Insights

Simplifying Freight Audit and Payment: A Complete Guide

Freight audit and payment is a process companies use to monitor and manage their transportation costs. This process includes reviewing freight invoices to track costs, verify their accuracy, and pay carriers in compliance with previously agreed-upon terms.

If you’re dealing with freight shipments, you’re familiar with the freight audit and payment process. As freight shipping gets increasingly complex, auditing does too.

Traditional audits make costly errors more likely, create bottlenecks that slow logistics down, and prevent your supply chain from achieving maximum efficiency. But when done right, with the latest best practices and the right software, the audit and payment process can do the opposite: cut costs and improve efficiency.

This guide will break down the freight audit process and payment process and show you the crucial steps that your company needs to take to get up to speed. By the end, you’ll know how to efficiently check transport invoices and make accurate payments, helping you avoid overpayments and streamline your supply chain.

Key Takeaways

 

  • Freight auditing and payment streamlines supply chain operations by ensuring accurate billing, preventing overpayments, and uncovering potential cost-saving opportunities that can save 7-10% on total freight spend.

  • Incorporating freight audit software and real-time data processing can significantly reduce manual errors, increase efficiency, and provide actionable insights through in-depth data and analytics.

  • Selecting the right freight payment provider helps improve financial stability, facilitates expansion, and ensures effective payment and negotiation terms to avoid service interruptions.

Breaking Freight Audit and Payment Down To The Basics

What exactly does freight auditing entail? Simply put, it involves:

  • Evaluating and settling freight invoices

  • Increasing visibility into logistics spending and activities

  • Verifying additional charges & preventing duplicate payments

  • Ensuring tariff and industry standards compliance 

  • Handling exceptions, then resolving disputes

At its core, freight auditing ensures invoice accuracy to help promote cost savings and sharpen your overall logistical processes. It allows you to scrutinize them, looking for errors like double billing and inaccurate charges to identify discrepancies that you can recover payment for.

This is the freight auditing process:

  1. A company receives invoices from its freight partners (carriers, third parties, contractors, shippers, etc.) and uploads them into an online system.

  2. Invoices are grouped and sorted by factors like carrier, date, or company. 

  3. Each invoice is closely scrutinized for accuracy. This means checking for:

    • Accessorial charges

    • Duplicate charges

    • Freight classification

    • Compliance with rules and regulations

    • Timeliness

    • Rate accuracy, possible discounts, reductions, or additions

    • Confirming accurate taxes and totals

  4. The company handles exception management and dispute resolution to finalize invoices requiring changes. Repeat auditing to confirm changes are implemented.

As you can tell, a freight audit can become time-consuming and costly to perform without the right knowledge or tools. That’s where freight audits and payment services come in.

Optimizing Your Supply Chain with Effective Freight Audit Services

Freight auditing is a critical element of your logistics process, but getting it right on your own can be complicated. 

Especially for larger companies, the sheer volume and complexity of freight bills highlight the importance of effective auditing. Without it, you risk overpayment due to error-prone manual processes, shipment issues from unclear terms, and missed refund opportunities from discrepancies and disputes. 

With your financial well-being and business success on the line, efficient auditing isn’t optional. You need a trusted, reliable, and effective freight and parcel audit solution like Zero Down to maximize your savings and your efficiency.

So, how can freight auditing services like Zero Down help optimize freight costs? 

Auditing Reduces Costly Errors

Billing errors are a major problem in your logistics process. Approximately 16% of invoices have an error, which is easy to miss manually and can cost you over time. Fortunately, the right freight auditing solution can help– and here’s how.

  • Saving Time: Detecting and resolving errors takes time – especially if you’re auditing manually. The time it takes an employee to audit your freight invoices by hand could be spent on improving other elements of your logistics process that provide you with a higher return on labor costs. Plus, there’s no guarantee manual auditing will be cost-efficient.

  • Avoiding Duplicate and Incorrect Invoices: Large-scale operations receiving many invoices per day can make it hard to stay on top of things. If you’re not careful, you could let a duplicate invoice through the cracks. Incorrect freight bills may also lead to exceptions, create late payment charges, missed early payment discounts, or extra unnecessary fees.

  • Maintaining Carrier Relationships: Carriers want to get paid on time and with the least hassle. If you are not using efficient processes, you risk strain on that relationship and threaten good faith, trust and negotiating power.

Freight auditing services offer businesses enhanced visibility, control over transportation expenses, and the insight you need to optimize costs and improve carrier relationships. These benefits, along with the increased reliability, lead to better decision-making in logistics operations.

Auditing Analytics Inform Efficiency Optimization

Integrating data analytics into the freight auditing process can take cost savings and efficiency to another level. Some benefits of integrating data analytics into freight auditing include:

  • Reducing shipping delays

  • Enhancing customer satisfaction

  • Ensuring payment accuracy

  • Uncovering cost-saving opportunities

By analyzing shipment details like weights, distances, and charges, freight audits can help achieve these benefits.

