How Retailers Can Benefit from Freight Invoice Auditing

Freight Invoice AuditingThe retail world has plenty of opportunities to make money. From controlling margins, cost-of-goods, to reducing overhead, and payroll, today’s retailer often makes hard choices to keep their businesses operating in the green. However, one item that most retailers consider a non-controllable expense are freight invoices. Truth be told, every day thousands of dollars of incorrect charges are incurred by shippers across the United States. By being proactive about completing freight invoice auditing, a retailer can save money – but also improve the efficiency of their supply chain operations; which can save money in other areas as well.

In the information below, we’ll outline three ways that freight invoice auditing helps a retailer specifically in areas you might never consider.

What is Freight Invoice Auditing?

The process of auditing freight invoices is one that requires experience, attention to details, and the use of some software tools that can expedite the process. In most instances, professional freight auditing companies are hired by shippers, retailers, and even carriers to help them review invoices for errors of the human or clerical nature. Specifically, auditing a freight invoice typically involves reviewing data entry on the invoice, the services rendered, the carrier information, proof of delivery, and all charges billed.

What most people don’t realize is that the most common mistake on the invoice is information not listed on the invoice. For retailers, this can come in the way of negotiated fuel surcharges, shipping rates, or parcel invoices. The mistake that often costs retailers millions of dollars each year is listing inaccurate negotiated rates for services rendered. By working with an experienced 3PL, a retailer can trust their experience on understanding the ‘hidden tricks’ of some less than ethical carriers and freight providers to help them save money they are owed.

What Errors on Freight Invoices Are Common with Retailers?

Since most retailers consider the freight and shipping invoice a non-controllable expense, they simply pay them without questioning the charges. While most carriers operate ethically, there are some out there that take advantage of unsuspecting customers. In some instances, the errors are simply ‘mistakes’ and not malicious – but in the end, the retailer is the one who is on the losing end.

There are four general mistakes that are found with retailer freight invoices that can be discovered and rectified by experienced third-party logistics providers.

  • Freight Dimensions: When a retailer places an order for supplies, it’s typically on automatic pilot – meaning an advanced inventory control system relays stock status to buyers, who order supplies to replenish the store’s inventory levels. It’s often up to the carrier to determine what is sent in each depot shipment to the retail outlet. In many instances, the freight is packaged on pallets that are not efficient and takes up more space than it should. In the end, the shipping and receiving associate simply sign the POD, and the retailer is charged for empty space.
  • Negotiated shipment weights & charges: In most cases, the error here is a clerical one – where the carrier will enter inaccurate information from a different customer and note it on your invoice. Verifying that the shipment weights and charges are accurate based on your negotiated rates is another area where an experienced 3PL can help save a retailer a tremendous amount of money.
  • Mileage Traveled: The mileage traveled by an independent carrier is another section that often plagues the smaller retailer. Larger retail outlets have depots that travel dedicated routes to different store locations within the company’s area of service. A freight invoice audit will verify the actual miles traveled vs what is noted on the invoice.
  • Delivery Delays: Retailers are pretty strict about their receiving hours – and they have to be. However, you’d be surprised how many retailers pay missed-delivery or delayed delivery charges – even when the shipment was delivered within their hours of operation. This is another area that some carriers take advantage of the retailer, simply because it’s a common occurrence.

While many retailers have departments dedicated to accounts payable, purchasing and buying, and shipping and receiving, auditing freight invoices is typically not an area of expertise. The biggest benefit that freight auditing can provide a retailer occurs when this task is allocated to an experienced third-party logistics provider. An experienced company will have the experience, resources, network, and a proven process for reviewing invoices, finding errors, correcting them, and submitting payment directly on behalf of the retailer. Outsourcing freight invoice auditing also permits a retailer to save money on payroll, allocate your employees on business growth and taking care of your valued customers.