Reducing Freight Costs: 5 Practical Tips for Shippers
If you're in supply chain management, you're always looking for ways to lower transportation costs. While reducing transportation costs even slightly can have huge benefits for your bottom line, finding and implementing these solutions is rarely an easy task.
One way you may be able to save money on your less than truckload (LTL) shipments is by conducting thorough and routine LTL freight audits.
Although conducting more thorough audits of all freight bills may sound relatively easy, as it turns out, carrying out routine LTL freight audits can put added stress on your internal teams.
In this blog post, we'll go over some tips to help you navigate the inner workings of a standard freight audit and help guide you along the best way to handle your LTL freight audits.
Navigating LTL Audits
LTL audits aren't as straightforward as full truckload audits.
Full truckload freight audits are, for the most part, fairly straightforward. With LTL shipments on the other hand, there are a few extra variables to consider when it comes to performing an LTL audit. A hurdle you may encounter with LTL audits is overcharges, which include:
- Paying for hidden LTL accessorial fees
- Incorrect freight dimensions that can trigger cubic capacity surcharges
- The wrong base rates and negotiated discounts
These issues may not otherwise occur as frequently with other shipping methods.
But fret not, once you have performed a few LTL freight audits, the process feels less daunting overall and will help your business immensely.
LTL Audit and Pay Services
Freight payment and auditing services are third-party solutions that will manage your invoices for your company. These services generally take over the entire process for you. Finding a less than truckload audit and pay service specifically for your LTL freight audits will take the burden off of your in-house team.
You will send your third-party LTL audit and pay service all LTL invoices along with copies of original contracts. This is to cross-reference the two for any errors using their software. Then, if any overcharges are found, your third-party service provider will use their supporting documentation to dispute the overcharge. Once the error is corrected, your team will see the invoice as ready to be funded. Payables processes are streamlined by creating one payment to the service provider, who then executes multiple shipments to each individual LTL carrier.
This solution allows your third-party provider to handle all aspects of billing and validating invoices. Freeing up your team to focus on higher-priority tasks, while also ensuring that you are not paying more than you agreed to is a win-win situation.
In-House Audits with Freight Audit Software
An internal LTL freight audit involves the collection of all LTL invoices and validating them against the original negotiated contract. A combination freight audit process is strongly recommended. This sort of system utilizes auditing software along with employee aggregated data to verify errors. This ensures that the process is both fast and accurate as using only software may result in gaps in the full scope of things, and manually processing invoices is too time-consuming.
If your in-house team is performing the LTL freight audit, then the software will compare the originally agreed-upon price for every LTL contract to the final invoice. If any discrepancies are found, you can easily correct them.
If your team is finding overcharges, make sure that the carriers are notified immediately. It could be a simple error or they could've increased their rates. Either way, the discrepancy should be dealt with as soon as possible to avoid overcharges in the future.
Final Thoughts
When you're managing LTL shipments, freight audits are essential to protecting your bottom line. Whether you choose to work with a third-party audit and pay service or handle audits in-house with specialized software, the key is consistency and attention to detail. By implementing a robust freight audit process, you can identify overcharges, correct billing errors, and ensure you're only paying what you agreed to pay.
Want to take your LTL freight audit process to the next level? Reach out to our team at Redwood Logistics and let us show you how you could better optimize, initialize, and implement a more streamlined and accurate auditing strategy.
FAQs
What is an LTL freight audit?
An LTL freight audit is the process of reviewing less-than-truckload shipping invoices against the original negotiated contract to find billing errors, overcharges, and other discrepancies. It helps verify that the final invoice matches the agreed-upon price and terms before payment is approved.
How often should you do LTL freight audits?
You should conduct LTL freight audits on every invoice you receive. Routine auditing helps catch errors quickly, prevents recurring overcharges, and makes it easier to correct billing issues before they become a pattern.
What are the most common LTL billing errors?
The most common LTL billing errors include hidden accessorial fees, incorrect freight dimensions that trigger cubic capacity surcharges, and wrong base rates or negotiated discounts. These mistakes can raise transportation costs if invoices are not checked carefully against contract terms.
Why are LTL freight audits harder than full truckload audits?
LTL freight audits are harder because LTL shipments involve more variables than full truckload shipments. Billing can be affected by accessorial charges, dimensional pricing, and negotiated discount accuracy, so there are more places for discrepancies to appear.
Should shippers use a third-party freight audit service or handle audits in-house?
The best choice depends on your internal capacity and expertise. Third-party audit and pay services manage the invoice review, dispute support, and payment process for you, while in-house audits with software give your team more direct control. A combination of software and employee review is often recommended for accuracy and speed.
How does a third-party audit and pay service work for LTL freight audits?
A third-party audit and pay service receives your LTL invoices and original contracts, uses software to cross-check them for errors, and disputes any overcharges with supporting documentation. Once corrected, the invoice is marked ready to fund, and your team makes one payment to the service provider instead of paying each carrier individually.
What percentage of freight invoices contain errors?
Industry research cited in the article indicates that incorrect freight bills occur in about 5% to 6% of all invoices. Those errors can increase transportation expenses if they are not identified and corrected through regular auditing.
