Transportation is a pretty efficient industry — though it’s absolutely vital to every other part of the economy, it only accounts for 6% of economic activity. Still, shipping is one of the highest expenses that businesses have, and what can make matters worse is not ensuring that billing and payments are accurate. There are three main methods of freight bill auditing and a few reasons why it’s necessary. At the end of the day, it should probably be outsourced. Here’s what you need to know.

Methods of Freight Bill Auditing

  1. Pre-Audit: One method of freight auditing takes place before the invoice is actually paid. This is referred to as a Pre-Audit and will ensure that you’re paying the carrier the correct amount. In many cases, this is the most advantageous due to the fact that the carrier has yet to be paid. Typically, the party who has control of the funds has better chance of settling the claim in their favor.
  2. Post-Audit: Another method of freight auditing takes place after the bill has been paid. Choosing to perform a Post-Audit of freight invoices is still a good option since you can then settle up with the carrier if differences have been found.
  3. Reporting: When you audit your freight bills, this is still a good time to gather information about your shipping practices. Looking at the numbers will keep you aware of exactly what you’re spending on freight. With data easily accessible, it will also give you leverage during future price negotiations and you can depend on the data being accurate.

Why Auditing is Necessary

You need to audit your freight bills for a few reasons. The first and most important one is that you might be overspending. More than three quarters of businesses pay too much for shipping, and keeping a close eye on your bills and payments can keep your business from being one of them. Making sure that you’re being appropriately charged for what you’re shipping and that you’re paying only that amount is a good practice and will ensure that there are no errors.

Why You Should Outsource

The problem with keeping track of these things is that it takes time to audit freight bills. Businesses typically get one invoice per shipment, which can pile up pretty quickly and can be really time consuming to go through. Additionally, you may have to recover overpaid freight charges. Furthermore, not knowing what you’re looking for can make the process longer (and confusing); depending on the mode and the structure of the pricing agreements, transportation pricing can be very complicated. This is probably one of those cases where it’s best to leave it to professionals who have the right skills and experience to do so.

Do you have any questions about freight auditing? Feel free to ask us in the comments.