Data Management and Insight

Your analytical approach should also include data warehousing, which is when you use analytical tools to quickly gain valuable insights from your wealth of freight data.

Data warehousing consolidates data from transactional systems and other sources, helping you manage your freight spend via:

  • Tracking costs

  • Analyzing spending trends

  • Identifying cost-saving methods

  • Identifying performance issues

Storing and analyzing in-depth carrier data is a critical part of transportation spend management (TSM), which helps optimize your freight spending.

Analytics for Carrier Performance

Carrier performance evaluation is another important aspect of the freight audit process. It involves tracking certain criteria like timeliness, communication, compliance, and invoice accuracy to ensure you’re maintaining a high standard of quality.

Regular carrier performance assessments help you select the best-suited carriers, renegotiate contracts, and maintain high-quality service. Freight audits and payments also enhance visibility into carrier performance and transportation contracts, supporting strategic planning and the execution of business initiatives.

Navigating the Freight Payment Process

Auditing is only one part of the process–invoices also need to be paid through the accounts payable process for transportation or freight. Accurate and timely payment is crucial for efficient supply chain management, positive carrier relationships, and negotiating power– all of which help your business succeed. 

Here’s a breakdown of what the freight payment process is like:

  • Audited and finalized invoices are approved for payment

  • The company or payment provider pays the invoice using the agreed-upon method between the company and carriers. Methods may include:

  • Paper checks

    • ACH wire transfer

    • Credit/Debit Cards

  • The company logs transactions and costs in accounting systems 

  • Company and carriers track payment status through to successful receipt 

Any interruption in this process can lead to delays, lowered service quality, and lost relationships, so your payment processes must be streamlined.

Complications in freight payment without professional services

Similar to freight auditing, paying freight carriers comes with complications and time-consuming requirements that make it inefficient to handle manually.

Here are a few reasons to choose a freight payment solution.

Complex Payment Requirements

Carriers are private businesses. They each have their own payment rate structures, accessorial fees, modes of communication, and SOPs, which can make payment complex and time-consuming. Plus, it gets even worse when including parcel reverse logistics, specialized shipments, multiple carriers, and other complications. 

You also have to process payments using their preferred method. Traditionally, you would use paper-based payment. However, ongoing digitization has made virtual payments the future-proof option. You’ll need to be able to support both, though, to avoid limiting your carrier options. Fortunately, freight payment providers accept and process various payment types.

Negotiating Favorable Contracts

Documentation is essential to prevent misunderstandings regarding freight charges and payment terms. As part of your carrier relationship, you’ll create a contract or agreement that outlines specific payment terms, including freight charges and additional fees like inspections, handling charges, and taxes, to ensure transparent and accurate billing. 

But getting a strong contract is easier said than done. Luckily, providers like Zero Down handle these negotiations using their expertise and industry knowledge to help you secure the best terms.

International Compliance and Support

Businesses with a global presence or hoping to expand into one will face specific challenges when expanding. These may include varying invoicing standards, the rarity of payment solutions outside North America, and the need for global support and presence. 

When selecting a freight payment partner, you must look for partners with a presence in your operational regions and ensure you’re working with regulated service providers to avoid compliance issues.

Leveraging Technology for Next-Level Efficiency

Technology has made a significant impact on logistics throughout all industries–and freight auditing is no exception. Freight audit software aids in automating the audit process, reducing manual errors, and providing analytics tools for improved decision-making. 

Digitization of freight auditing offers several benefits, including:

  • Automated data entry and document management, which significantly reduces your labor cost

  • Expedited audit process with improved accuracy

  • Greater supply chain efficiency

  • Improved insight into optimizations

The combination of the right software and the right freight audit and payment solution provider simplifies the auditing process in a variety of ways.

Real-Time Data Processing

The market moves fast–data needs to be available as soon as possible to keep up. Real-time data processing is another technology-driven breakthrough in freight auditing. It enhances precision in examining and verifying freight bills, effectively reducing errors in freight billing and payments that cost you money.

By automating data collection and analysis, real-time freight audit data processing greatly improves time efficiency and lets you focus your time on other, more important tasks.

The integration of internet-based technology in logistics provides accurate, real-time data that ensures timely and compliant payment while saving money by identifying overcharges and shipping route optimizations.

Integrating Systems for Seamless Operations

Integrating freight audit systems with enterprise resource planning (ERP) and transportation management system (TMS) tools is vital for complex and large-scale multi-national and multi-currency transactions. 

Customizable integrated systems support business compliance and adaptability. They’re crucial for sustaining relationships and quickly handling changes in logistics to streamline operations, increase scalability, and improve freight audit efficiency.

