What Is the ROI of Managed Transportation Services?
In the supply chain and logistics world, there are many advertised services that seem to just be too good to be true, and it can be difficult to sort through the cluttered and often confusing array of offerings. One of the most misunderstood services offered by 3rd-party logistics companies is freight bill auditing.
While there are several companies out there that use generic templates or automated software to complete auditing freight invoices, some professional 3rd-party logistics companies go above and beyond to truly save their clients thousands of dollars each year.
Not only do they use the latest technology to audit the invoices of carriers and other supply chain partners, but they also leverage practical, hands-on experience to discover mistakes that often get skipped over.
In this blog post, we will explain why working with an experienced 3PL to complete freight bill auditing is worth the investment.
It’s All About the Process of Completing Freight Bill Auditing
Freight bill audits are a service that is offered by most 3PL companies. It involves the process of reviewing the invoices submitted for payment by carriers, suppliers, distributors, or any other partner that a company works with to move freight. Every 3PL that offers freight bill audits has a unique process that is proprietary in nature, and typically not 100% disclosed (for obvious reasons).
However, there are a few general steps that the best 3PLs use to ensure their clients receive the best return on their investment.
Organization
In order to provide a return on investment, any company needs to begin with gathering information. The organization process begins by gaining a big-picture perspective of a company's complete supply chain functions.
This involves reviewing:
- The different types of carriers used
- Modes of transportation
- Areas of transportation
- Service level commitments
- Special handling requirements
- Individual contracts or negotiated rates for every supply chain partner
Review
Once the 3PL has all of the information it needs to accurately audit all of your freight bills, the review process can begin. Proven 3rd-party logistics companies understand that there are generally two areas of mistakes found during freight bill audits; human and automated.
The human mistake can range from intentional to a simple typing error. The automated mistakes can range from having the wrong customer profile noted on an invoice, to the invoice being submitted to the wrong contact or at the wrong time.
The best freight bill auditing companies understand where the root mistake is sourced, so they can contact the carrier and resolve the issue correctly.
Auditing
The actual auditing of a freight bill invoice is the last step. A professional 3rd-party logistics company will use the latest technology solutions, which are typically customized for every individual client. They will use the software and other resources to complete an initial audit or investigation.
Once the report has been published, the 3PL will begin the human review of the audit. This helps to find those hidden mistakes that technology simply can't catch.
This is the key to receiving your return on investment on having a professional 3rd-party logistics company audit your freight bill invoices. By having multiple, redundant procedures and steps involved in the auditing of freight invoices, financial mistakes are always discovered, resolved, and corrected before any payment is made.
By completing these three crucial steps, the shipper will only pay what is due.
Final Thoughts
Mistakes happen all the time in the supply chain.
The key to achieving efficiency across the board is determining where the mistakes are being made, making changes to eliminate those mistakes, and creating controls that catch the errors before they occur again.
This is the value that Redwood's Modern 4PL approach brings to the table.
Proven experts in freight bill auditing focus on the big picture – which is saving money for clients while setting them up for future growth and success. By making the small investment in allocating your freight bill auditing to experts in the industry, you’re not only saving internal resources that can be used elsewhere but making sure the job is done right. Contact Redwood today to learn how our freight bill auditing services can help your business save money and improve efficiency.
FAQs
What is freight bill auditing?
Freight bill auditing is the process of reviewing invoices submitted by carriers, suppliers, distributors, or other freight partners before payment is made. The goal is to confirm that charges match the agreed terms, negotiated rates, and service details. Done well, freight bill auditing helps shippers pay only what is due and catch avoidable billing mistakes early.
Why do companies use freight bill auditing instead of checking invoices manually?
Companies use freight bill auditing to find mistakes that manual review often misses and to protect their freight spend. A strong audit process combines technology with human review, which helps catch both obvious errors and hidden issues that software alone may overlook. That reduces overpayments and improves invoice accuracy across a supply chain.
What are the main steps in a freight bill audit process?
A freight bill audit process usually has three main steps: organization, review, and auditing. Organization means gathering supply chain details such as carriers, transportation modes, service levels, special handling needs, and negotiated rates. Review identifies likely human or automated errors, and auditing uses software plus human analysis to verify charges and resolve discrepancies before payment.
What kinds of errors does freight bill auditing catch?
Freight bill auditing catches both human and automated billing errors. Human errors can include typing mistakes or intentional mischarges, while automated errors may involve the wrong customer profile, the wrong invoice contact, or invoices submitted at the wrong time. The best audits also trace the root cause so the carrier issue can be corrected properly.
How does technology fit into freight bill auditing?
Technology is the first layer of freight bill auditing, but it is not the whole process. Professional 3PLs use customized software to run an initial audit or investigation, then add a human review to catch issues the system cannot see. That two-layer approach creates a more reliable check on freight invoices and helps prevent payment mistakes.
What information do you need to start freight bill auditing?
To start freight bill auditing, a provider needs a big-picture view of the supply chain. That includes the types of carriers used, transportation modes, shipping lanes or areas, service commitments, special handling requirements, and every contract or negotiated rate in place. Without that context, it is harder to verify invoices accurately and spot billing discrepancies.
Why is freight bill auditing valuable for a shipper’s bottom line?
Freight bill auditing is valuable because it helps shippers pay only what they owe and avoid unnecessary freight spend. By combining technology, process discipline, and human review, it reduces invoice mistakes before payment goes out. It also saves internal teams time, since the work is handled by specialists rather than pulled into day-to-day operations.
