What Is Freight Auditing? Why Should You Care?

Freight audits are a crucial part of running a business, and they save you money. The freight audit process involves reviewing shipping charges and making sure you aren’t paying any more than you should be. Because shipping costs can be complicated by accessorial charges, invoice errors do occur, so it’s very important to catch these mistakes before paying carrier invoices.

The freight bill audit process should begin when you receive each of your freight invoices. More often than not, you can find freight audit services through supply chain software tools, but there are also freight audit and payment companies that can provide the same services with a team of experts. Once the freight invoice audits have been completed, and if there are no billing errors, accounts payable will start the payment process.

Cost savings are just one of the benefits of freight auditing, especially for businesses that do high-volume shipping. Whether you use auditing software built into your transportation management system, or an audit company managing your freight audit and payment services, you get to know your true freight costs. When you know these costs, you can get competitive freight rates by negotiating with your carrier.

There are many ways that errant charges can pop up in your freight bills. Here are some of the main things to keep an eye out for when auditing:

Agreed-upon discounts * Make sure that any special promotional deals or discounts that you negotiated into your contract are reflected in your bill.

Math mistakes * All the numbers should add up correctly - all costs, discounts, credits, charges, and fees should be listed out in detail. If there is any discrepancy, don’t leave it unspoken.

Delivery timing * You are paying for your shipments to be delivered by a specified time. If your shipments are delivered late, or not at all, you are not obligated to pay the full cost for the service.

Double charges * This happens very often in freight shipping. Be wary of any invoices with identical dollar amounts, similar invoice numbers, and other potential duplicate charges. Avoid being charged twice for the same shipment.

Accessorial fees * Accessorial charges pop up after your product has been shipped, and normally include unexpected fees for things like oversized packages, not having a lift gate, driver-assisted loading or unloading, and more. If you’ve waived any accessorials in your contract, you want to make sure these are not on your bill. If you have been charged an accessorial fee or two, make sure they make snes for your shipment.

Base rate * Each shipping carrier has their own base rate, but generally shippers have carriers use a third-party rate they’ve agreed upon in advance. This should be reflected in your bill.

Taxes * If you ship internationally, taxes can become complicated. Make sure any taxes you were charged make sense and are accurate.

Freight class * There are 18 subclasses of packages, based on factors like durability, item value, and stowability. Each class has a different rate, so these should match up with your shipments so you’re not overcharged.

Mileage and location * Make sure all the zip codes match your order details, and that mileage is calculated appropriately.

The question many business owners ask themselves is that of whether freight auditing should be handled by software, by employees internally, or outsourced to a firm.

If you decide to handle it internally, you’ll need a team of employees to manually go through each invoice, line by line, to ensure all charges are correct and resolve any disputes. They also would be responsible for determining the best shipping routes and understanding market price trends so they can negotiate favorable rates from shippers.

This manual process opens up a lot of room for potential errors, though, and isn’t particularly cost-effective. You could outsource to a specialized firm, which would save your business time and money, but still has the human error potential.

Software tools that handle freight auditing have become sophisticated enough to handle complex invoices and give you more transparency into your shipping costs. You can audit bills, track payments, and more from these tools, and virtually eliminate human error. If your freight data is complicated and inaccessible, it’s probably best to leave it to software.

The key to having an efficient freight auditing process is getting the clearest picture of your shipping data. Inxeption can help you to eliminate surcharges by offering up front, flat rates for shipping your products.. Inxeption provides companies with a stable flat rate on full truckload (FTL) or less-than-truckload (LTL) freight shipments. It also has powerful software tools to help you monitor your shipping costs for smoother logistics.

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