Ensuring Timely Freight Payments

Timely payments help improve relationships with carriers, which can lead to benefits like prioritization and discounts. At the same time, late payments can jeopardize the shipper-carrier relationship, potentially resulting in elevated rates and lower capacities to protect against financial risk.

Automation in the freight audit process and payments offer immediate cost savings and encourage more on-time payments to carriers. You can even prioritize highest-volume carrier relationships to ensure your operations are as efficient as possible.

The Future of Automation

Integrated digital platforms will shape the future of the freight audit with real-time data exchange and optimized payment processing. Blockchain technology also has the potential to enhance the security and transparency of payment processes, reducing the likelihood of fraud and errors. Additionally, artificial intelligence and machine learning may also advance payment processes by utilizing predictive analytics to optimize payment timings and amounts.

Zero Down Case Study: An Example of Technology In Freight Audit and Payment

Starting with the freight audit provider today can help deliver results now and help you future-proof your operations.

For example, a Zero Down client who’s an industry leader in the US was having trouble with their previous auditor. Unclear communication and a lack of visibility led to late payments that damaged crucial carrier relationships– and they had no visibility into the issue.

Luckily, Zero Down was able to automate their general ledger (GL) coding to streamline operations and payments. They were then able to improve their carrier relationships and operations visibility to make everyone, including stakeholders, happy.

Outsource Advanced Freight Audit and Payment Solutions for Supply Chains

Utilizing freight audit services like those offered by Zero Down can result in significant financial and time savings, allowing companies to reallocate internal resources to core business activities.

With the right freight auditing and payment solution, you’ll enjoy benefits like:

  • Outsourcing laborious tasks, which can improve focus on core business aspects

  • Invoice matching, validation, and error detection with automatic exception management and dispute resolution

  • Optimizing transportation spending and identifying cost savings throughout the entirety of your global transportation network

  • Enhancing carrier relations by streamlining payments with versatile payment options

  • Better financial management and cost-saving strategies

Settling for the wrong freight audit providers can cost you time, money, and reputation if they’re unable to manage your operations effectively.

Choosing the Right Provider

The right freight auditor and payment provider should:

  • Fit your needs

  • Enhance your bottom line

  • Drive growth through optimization

  • Improve overall operations. 

  • Offer continuous strategic suggestions for optimizing processes

  • Use the most modern, cutting-edge technology.

The freight audit process has a number of pitfalls, which is why having the right partner and technology by your side can make all the difference.

Zero Down has the experience, knowledge, and technology to simplify and optimize freight auditing efficiency and payment processing. FreightOptics, their proprietary automated logistics platform, can help you perform both auditing and payment processing in a fraction of the time and with higher accuracy than manual processes.

FreightOptics will uncover more discrepancies, identify valuable trends and insight to shape your operations and provide you with the data you need to prevent and recover overpayment.

Streamline Your Supply Chain with The Right Solution

Freight audit and payment services play a critical role in streamlining workflows, saving money, and improving logistics. With the growing integration of technology, the future holds promising advancements in freight auditing and payment processing efficiency. 

Don’t get left behind– choose the right provider to help future-proof your operations and improve efficiency over traditional practices.

Freight audit and payment is a process companies use to monitor and manage their transportation costs. This process includes reviewing freight invoices to track costs, verify their accuracy, and pay carriers in compliance with previously agreed-upon terms.

If you’re dealing with freight shipments, you’re familiar with the freight audit and payment process. As freight shipping gets increasingly complex, auditing does too.

Traditional audits make costly errors more likely, create bottlenecks that slow logistics down, and prevent your supply chain from achieving maximum efficiency. But when done right, with the latest best practices and the right software, the audit and payment process can do the opposite: cut costs and improve efficiency.

This guide will break down the freight audit process and payment process and show you the crucial steps that your company needs to take to get up to speed. By the end, you’ll know how to efficiently check transport invoices and make accurate payments, helping you avoid overpayments and streamline your supply chain.

Key Takeaways

 

  • Freight auditing and payment streamlines supply chain operations by ensuring accurate billing, preventing overpayments, and uncovering potential cost-saving opportunities that can save 7-10% on total freight spend.

  • Incorporating freight audit software and real-time data processing can significantly reduce manual errors, increase efficiency, and provide actionable insights through in-depth data and analytics.

  • Selecting the right freight payment provider helps improve financial stability, facilitates expansion, and ensures effective payment and negotiation terms to avoid service interruptions.

Breaking Freight Audit and Payment Down To The Basics

What exactly does freight auditing entail? Simply put, it involves:

  • Evaluating and settling freight invoices

  • Increasing visibility into logistics spending and activities

  • Verifying additional charges & preventing duplicate payments

  • Ensuring tariff and industry standards compliance 

  • Handling exceptions, then resolving disputes

At its core, freight auditing ensures invoice accuracy to help promote cost savings and sharpen your overall logistical processes. It allows you to scrutinize them, looking for errors like double billing and inaccurate charges to identify discrepancies that you can recover payment for.

