3 Reasons Freight Bill Audit Companies Are Needed in Logistics

In a perfect world, every transaction would be completed ethically, without errors, and smooth as silk. Unfortunately, especially in the global supply chain, we don’t live in this utopian society of freight billing. In fact, the leading cause of lost revenue and payment mistakes is inaccurate information documented on freight bills. With so many companies moving towards automatic bill payment, the need for ethical freight bill audit companies in the logistics space is greater than ever.

In the information below, we’ll explain a few of the reasons why auditing freight bills are critical, and specifically, why working with freight bill audit companies is a smart investment for protecting your logistics company.

What is a Freight Bill Audit Company?

The auditing of freight bills is typically completed by a third-party logistics supplier, or commonly known as a 3PL. A 3PL is an independent agency that helps a company with multiple supply chain functions ranging from hosting and shipping commodities for a company to set up logistics networks, warehouse functions, and in some instances, offering complete supply chain daily functions. The modern 3PL also helps a shipper streamline their processing of freight billing. However, before or right after payment is submitted for freight invoices, an audit is typically completed.

What is the Process of a Freight Audit?

While each 3PL has their own process for auditing freight bills, the general steps involved is quite simple. The first step is to set up a relationship with a 3PL who specializes in auditing invoices. Once this has been completed, a shipper or carrier will typically submit invoices in bulk quantities to a freight auditor. It’s generally considered a best practice to audit invoices within a 180-day period. When the freight audit company receives the invoices, they will compare the invoice along with the bill or estimates to determine if they are accurate. If errors are found, the freight audit company will inform their clients and file claims with the other party on their behalf. Once the errors are resolved, payment is sent back to the client.

Why the Freight Audit Billing Company is Needed

While a shipper can spend a lot of resources on building an internal freight audit division, mistakes can – and often will occur for multiple reasons. To this end, retaining the services of an independent third-party logistics provider can discover freight billing mistakes, submit the claims, and work with all parties to reduce the potential of errors happening again.

Generally speaking, there are three core reasons why a 3PL is needed in today’s competitive logistics world.

First - It Keeps Carriers Honest

One critical item that most people simply don’t know is that 3PL’s maintain exceptional relationships with carriers and shippers. The reason is – several 3PL’s also work with carriers to improve their operations. The modern 3PL is comprised of logistics and supply chain experts, many of whom have worked as shippers or carriers in the past. They know the habits and tactics that some “less than ethical” use to “nickel and dime” customers.

Using a 3PL as an independent agency – especially when they contact a carrier directly, let’s them know that the shipper best interest is being protected by insiders who understand the game. As a result, carriers who operate with less than ethical standards realize they can’t take advantage of the shipper.

Second – Helps a Shipper Control Costs

You’d be surprised by how many mistakes are made on the average freight bill. While most mistakes can be attributed to human error, the fact remains that finding those errors is difficult – if you don’t know what to look for on the invoice. The use of a reliable and experienced 3PL helps a company save money by allocating the important task of freight bill auditing to an expert. There are a few specific ways that a 3PL or freight bill auditing company can help a shipper control their overall operational costs.

• Outsourcing freight bill audits is less expensive than in-house programs. Employees are a critical component to any operation, but the fact is, they are expensive. When you add up their salary, training costs, insurance, worker’s compensation, and other factors, allocating freight billing and audit services to an agent tends to be much more cost-efficient.
• Discovering hidden errors: An experienced 3PL will typically find mistakes that an employee may not discover. Since freight bill auditing companies specialize at this vital task, they can save companies tons of money by discovering the mistakes, filing the claims, and collecting payment for their clients.
• Set up efficient supply chain operations: The hidden gem of using a freight bill audit company is that they typically help a shipper streamline their supply chain, find efficient carriers, and improve their complete logistics networks – simply by starting to audit invoices.

Third – Allows Shippers to Focus on Growing Business

When you can rely on an experienced 3PL to help you audit and submit freight billing payments, you have the flexibility to direct your resources on improving sales. Employees that would otherwise be tied-down to meticulous freight auditing and payment tasks can now focus on customer service, sales, or vital warehousing functions.

The modern-day shipper understands how critical efficiency is to their complete operations. Since the auditing of freight billing is a critical daily function, having the flexibility to allocate this task to a proven freight bill auditing company is the pathway to growth, reduced costs, improved revenue, and the smooth operations of any company.