3PLs are Good for Your Freight Bill Auditing

Transportation Management Audit

Most mistakes are easily rectifiable. But when freight bill errors become an issue, they can really add up over time. 

A leading cause of invoice mistakes is human error. In fact, most mistakes can be contributed to nothing more than inaccurate billing info listed for customers.

However, there are other times when these errors are due to hidden surcharges and added expenses that were not verified beforehand.

And this is where a 3PL comes in handy!

In order to minimize the number of mistakes made by carriers, shippers rely on 3PL companies. Third-party logistics companies are able to hold carriers accountable and make sure everything is handled properly.

In this article we will show you the 3 most common ways that 3PLs achieve this. More importantly, we will be highlighting the reasons why you really need to partner with a 3PL to handle all your freight bill auditing tasks.


Freight Invoice Auditing

When a shipper receives a shipment, it comes with a freight bill. This freight bill outlines all of the details of the shipment being sent.

Unfortunately for shippers, on average, almost 25 percent of all freight bills contain some type of error.

Freight bill auditing is the first step to fixing this problem. By auditing freight invoices, carriers will be forced to make sure fewer mistakes occur as they no longer make it through the cracks, so to speak.

Here is the general process that 3PLs follow for freight bill auditing:

  • Once a freight audit company or a 3PL receives a carrier invoice, this invoice is compared to estimates to determine if it is accurate or not.
  • Next, the auditor will have to check negotiated billing rates, such as mileage charges, shipping rates, and fuel surcharges.
  • Whenever an error is found, the 3PL or freight audit company informs their clients (shippers) and makes a claim with the carrier. Once the errors are corrected, the client receives payment from the carrier.
  • Most 3PLs require carriers to get approval from the shipper before any reclassification or weight charges can be initiated. Once the 3PL receives the request, the shipper’s invoice is submitted, and the carrier receives payment.

Once the PRO (progressive rotating order) is closed, 3PLs perform a full post-audit to ensure no other charged were added after the fact.


Consolidated Invoicing

The last thing that any organization wants to deal with is a constant barrage of shipping-related invoices.

Since companies use several different kinds of shipping methods - cold-storage, LTL, FTL, ground parcel, or overnight air - a shipper might easily end up with hundreds of individual freight invoices in a single month. 

When shippers fail to pay these invoices on time, carriers charge late fees.

This is where the idea of consolidated invoicing comes into play. 

So how does it work? 

Instead of receiving countless invoices that can easily be missed, skipped, or lost, a shipper using consolidated invoicing would receive a single invoice with everything on it. Additionally, it can be formatted in any style they prefer; monthly, bi-monthly, or weekly.


Carrier Payment Solutions

When carriers are paid on time, they tend to be a lot more friendly and forgiving. 

On the other hand, when invoices are not paid on time, some carriers can get very demanding with shippers.

Once a shipper hires a 3PL, carriers will from then on communicate directly with the shipper’s 3PL regarding questions on the status of a payment or invoice. This gives the shipper more time to focus on other critical aspects of the business such as driving sales, finding new opportunities and managing people.

A professional 3PL like Redwood Logistics, is known for protecting their clients’ assets and reducing mistakes. By hiring a 3PL to audit carriers and manage freight accounting and invoice procedures, you’ll save money, time, and be able to focus on other aspects of the business without worrying about whether or not a carrier is taking advantage of you.

Don’t just hire any 3PL… You need to hire Redwood Logistics.