This is the freight auditing process:

  1. A company receives invoices from its freight partners (carriers, third parties, contractors, shippers, etc.) and uploads them into an online system.

  2. Invoices are grouped and sorted by factors like carrier, date, or company. 

  3. Each invoice is closely scrutinized for accuracy. This means checking for:

    • Accessorial charges

    • Duplicate charges

    • Freight classification

    • Compliance with rules and regulations

    • Timeliness

    • Rate accuracy, possible discounts, reductions, or additions

    • Confirming accurate taxes and totals

  4. The company handles exception management and dispute resolution to finalize invoices requiring changes. Repeat auditing to confirm changes are implemented.

As you can tell, a freight audit can become time-consuming and costly to perform without the right knowledge or tools. That’s where freight audits and payment services come in.

Optimizing Your Supply Chain with Effective Freight Audit Services

Freight auditing is a critical element of your logistics process, but getting it right on your own can be complicated. 

Especially for larger companies, the sheer volume and complexity of freight bills highlight the importance of effective auditing. Without it, you risk overpayment due to error-prone manual processes, shipment issues from unclear terms, and missed refund opportunities from discrepancies and disputes. 

With your financial well-being and business success on the line, efficient auditing isn’t optional. You need a trusted, reliable, and effective freight and parcel audit solution like Zero Down to maximize your savings and your efficiency.

So, how can freight auditing services like Zero Down help optimize freight costs? 

Auditing Reduces Costly Errors

Billing errors are a major problem in your logistics process. Approximately 16% of invoices have an error, which is easy to miss manually and can cost you over time. Fortunately, the right freight auditing solution can help– and here’s how.

  • Saving Time: Detecting and resolving errors takes time – especially if you’re auditing manually. The time it takes an employee to audit your freight invoices by hand could be spent on improving other elements of your logistics process that provide you with a higher return on labor costs. Plus, there’s no guarantee manual auditing will be cost-efficient.

  • Avoiding Duplicate and Incorrect Invoices: Large-scale operations receiving many invoices per day can make it hard to stay on top of things. If you’re not careful, you could let a duplicate invoice through the cracks. Incorrect freight bills may also lead to exceptions, create late payment charges, missed early payment discounts, or extra unnecessary fees.

  • Maintaining Carrier Relationships: Carriers want to get paid on time and with the least hassle. If you are not using efficient processes, you risk strain on that relationship and threaten good faith, trust and negotiating power.

Freight auditing services offer businesses enhanced visibility, control over transportation expenses, and the insight you need to optimize costs and improve carrier relationships. These benefits, along with the increased reliability, lead to better decision-making in logistics operations.

Auditing Analytics Inform Efficiency Optimization

Integrating data analytics into the freight auditing process can take cost savings and efficiency to another level. Some benefits of integrating data analytics into freight auditing include:

  • Reducing shipping delays

  • Enhancing customer satisfaction

  • Ensuring payment accuracy

  • Uncovering cost-saving opportunities

By analyzing shipment details like weights, distances, and charges, freight audits can help achieve these benefits.

Data Management and Insight

Your analytical approach should also include data warehousing, which is when you use analytical tools to quickly gain valuable insights from your wealth of freight data.

Data warehousing consolidates data from transactional systems and other sources, helping you manage your freight spend via:

  • Tracking costs

  • Analyzing spending trends

  • Identifying cost-saving methods

  • Identifying performance issues

Storing and analyzing in-depth carrier data is a critical part of transportation spend management (TSM), which helps optimize your freight spending.

Analytics for Carrier Performance

Carrier performance evaluation is another important aspect of the freight audit process. It involves tracking certain criteria like timeliness, communication, compliance, and invoice accuracy to ensure you’re maintaining a high standard of quality.

Regular carrier performance assessments help you select the best-suited carriers, renegotiate contracts, and maintain high-quality service. Freight audits and payments also enhance visibility into carrier performance and transportation contracts, supporting strategic planning and the execution of business initiatives.

Navigating the Freight Payment Process

Auditing is only one part of the process–invoices also need to be paid through the accounts payable process for transportation or freight. Accurate and timely payment is crucial for efficient supply chain management, positive carrier relationships, and negotiating power– all of which help your business succeed. 

Here’s a breakdown of what the freight payment process is like:

  • Audited and finalized invoices are approved for payment

  • The company or payment provider pays the invoice using the agreed-upon method between the company and carriers. Methods may include:

  • Paper checks

    • ACH wire transfer

    • Credit/Debit Cards

  • The company logs transactions and costs in accounting systems 

  • Company and carriers track payment status through to successful receipt 

Any interruption in this process can lead to delays, lowered service quality, and lost relationships, so your payment processes must be streamlined.

