Freight Bill Errors: How They Happen and How to Stop Them

Whether you’re shipping goods overseas or across the country, shipping, handling and material costs can mount quickly. For many companies, this is the most expensive part of their day-to-day operations.

Those costs can skyrocket even further, however, when they are compounded by freight bill errors. These mistakes range from overcharges to incorrect billing based on inaccurate measurements, and every one of them can cost your business significantly.

Learn how to find and correct freight invoice errors in this guide.

What Are the Most Common Freight Bill Errors?

The four main types of freight bill errors include:

1. Human Errors

Bill errors in this category are made by the people handling freight processes. In most cases, they are mistakes. For example, data entry errors and contract misinterpretations are typically the result of a lack of concentration, a misunderstanding or inexperience. While there will always be some margin of error with human involvement, training can help reduce these mistakes.

2. System Errors

These bill errors are caused by technological malfunctions or outdated information. They may be difficult to notice, but they will typically result in additional problems beyond billing that are easier to detect. Software glitches, for example, often lead to program errors and alerts. Integration issues between company systems will also lead to other incompatibilities that will be easier to spot. Outdated rate tables can be a bit harder to notice.

3. Carrier Errors

The freight carrier itself can also produce bill errors, which are larger in scale than human errors. The three most common of these errors are:

• Incorrect application of rates.
• Inaccurate accessorial charges.
• billing for services not rendered.

Each of these errors can lead to significant price increases if they are not noticed during the billing process. However, their sheer scale may also make them easier to notice in some cases.

For instance, less-than-truckload (LTL) shipments may be susceptible to these errors. LTL shipments involve consolidating goods from multiple suppliers, which increases billing complexity and the potential for errors in applying rates, accessorial charges or billing for services not rendered.

4. Contract Errors

Bill errors can be the result of the contract between your company and the freight carrier itself. The three most common contract issues are ambiguous contract language, unclear pricing agreements and a failure to update contracts. Vague contracts and outdated pricing agreements can cause companies to overspend.

The High Cost of Freight Bill Errors

Each of the four types of bill errors can dramatically increase your company’s logistical expenditures.

Overcharges due to incorrect rates can consistently inflate prices if you are regularly dealing with the same freight carrier. Incorrect rates may be the result of an outdated contract or a carrier error. Shipping rates should be regularly updated and checked against both the carrier’s standards and your contract with them.

Duplicate billing is another common error and one of the most damaging. Human, system or carrier error may accidentally double the cost of single items and even entire orders. If the duplication goes unnoticed, your company may unnecessarily suffer a substantial loss.

Accessorial charge errors, such as incorrect fuel surcharges and address correction fees, can also climb quickly. This is especially true when working with companies overseas, where communication can be more challenging and transportation is more complex.

Incorrect weight and dimension measurements can also lead to inaccurate billing and financial losses. While they may be smaller in scale than other errors, incorrect measurements can still alter billing and even lead to fewer items being transported per shipment.

The cost of LTL bill errors can be especially high. These shipments carry goods from multiple suppliers, which can lead to billing complexities and system errors. The number of parties involved also makes it more challenging to detect and resolve these discrepancies.

How to Mitigate Freight Bill Errors

When identifying and preventing freight bill errors, there are three main approaches:

• Freight bill auditing: The auditing process is designed to analyze and optimize every aspect of the freight shipping process. It identifies bill errors and opportunities for streamlining. Typically, a professional auditing service handles the audit and notifies your company of errors and saving opportunities.
• Contract optimization: Creating a contract in-house can lead to bill errors and disputes in the long run as a result of unclear, imprecise or out-of-date language. For example, if shipping LTL, it is important to partner with a company that knows how to negotiate better LTL rates and create clear and concise contracts. These new, optimized contracts will save your company money and improve your relationships with your freight carriers.
• Internal best practices: Freight carriers themselves can reduce freight bill errors by optimizing their internal practices. Relevant stakeholders should be trained on how to handle and evaluate each step of the billing process. A robust internal review process can then compensate for human errors that occur. Rate tables, contracts and data should also be updated regularly to ensure accuracy.

The Benefits of Preventing Freight Bill Errors

Implementing the practices above offers several benefits for your company. Most importantly, mitigating freight bill errors saves your company money. It can also lead to:

• Improved profit margins as a result of lower costs.
• Heightened cash flow, thanks to quicker and more reliable shipping processes.
• Stronger carrier relations due to optimized contracts.
• More accurate freight data to help inform company projections and decision-making.

In these ways, robust freight billing processes can transform your company, making it more agile, professional and profitable.

Partner With Broussard Logistics Today

Now that you know how to reduce freight costs by auditing invoices, it is time to find the perfect professional auditing service.

Broussard Logistics gives your company the attention it needs at the scale it deserves. We conduct freight bill audits, offer transportation management software and more, all in the name of providing cost-saving logistics to companies around the world. Since 1978, companies just like yours have been trusting us to optimize their logistics.

To learn more about how our auditing services can help your company, contact us today.