What are Trends in Automation of Freight Audit Payments?
The process of freight auditing is vital to maintaining a system of checks and balances for any shipper. By investigating freight invoices, a shipper can verify that they are being billed for what was negotiated – and no hidden or inflated costs are being paid. This duty is typically provided by a third-party agency that specializes in freight auditing and payment forwarding. While freight auditing has been around for quite some time, there are some growing trends in automation, designed to expedite the process, reduce mistakes, and save companies money.
Noted below are a few of the growing trends in automation of freight audit payments and why they are gaining steam.
Understanding the Freight Auditing Process
It is estimated that one-quarter of all freight bills have an error that can impact a company’s bottom line profits. These mistakes would continue to pile up without the activation of a daily manual freight audit completed by the shipper or an agent acting on their behalf. Manually auditing invoices and payments is a costly and resource-draining process for many shippers, which is why several reach out to a third-party logistics company or 3PL to manage their freight audit and pay.
A freight audit permits freight bills to be reviewed, verified for accuracy, and adjusted if needed.
What is Freight Audit?
A freight audit is a business process where the company’s freight bills are examined, adjusted and verified for accuracy. There are several individual steps that are completed during the audit. First is an examination of the company invoice. It checks the shipper and carrier information, shipment weights, mileage, tracking number, Bill of Lading, any discounts, and the final price. The invoice is also verified that it has not already been paid. If mistakes are found, they are adjusted before submitting payment.
To complete this process, a 3PL or shipper will spend nearly 70 percent of their invoicing time with document handling, auditing, and completing the payment process. Scrutinizing freight invoices is a complex and time-consuming process, however, there are a few automated trends that are reducing the time spent for completing this vital step.
Automation of Invoice Review
New software developed by many companies including IBM have helped to automate the invoice review process. Automating the freight audit provides a shipper or 3PL multiple advantages including:
• It minimizes efforts or time for completing medium to high volume invoice review.
• Automation can find invoice errors quicker.
• It permits companies to allocate human resources to improve supply chain optimization.
IBM specifically is a leading provider of freight invoice automated solutions. They argue that companies can obtain bottom-line savings by activating a two-prong approach. First, complete pre and post freight shipping audits, and second create freight invoice processes that reduce overhead expenses. This is completed by using a freight audit payment system or FAP.
A FAP has the capacity to track freight invoices, surcharges, vouchers, freight carriers, and manage 3PL providers. Several companies utilizing this software have noted a 20 percent reduction in freight invoice costs. Utilizing FAP also allows you to free up employees to optimize freight forwarding or take care of customers. The use of these systems reviews also enhances transparency within the supply chain, which has a trickle-down effect to reduce future ‘mistakes’.
Improved Solutions from Freight Auditing and Payment Companies
As technology improves, the process of completing freight auditing and payments is streamlined. This has stimulated many shippers to question whether or not they can – or should take on this task themselves. So – where does this leave 3PL’s and other freight auditing and payment companies? Shippers are no longer satisfied with providers who simply dot the “I’s” and cross the “T’s”. Shippers are looking for advisory services that help them save costs, improve shipping efficiency, and reduce the potential of incorrect invoicing.
To satisfy their clients, freight auditing companies need to expand their service offerings. Some successful 3PL’s utilize online data mining and analytical services allow shippers to optimize the use of TMS or transport management systems. Others are taking time to review the shipper’s processes and enhance relationships with carriers.
With all things in life, technology tends to drive change and trends in the market. As more FAP solutions become available, shippers and 3PL’s will need to work together to integrate these systems into their operations.