Complications in freight payment without professional services

Similar to freight auditing, paying freight carriers comes with complications and time-consuming requirements that make it inefficient to handle manually.

Here are a few reasons to choose a freight payment solution.

Complex Payment Requirements

Carriers are private businesses. They each have their own payment rate structures, accessorial fees, modes of communication, and SOPs, which can make payment complex and time-consuming. Plus, it gets even worse when including parcel reverse logistics, specialized shipments, multiple carriers, and other complications. 

You also have to process payments using their preferred method. Traditionally, you would use paper-based payment. However, ongoing digitization has made virtual payments the future-proof option. You’ll need to be able to support both, though, to avoid limiting your carrier options. Fortunately, freight payment providers accept and process various payment types.

Negotiating Favorable Contracts

Documentation is essential to prevent misunderstandings regarding freight charges and payment terms. As part of your carrier relationship, you’ll create a contract or agreement that outlines specific payment terms, including freight charges and additional fees like inspections, handling charges, and taxes, to ensure transparent and accurate billing. 

But getting a strong contract is easier said than done. Luckily, providers like Zero Down handle these negotiations using their expertise and industry knowledge to help you secure the best terms.

International Compliance and Support

Businesses with a global presence or hoping to expand into one will face specific challenges when expanding. These may include varying invoicing standards, the rarity of payment solutions outside North America, and the need for global support and presence. 

When selecting a freight payment partner, you must look for partners with a presence in your operational regions and ensure you’re working with regulated service providers to avoid compliance issues.

Leveraging Technology for Next-Level Efficiency

Technology has made a significant impact on logistics throughout all industries–and freight auditing is no exception. Freight audit software aids in automating the audit process, reducing manual errors, and providing analytics tools for improved decision-making. 

Digitization of freight auditing offers several benefits, including:

  • Automated data entry and document management, which significantly reduces your labor cost

  • Expedited audit process with improved accuracy

  • Greater supply chain efficiency

  • Improved insight into optimizations

The combination of the right software and the right freight audit and payment solution provider simplifies the auditing process in a variety of ways.

Real-Time Data Processing

The market moves fast–data needs to be available as soon as possible to keep up. Real-time data processing is another technology-driven breakthrough in freight auditing. It enhances precision in examining and verifying freight bills, effectively reducing errors in freight billing and payments that cost you money.

By automating data collection and analysis, real-time freight audit data processing greatly improves time efficiency and lets you focus your time on other, more important tasks.

The integration of internet-based technology in logistics provides accurate, real-time data that ensures timely and compliant payment while saving money by identifying overcharges and shipping route optimizations.

Integrating Systems for Seamless Operations

Integrating freight audit systems with enterprise resource planning (ERP) and transportation management system (TMS) tools is vital for complex and large-scale multi-national and multi-currency transactions. 

Customizable integrated systems support business compliance and adaptability. They’re crucial for sustaining relationships and quickly handling changes in logistics to streamline operations, increase scalability, and improve freight audit efficiency.

Ensuring Timely Freight Payments

Timely payments help improve relationships with carriers, which can lead to benefits like prioritization and discounts. At the same time, late payments can jeopardize the shipper-carrier relationship, potentially resulting in elevated rates and lower capacities to protect against financial risk.

Automation in the freight audit process and payments offer immediate cost savings and encourage more on-time payments to carriers. You can even prioritize highest-volume carrier relationships to ensure your operations are as efficient as possible.

The Future of Automation

Integrated digital platforms will shape the future of the freight audit with real-time data exchange and optimized payment processing. Blockchain technology also has the potential to enhance the security and transparency of payment processes, reducing the likelihood of fraud and errors. Additionally, artificial intelligence and machine learning may also advance payment processes by utilizing predictive analytics to optimize payment timings and amounts.

Zero Down Case Study: An Example of Technology In Freight Audit and Payment

Starting with the freight audit provider today can help deliver results now and help you future-proof your operations.

For example, a Zero Down client who’s an industry leader in the US was having trouble with their previous auditor. Unclear communication and a lack of visibility led to late payments that damaged crucial carrier relationships– and they had no visibility into the issue.

Luckily, Zero Down was able to automate their general ledger (GL) coding to streamline operations and payments. They were then able to improve their carrier relationships and operations visibility to make everyone, including stakeholders, happy.

Outsource Advanced Freight Audit and Payment Solutions for Supply Chains

Utilizing freight audit services like those offered by Zero Down can result in significant financial and time savings, allowing companies to reallocate internal resources to core business activities.

