How Do 3PL Freight Bill Audit Companies Simplify the Process?

Freight auditing is a complex process that involves multiple, individual steps. From receiving and categorizing all freight related invoices, reviewing the data, verifying pricing, then submitting payment, many shippers determine that accurate freight auditing is simply put – not cost effective. It is due to these reasons that many professional shippers reach out to 3PL’s or third-party logistics providers to complete freight audit payments on their behalf.

The process of freight auditing is a vital step for any shipper. Taking time to investigate freight invoices will verify that the shipper is being charged at negotiated rates, for the correct services, and that no hidden charges exist. To expedite this process, professional 3PL’s depend on advanced technology and proven techniques. They follow trends but also work with software developers to create customized solutions for specific industries.

To understand how the freight audit payment process is completed, it’s important to first analyze the trends in the marketplace that a 3PL and a shipper can use to streamline freight bill auditing.

Outlining the Freight Auditing Process

Did you know that nearly a quarter of all freight bills are filled with mistakes? Whether of the human variety or done with ill-intent, most freight bill mistakes negatively impact the shipper – not the carrier. If the freight bill audit is not completed, it can cost shippers thousands of dollars per year – which directly impacts the company bottom line profits. This is why the freight audit process is so critical.

In years past, the freight audit was a manual process – which is a major reason why shippers deemed it not cost-effective. Technology has automated multiple steps that reduces costs, ensures accuracy, and can even submit payments directly to the carrier.

What is a Freight Bill Audit Companies Secret to Efficiency?

To be completely honest, there really isn’t a magic secret process that 3PL’s use to complete freight audits. The actual freight audit is a business process that most companies use today, where the freight bills are reviewed, adjusted and verified before payment has been submitted. There are several individual steps that are completed during the audit.

• Examining the Invoice: Once a shipping service has been provided a final bill will be submitted by the carrier. On this invoice, there will be multiple sections including the shipper and carrier contact information, the shipment dimensions, mileage traveled, tracking numbers, the Bill of Lading, recipient information, proof of delivery, any discounts, and the final invoice total.
• Checking for Duplicates: When an invoice has been first reviewed for accuracy of data and charges, the 3PL will then verify that the invoice is not a duplicate, or that multiple charges are not listed on the invoice. Believe it or not, this is the leading problem with logistics bill payment. A major reason for this is that there is often a delay of communication between shippers and carriers. For example, let’s say that a shipper submits payment to a carrier for invoice #1234ABCD on May 1^st, 2018. The payment was submitted via a physical check that was mailed on the same day, however, was not received by the carrier until May 7^th, 2018. The check then took 3 weeks to be processed by the carrier's accounts payable department, which finally cleared the invoice on June 2^nd, 2018. At the end of the month, the bill was not noted as “paid” by the carrier, and a duplicate invoice was sent to the shipper.

As it’s clearly explained above, scrutinizing freight invoices can be a time-consuming process. This is where professional 3PL’s depend on automation to reduce time and increase accuracy of this critical freight bill auditing step.

Automation of Freight Bill Auditing

Companies like IBM have created new technology that helps to automate the invoice audit process. This technology arms the 3PL with several advantages including:

• It reduces time to complete larger-volume invoice review.
• It locates errors quicker and more efficiently than a human.
• Automation can locate and resolve the error by inserting correct data on the fly.
• Once reviewed, an automated freight bill auditing software solution can then directly submit electronic payments.

This type of automated freight bill auditing software is referred to as a FAP or freight audit payment system. FAP’s can significantly improve the bottom line profits by discovering billing errors, submitting payments electronically, and reducing human errors. FAP solutions can also track shipments, create invoices, review negotiated surcharges, vouchers, manage carriers, and even communicate with vendors and suppliers.

Professional 3PL’s utilize FAP software and other technology solutions to simplify and accurately complete freight auditing. Dependable freight bill auditing companies like LTX Solutions continue to improve their processes, so their clients improve bottom line profits.