When to Use LTL vs. Truckload: A Shipper's Decision Guide
Wouldn’t it be great if you were always charged a fair and balanced price for goods and services? Can you imagine living in such a perfect world?
Unfortunately, perfection is simply one of those unachievable standards that we all still try to reach in some way. It’s human nature to mess up, and mess up often, we do! As living beings, we are inherently flawed. And those flaws carrier over into the business world sometimes and the logistics industry is no exception to this.
In fact, one of the shipping industries biggest problems currently is inaccuracies found on freight bills. What may seem like just a decimal point moved over one space is actually costing the company footing the bill quite a bit more than initially quoted. A lot of the time, these errors go unnoticed. Now, multiply that number many times over and you can see how quickly those errors begin to add up.
Simply put, freight distribution doesn’t leave much room for error. With razor-thin margins and the need to ensure cargo is being transported effectively and safely, most distribution companies rely on a third-party logistics company to handle invoices and auditing services.
In this blog post, we will take a look at the top three reasons to invest in freight bill auditing services.
How Does a 3PL Handle Freight Bill Auditing?
Before we just dive into the specific ways that freight bill auditors benefit their clients, let's talk about what they do in general.
Oftentimes, freight companies use a third-party logistics (3PL) company to handle the auditing of their freight bills and other invoices. Many of them also offer direct bill pay and full freight payment services, handling all aspects of freight invoicing. Not only do they save their clients money, but they enable them to track their business growth, focus on customer service and other more important areas of business.
From the moment you receive an invoice, the 3PL reviews it for inaccuracies with their software platforms. If it is flagged, it is held for further review by the client. If it is cleared, it can be sent over to the billing department to get it paid. All of this usually happens within the same platform and rarely takes very long at all.
How Can Freight Bill Auditing Help Distribution Companies?
Let's get one thing out of the way... distribution companies are often undervalued.
However, without them, most manufacturers would have no way to get their product to consumers. So, keeping them running like a well-oiled machine is just a good idea for the economy in general. This is an extremely challenging industry that requires proactive managers and owners in order to maintain a smooth flowing operation, though.
And since there are so many moving parts in distribution services, the last thing distributors need is to sit around auditing invoices.
This is where a 3PL company can step in to assist in the discovery of billing errors, claim submissions, and help prevent future mistakes. The following is just a sampling of the reasons why partnering with a 3PL is necessary for distribution companies.
Controls Shipping Costs
Approximately 50 percent of all billing mistakes from freight companies are simple clerical errors; a typo in simpler terms.
Finding those mistakes takes a lot of focus and means going through records one by one to make sure the numbers line up properly. 3PL companies help save money by having an expert review audits to ensure they are correct before allowing them to be sent out.
Here are a few ways freight bill auditing companies help shippers control operational costs:
- Freight bill outsourcing tends to be less expensive than handling it in-house.
- Experienced 3PLs can usually discover problems and errors that even the most experienced employee miss. This isn’t because the employee is not well trained, it’s just the reality that most 3PLs are staffed by those who’ve worked throughout the logistics world. They know the hidden tricks, but also find mistakes that are usually skipped.
- They offer complete freight bill auditing solutions. This means that the 3PL can help with payment, scheduling future invoice review, work with the carriers to mitigate future mistakes, and can offer suggestions for improving shipping optimization.
In the end – these benefits help to control or reduce the cost of shipping for their clients.
Focus on Growing Business
If you’re able to outsource the billing department, imagine how much more can be accomplished. Without the hassle of handling auditing or paying bills, your business can focus on growth and other important tasks. Well, that's exactly the type of service a well-rounded 3PL can provide.
From there, you just focus on growing the business. This is the perfect opportunity to work on improving in-house operations, sales and marketing.
Overall, with an experienced 3PL to assist with your audits and billing your clients, you have more time to commit to improving the overall growth of your company.
Freight Bill Audits Keep Your Carriers Honest
Not every carrier operates on the up-and-up. Some of them are flat out con artists who take advantage of less-than-educated shippers. They hide inflated costs or play games with invoice bill payment, by charging ‘late fees’ that are not accurate.
Working with Redwood's Open 4PL approach shows these scrupulous carriers that expert oversight is now in place.
Final Thoughts
Freight bill auditing is an essential service for distribution companies looking to control costs, focus on growth, and ensure carrier accountability. By partnering with a proven logistics provider, you can eliminate billing errors and redirect your resources toward what matters most—growing your business.
Want to make sure you never pay more than what you are supposed to on a freight bill? Reach out to Redwood Logistics today!
FAQs
What is freight bill auditing?
Freight bill auditing is the process of reviewing freight invoices for errors before payment is approved. A 3PL or logistics provider checks charges in a software platform, flags anything suspicious for further review, and clears accurate invoices for payment. The goal is to catch billing mistakes early, reduce overcharges, and keep freight spending under control.
How does a 3PL handle freight bill auditing?
A 3PL handles freight bill auditing by receiving invoices, reviewing them with software tools, and flagging any inaccuracies for client review. If the invoice checks out, it can move to the billing department for payment. Many 3PLs also manage direct bill pay and freight payment in the same platform, which keeps the process organized and efficient.
Why do distribution companies use freight bill auditing services?
Distribution companies use freight bill auditing services because they have too many moving parts to spend time checking invoices one by one. Outsourcing billing review helps uncover billing errors, support claim submissions, and prevent repeat mistakes. It also lets managers focus on customer service, operations, and growth instead of getting stuck in invoice review.
How can freight bill auditing help control shipping costs?
Freight bill auditing helps control shipping costs by catching clerical mistakes and other invoice errors before they become permanent overcharges. The article notes that about half of freight billing mistakes are simple typos, and experienced 3PLs can spot issues that in-house teams may miss. That extra review helps reduce avoidable spending across many shipments.
Can freight bill auditing help my team focus on growth?
Yes, freight bill auditing can free up time for higher-value work by taking invoice review and payment tasks off your team’s plate. When billing is outsourced, your staff can spend more time on sales, marketing, and improving in-house operations. That shift matters for companies that need to stay focused on growth rather than administrative work.
How do freight bill audits keep carriers honest?
Freight bill audits keep carriers honest by creating expert oversight around invoice charges and payment timing. That makes it harder for carriers to hide inflated costs or add inaccurate late fees. With regular auditing in place, carriers know their bills will be reviewed carefully, which discourages questionable billing practices.
What problems can freight bill auditing catch before payment?
Freight bill auditing can catch clerical errors, incorrect charges, inflated costs, and inaccurate late fees before payment goes out. It can also uncover issues that need follow-up with the carrier or a claim submission. By reviewing invoices in advance, shippers reduce the chance of paying more than they were originally quoted.