With the right freight auditing and payment solution, you’ll enjoy benefits like:

  • Outsourcing laborious tasks, which can improve focus on core business aspects

  • Invoice matching, validation, and error detection with automatic exception management and dispute resolution

  • Optimizing transportation spending and identifying cost savings throughout the entirety of your global transportation network

  • Enhancing carrier relations by streamlining payments with versatile payment options

  • Better financial management and cost-saving strategies

Settling for the wrong freight audit providers can cost you time, money, and reputation if they’re unable to manage your operations effectively.

Choosing the Right Provider

The right freight auditor and payment provider should:

  • Fit your needs

  • Enhance your bottom line

  • Drive growth through optimization

  • Improve overall operations. 

  • Offer continuous strategic suggestions for optimizing processes

  • Use the most modern, cutting-edge technology.

The freight audit process has a number of pitfalls, which is why having the right partner and technology by your side can make all the difference.

Zero Down has the experience, knowledge, and technology to simplify and optimize freight auditing efficiency and payment processing. FreightOptics, their proprietary automated logistics platform, can help you perform both auditing and payment processing in a fraction of the time and with higher accuracy than manual processes.

FreightOptics will uncover more discrepancies, identify valuable trends and insight to shape your operations and provide you with the data you need to prevent and recover overpayment.

Streamline Your Supply Chain with The Right Solution

Freight audit and payment services play a critical role in streamlining workflows, saving money, and improving logistics. With the growing integration of technology, the future holds promising advancements in freight auditing and payment processing efficiency. 

Don’t get left behind– choose the right provider to help future-proof your operations and improve efficiency over traditional practices.

Freight audit and payment is a process companies use to monitor and manage their transportation costs. This process includes reviewing freight invoices to track costs, verify their accuracy, and pay carriers in compliance with previously agreed-upon terms.

If you’re dealing with freight shipments, you’re familiar with the freight audit and payment process. As freight shipping gets increasingly complex, auditing does too.

Traditional audits make costly errors more likely, create bottlenecks that slow logistics down, and prevent your supply chain from achieving maximum efficiency. But when done right, with the latest best practices and the right software, the audit and payment process can do the opposite: cut costs and improve efficiency.

This guide will break down the freight audit process and payment process and show you the crucial steps that your company needs to take to get up to speed. By the end, you’ll know how to efficiently check transport invoices and make accurate payments, helping you avoid overpayments and streamline your supply chain.

Key Takeaways

 

  • Freight auditing and payment streamlines supply chain operations by ensuring accurate billing, preventing overpayments, and uncovering potential cost-saving opportunities that can save 7-10% on total freight spend.

  • Incorporating freight audit software and real-time data processing can significantly reduce manual errors, increase efficiency, and provide actionable insights through in-depth data and analytics.

  • Selecting the right freight payment provider helps improve financial stability, facilitates expansion, and ensures effective payment and negotiation terms to avoid service interruptions.

Breaking Freight Audit and Payment Down To The Basics

What exactly does freight auditing entail? Simply put, it involves:

  • Evaluating and settling freight invoices

  • Increasing visibility into logistics spending and activities

  • Verifying additional charges & preventing duplicate payments

  • Ensuring tariff and industry standards compliance 

  • Handling exceptions, then resolving disputes

At its core, freight auditing ensures invoice accuracy to help promote cost savings and sharpen your overall logistical processes. It allows you to scrutinize them, looking for errors like double billing and inaccurate charges to identify discrepancies that you can recover payment for.

This is the freight auditing process:

  1. A company receives invoices from its freight partners (carriers, third parties, contractors, shippers, etc.) and uploads them into an online system.

  2. Invoices are grouped and sorted by factors like carrier, date, or company. 

  3. Each invoice is closely scrutinized for accuracy. This means checking for:

    • Accessorial charges

    • Duplicate charges

    • Freight classification

    • Compliance with rules and regulations

    • Timeliness

    • Rate accuracy, possible discounts, reductions, or additions

    • Confirming accurate taxes and totals

  4. The company handles exception management and dispute resolution to finalize invoices requiring changes. Repeat auditing to confirm changes are implemented.

As you can tell, a freight audit can become time-consuming and costly to perform without the right knowledge or tools. That’s where freight audits and payment services come in.

Optimizing Your Supply Chain with Effective Freight Audit Services

Freight auditing is a critical element of your logistics process, but getting it right on your own can be complicated. 

Especially for larger companies, the sheer volume and complexity of freight bills highlight the importance of effective auditing. Without it, you risk overpayment due to error-prone manual processes, shipment issues from unclear terms, and missed refund opportunities from discrepancies and disputes. 

With your financial well-being and business success on the line, efficient auditing isn’t optional. You need a trusted, reliable, and effective freight and parcel audit solution like Zero Down to maximize your savings and your efficiency.

So, how can freight auditing services like Zero Down help optimize freight costs? 

Auditing Reduces Costly Errors

Billing errors are a major problem in your logistics process. Approximately 16% of invoices have an error, which is easy to miss manually and can cost you over time. Fortunately, the right freight auditing solution can help– and here’s how.

