, and incorrect freight bills, and you probably can't eliminate the human component even with a FAP system in place. The technology centers on providing information on billing discrepancies in real-time; the information is much more manageable, even when errors occur.
Rather than tediously reviewing every line of the bill, auditors can focus on known errors and process each invoice in a much shorter time. This, in turn, makes it easier to catch issues before payment is made and maintain on-time payments as outlined in contractual agreements, reducing unnecessary freight spend and enhancing the performance of your supply chains.
Efficiency in the Supply Chain
Mistakes will happen when you move millions or billions of dollars worth of freight across the global supply chain. Invoicing errors, duplicate invoices, shifts in freight rates, and more are common culprits, making it essential to have tools to minimize errors, reduce costs, and create data visibility.
FAP tools are an added layer of protection, creating additional controls that make scaling within the supply chain much more manageable. As your organization explores different verticals and new markets or acquires new businesses, visibility, and efficiency should be focal points.
Freight Bill Audits With Trax’s FAP Technology
The audit process is essential whether you are working in a single market with a small handful of vendors or working across the breadth of the global supply chain. As your business grows, complexity follows.
Having the correct freight audit tools saves you time and money. Access to real-time audit data makes it easier to quickly identify billing errors like duplicate payments, make corrections, and issue accurate freight charges, helping reduce freight spend and continuously improve processes.
At Trax, we aim to help global organizations simplify the complex challenges of working within the global supply chain. Our tools streamline the audit process, provide real-time insights, and help reduce transportation management costs, regardless of the size of your operation.
Connect with our team to learn more about leveraging AI in your freight bill auditing process.