You packed the goods and had them picked up and shipped. Job is over, or so you thought.
The world of the shipping industry is complex, especially when it comes to freight charges. It is common for businesses to spend thousands to millions of dollars in shipping costs alone. Due to the complexity of freight pricing—think about base rates, surcharges, and other costs, it’s not unusual for both companies and carriers to make mistakes. That’s where a freight audit comes in. Let’s see why the top tips to audit your freight invoices would be helpful to you.
What is a Freight Invoice Audit?
Simply, a freight invoice audit is like any audit activity you know. It is the process of analysing freight invoices and making adjustments to make sure they are accurate. A freight audit ensures you only pay the freight charges you should and as quoted. Manual auditing is hard work, and due to the many complexities of the job, mistakes are commonly rendered, making your audits inaccurate.
Top Tips to Audit Your Freight Invoices
Some Freight Management systems such as Cario, will automatically reconcile your freight invoices. If you don’t have a system that can do this, here are some tips to help you manually audit your freight.
- Best practice suggests that auditing freight invoices should be done weekly. This ensures any issue that may arise is managed immediately.
- Request detailed invoices from carriers. This means you should not settle for summary invoices. PDF and Excel invoices are common, so if the Excel invoices you have don’t itemise the consignments, ask for a PDF copy, and vice versa. When auditing your freight invoices, using Excel files is ideal because they are easier to edit and manage.
- Organise all freight invoices in one place. Arrange all invoices by carrier, month, and site. This will enable you to easily collate and audit invoices in one place.
- Check the rate cards if there are any rate increases and cost differences within a specified period. If there is, compare the old and new rate cards to determine when the invoices cross over. Check the contract details carefully—what do the new rates cover?
- Match zones and postcode files with the carrier rate cards. Different zones and postcodes have different rates, so matching the two will allow you to determine accurate consignment estimates.
- Cross-verify the data indicated on the carrier invoices, carrier rates data matched with zone-postcode files, and your manifest data. This includes comparing freight activities, noting duplicate tracking numbers, identifying double charges and errors, among others. Ideally, a trained consultant should be managing the process.
- Create a reconciliation report. Insert a column at the end of your reconciliation report where you can enter the amount overcharged and the total at the bottom. Also, include the reason for the overcharge.
- Inform the carrier about your reconciliation report beforehand. Deal with overcharge issues as soon as possible.
- Take note of any issues that you may discover as you go through the auditing process. These issues may be at your end or the carrier’s. If it is the latter, liaise with your carrier and work through the issues.
The Best Way to Audit Your Freight Invoices
Freight audit, when done manually, is a tedious process that requires time and money. If you’re a business that needs to be hands-on on more essential activities, manual auditing of your freight invoices is not worth it.
The most efficient and best way to audit your freight invoices is to use a freight portal that offers automatic freight audit services. There are some Australian freight management software platforms out there, but not all are equipped with modern technology to automate shipment audits. Cario, a freight management system, not only digitises and automates your freight decisions but also your freight audits.
Benefits of An Automatic Freight Audit System
Aside from eliminating manual labor, using a freight portal with automatic freight audit services offers plenty of benefits.
- Accurate cost. You only pay what you should and as quoted.
- Simplified reconciliation process. To reconcile freight invoices is an intricate process that entails hard work. With an automatic freight audit system like Cario that can interpret Australian invoice terms, you can streamline and simplify a rather complex job.
- Focused work. Without the need to manually track and audit shipments, your staff will have more time and energy to focus on their core tasks.
- Alerts. Manual auditing is prone to human mistakes, and one can easily miss errors as well. With an automatic system, you are alerted to new issues so you can take steps before they turn into new overcharges. This allows your business to eliminate costing errors rather than deal with the same problems over and over again.
Common Freight Audit Mistakes
Mistakes in freight invoices aren’t like any other mistakes that you can easily disregard. They can result in inaccuracies and cost your business money. To help you recognise them, take a look at the common freight audit errors below.
- Incorrect carrier name and number. With a busy warehouse dock that entertains trucks from different carriers each day, it is easy to load shipments on the wrong carrier truck. This may lead to you being overcharged because rates vary from one carrier to another.
- Duplicate invoices. Cario, an Australian freight management software, uses advanced technology to check and alert of duplicate billing.
- Inaccurate rates and costs. Shippers sometimes based shipment costs on old rates. This creates a disparity between the carrier’s invoice and your manifest data and can lead to overcharge. Tax rates should also be considered and applied, as well as shipping discounts and accessorial fees or surcharges.
Freight invoice audits are an integral part of any business that makes shipments. To audit and reconcile freight invoices manually will cost you a considerable amount of money and time that you can use for other more pressing business concerns. Manual labor is also more prone to human errors. While it is normal to make mistakes in the process, there is a more efficient and cost-effective way of auditing freight invoices—using a comprehensive freight management system that provides automatic freight invoice services. Get in touch with Cario for more information.