  • Saving Time: Detecting and resolving errors takes time – especially if you’re auditing manually. The time it takes an employee to audit your freight invoices by hand could be spent on improving other elements of your logistics process that provide you with a higher return on labor costs. Plus, there’s no guarantee manual auditing will be cost-efficient.

  • Avoiding Duplicate and Incorrect Invoices: Large-scale operations receiving many invoices per day can make it hard to stay on top of things. If you’re not careful, you could let a duplicate invoice through the cracks. Incorrect freight bills may also lead to exceptions, create late payment charges, missed early payment discounts, or extra unnecessary fees.

  • Maintaining Carrier Relationships: Carriers want to get paid on time and with the least hassle. If you are not using efficient processes, you risk strain on that relationship and threaten good faith, trust and negotiating power.

Freight auditing services offer businesses enhanced visibility, control over transportation expenses, and the insight you need to optimize costs and improve carrier relationships. These benefits, along with the increased reliability, lead to better decision-making in logistics operations.

Auditing Analytics Inform Efficiency Optimization

Integrating data analytics into the freight auditing process can take cost savings and efficiency to another level. Some benefits of integrating data analytics into freight auditing include:

  • Reducing shipping delays

  • Enhancing customer satisfaction

  • Ensuring payment accuracy

  • Uncovering cost-saving opportunities

By analyzing shipment details like weights, distances, and charges, freight audits can help achieve these benefits.

Data Management and Insight

Your analytical approach should also include data warehousing, which is when you use analytical tools to quickly gain valuable insights from your wealth of freight data.

Data warehousing consolidates data from transactional systems and other sources, helping you manage your freight spend via:

  • Tracking costs

  • Analyzing spending trends

  • Identifying cost-saving methods

  • Identifying performance issues

Storing and analyzing in-depth carrier data is a critical part of transportation spend management (TSM), which helps optimize your freight spending.

Analytics for Carrier Performance

Carrier performance evaluation is another important aspect of the freight audit process. It involves tracking certain criteria like timeliness, communication, compliance, and invoice accuracy to ensure you’re maintaining a high standard of quality.

Regular carrier performance assessments help you select the best-suited carriers, renegotiate contracts, and maintain high-quality service. Freight audits and payments also enhance visibility into carrier performance and transportation contracts, supporting strategic planning and the execution of business initiatives.

Navigating the Freight Payment Process

Auditing is only one part of the process–invoices also need to be paid through the accounts payable process for transportation or freight. Accurate and timely payment is crucial for efficient supply chain management, positive carrier relationships, and negotiating power– all of which help your business succeed. 

Here’s a breakdown of what the freight payment process is like:

  • Audited and finalized invoices are approved for payment

  • The company or payment provider pays the invoice using the agreed-upon method between the company and carriers. Methods may include:

  • Paper checks

    • ACH wire transfer

    • Credit/Debit Cards

  • The company logs transactions and costs in accounting systems 

  • Company and carriers track payment status through to successful receipt 

Any interruption in this process can lead to delays, lowered service quality, and lost relationships, so your payment processes must be streamlined.

Complications in freight payment without professional services

Similar to freight auditing, paying freight carriers comes with complications and time-consuming requirements that make it inefficient to handle manually.

Here are a few reasons to choose a freight payment solution.

Complex Payment Requirements

Carriers are private businesses. They each have their own payment rate structures, accessorial fees, modes of communication, and SOPs, which can make payment complex and time-consuming. Plus, it gets even worse when including parcel reverse logistics, specialized shipments, multiple carriers, and other complications. 

You also have to process payments using their preferred method. Traditionally, you would use paper-based payment. However, ongoing digitization has made virtual payments the future-proof option. You’ll need to be able to support both, though, to avoid limiting your carrier options. Fortunately, freight payment providers accept and process various payment types.

Negotiating Favorable Contracts

Documentation is essential to prevent misunderstandings regarding freight charges and payment terms. As part of your carrier relationship, you’ll create a contract or agreement that outlines specific payment terms, including freight charges and additional fees like inspections, handling charges, and taxes, to ensure transparent and accurate billing. 

But getting a strong contract is easier said than done. Luckily, providers like Zero Down handle these negotiations using their expertise and industry knowledge to help you secure the best terms.

International Compliance and Support

Businesses with a global presence or hoping to expand into one will face specific challenges when expanding. These may include varying invoicing standards, the rarity of payment solutions outside North America, and the need for global support and presence. 

When selecting a freight payment partner, you must look for partners with a presence in your operational regions and ensure you’re working with regulated service providers to avoid compliance issues.

Leveraging Technology for Next-Level Efficiency

Technology has made a significant impact on logistics throughout all industries–and freight auditing is no exception. Freight audit software aids in automating the audit process, reducing manual errors, and providing analytics tools for improved decision-making. 

Digitization of freight auditing offers several benefits, including:

  • Automated data entry and document management, which significantly reduces your labor cost

  • Expedited audit process with improved accuracy

  • Greater supply chain efficiency

  • Improved insight into optimizations

The combination of the right software and the right freight audit and payment solution provider simplifies the auditing process in a variety of ways.

Real-Time Data Processing

The market moves fast–data needs to be available as soon as possible to keep up. Real-time data processing is another technology-driven breakthrough in freight auditing. It enhances precision in examining and verifying freight bills, effectively reducing errors in freight billing and payments that cost you money.

By automating data collection and analysis, real-time freight audit data processing greatly improves time efficiency and lets you focus your time on other, more important tasks.

The integration of internet-based technology in logistics provides accurate, real-time data that ensures timely and compliant payment while saving money by identifying overcharges and shipping route optimizations.

Integrating Systems for Seamless Operations

Integrating freight audit systems with enterprise resource planning (ERP) and transportation management system (TMS) tools is vital for complex and large-scale multi-national and multi-currency transactions. 

Customizable integrated systems support business compliance and adaptability. They’re crucial for sustaining relationships and quickly handling changes in logistics to streamline operations, increase scalability, and improve freight audit efficiency.

Ensuring Timely Freight Payments

Timely payments help improve relationships with carriers, which can lead to benefits like prioritization and discounts. At the same time, late payments can jeopardize the shipper-carrier relationship, potentially resulting in elevated rates and lower capacities to protect against financial risk.

Automation in the freight audit process and payments offer immediate cost savings and encourage more on-time payments to carriers. You can even prioritize highest-volume carrier relationships to ensure your operations are as efficient as possible.

The Future of Automation

Integrated digital platforms will shape the future of the freight audit with real-time data exchange and optimized payment processing. Blockchain technology also has the potential to enhance the security and transparency of payment processes, reducing the likelihood of fraud and errors. Additionally, artificial intelligence and machine learning may also advance payment processes by utilizing predictive analytics to optimize payment timings and amounts.

Zero Down Case Study: An Example of Technology In Freight Audit and Payment

Starting with the freight audit provider today can help deliver results now and help you future-proof your operations.

For example, a Zero Down client who’s an industry leader in the US was having trouble with their previous auditor. Unclear communication and a lack of visibility led to late payments that damaged crucial carrier relationships– and they had no visibility into the issue.

Luckily, Zero Down was able to automate their general ledger (GL) coding to streamline operations and payments. They were then able to improve their carrier relationships and operations visibility to make everyone, including stakeholders, happy.

Outsource Advanced Freight Audit and Payment Solutions for Supply Chains

Utilizing freight audit services like those offered by Zero Down can result in significant financial and time savings, allowing companies to reallocate internal resources to core business activities.

With the right freight auditing and payment solution, you’ll enjoy benefits like:

  • Outsourcing laborious tasks, which can improve focus on core business aspects

  • Invoice matching, validation, and error detection with automatic exception management and dispute resolution

  • Optimizing transportation spending and identifying cost savings throughout the entirety of your global transportation network

  • Enhancing carrier relations by streamlining payments with versatile payment options

  • Better financial management and cost-saving strategies

Settling for the wrong freight audit providers can cost you time, money, and reputation if they’re unable to manage your operations effectively.

Choosing the Right Provider

The right freight auditor and payment provider should:

  • Fit your needs

  • Enhance your bottom line

  • Drive growth through optimization

  • Improve overall operations. 

  • Offer continuous strategic suggestions for optimizing processes

  • Use the most modern, cutting-edge technology.

The freight audit process has a number of pitfalls, which is why having the right partner and technology by your side can make all the difference.

Zero Down has the experience, knowledge, and technology to simplify and optimize freight auditing efficiency and payment processing. FreightOptics, their proprietary automated logistics platform, can help you perform both auditing and payment processing in a fraction of the time and with higher accuracy than manual processes.

FreightOptics will uncover more discrepancies, identify valuable trends and insight to shape your operations and provide you with the data you need to prevent and recover overpayment.

Streamline Your Supply Chain with The Right Solution

Freight audit and payment services play a critical role in streamlining workflows, saving money, and improving logistics. With the growing integration of technology, the future holds promising advancements in freight auditing and payment processing efficiency. 

Don’t get left behind– choose the right provider to help future-proof your operations and improve efficiency over traditional practices.

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Author: Brad McBride

Brad McBride, CEO and Founder of Zero Down Supply Chain Solutions is a dynamic leader with over 30 years of experience in the supply chain sector. His journey began at Consolidated Freightways in 1988, where he mastered freight logistics and pricing. His career led him to Eagle Global Logistics, diving into international freight forwarding and leading high-volume shipping projects.

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