The process of moving goods from point A to point B is a complex endeavor involving many different parties. From manufacturers to warehouses to carriers, ensuring products arrive at their destination damage-free and on time requires coordination between suppliers, buyers, and logistics providers. Freight payment and audit services are critical links in the supply chain, providing oversight and expertise to optimize costs and mitigate risks.
Streamlining the Freight Payment Process
For shippers, freight payment can be time-consuming and error-prone. Invoice discrepancies, incorrect charges, and duplications can quickly escalate into problems. Freight bill audit and payment provides an efficient, cost-effective solution. Companies specializing in freight payment work on the shipper’s behalf to:
- Consolidate multiple carrier invoices into one weekly payment
- Audit freight bills for billing errors and discrepancies
- Pay carriers directly and promptly
- Provide reporting and analytics on spending
This simplifies payment processing for the shipper. It also ensures carriers get paid faster, which can mean lower rates. By streamlining freight payment and establishing internal controls, costs are lowered across the board.
Adding Visibility to the Audit Process
Freight payment providers add critical oversight to the billing process. They audit every invoice to check for errors, overcharges, and duplications. This helps shippers identify invoicing problems before they impact the bottom line.
Service providers can check for:
- Rating errors – such as miscalculations of weight, distance, or fuel costs
- Accessorial errors – such as incorrect application of fees, detention, etc.
- Duplicate payments – paying for the same freight move twice
- Invalid charges – costs not contractually agreed upon
By systematically auditing 100% of bills, providers identify invoicing errors that can reduce freight costs between 2-10%. This auditing visibility delivers meaningful savings to the shipper.
Leveraging Data Analysis for Logistics Insights
With reams of invoice data at their disposal, freight payment providers can deliver actionable analytics and reporting. Shippers gain insights into:
- Spending patterns – analytics on costs by carrier, mode, load, and other variables
- Cost-saving opportunities – identifying lanes with high error rates or duplicate payments
- Carrier performance data – tracking on-time service, claims, and billing accuracy
- Peer benchmarking – comparing freight spend versus industry peers
These insights help shippers better understand their freight activity. They can fine-tune logistics operations to control costs, enhance compliance, evaluate carriers, and optimize supply chain networks. Access to robust analytics and reporting is a key benefit of outsourcing to a freight payment specialist.
Maintaining Security and Compliance
Freight payment involves the exchange of sensitive financial data. It’s crucial this information remains protected and compliant. Reputable providers maintain strict security protocols and internal controls that exceed industry standards.
This includes PCI-DSS compliance for securing credit card data and SSAE-18 audits for financial reporting controls. Maintaining compliance provides assurance to shippers that financial data is kept safe and private.
Outsourcing to specialists relieves the burden for shippers of staying current with changing standards. It also reduces risks related to fraud, theft, and improper access to critical information.
The Benefits of Outsourcing for Shippers
Here are 5 advantages shippers can gain by using freight payment services:
- Cost control – identifying billing errors and discrepancies before payment
- Efficiency – reducing time spent processing and paying freight invoices
- Analytics – leveraging invoice data to enhance supply chain intelligence
- Compliance – ensuring financial data is secure and protocols are followed
- Payment terms – taking advantage of prompt payment discounts and carrier incentives
Together this allows shippers to optimize freight costs, operate efficiently, maintain control, and focus their efforts. Supply chain leaders are leveraging these benefits by increasingly outsourcing freight payment and audit.
Best Practices for Managing Freight Spend
Here are some smart tactics shippers can follow to lower freight costs and gain control over their supply chain spend:
Consolidate volumes – Using fewer carriers allows more negotiation leverage and better contracts. It also lowers the number of invoices.
Centralize billing – Have invoices routed to your payment provider instead of internally. This simplifies the process.
Pre-audit freight bills – Don’t rely only on provider audits. Add your own validation checks before payment.
Benchmark costs – Use analytics to compare freight rates versus peers. Identify competitiveness gaps.
Evaluate accessorials – Review contract terms for fees like detention, fuel surcharges, etc. Control these variable costs.
Dispute errors – Don’t pay incorrect charges. Reject bad invoices and rebill providers for errors.
Improve shipping data – Ensure carriers have complete info for accurate billing. Prevent pay-and-chase scenarios.
Ask for incentives – Carriers may offer discounts for volume, faster payment, or improved shipping data.
Key Takeaways on Freight Audit and Payment
- Freight audit and payment services centralize and simplify invoice processing for shippers.
- They provide critical oversight by auditing 100% of bills for errors and overcharges.
- Data analytics offer insights into spending patterns, performance, and cost-saving opportunities.
- Outsourcing provides efficiency, control, security compliance, and other benefits to shippers.
- Following best practices around consolidation, auditing, analytics, and dispute resolution allows shippers to optimize freight costs.
FAQ About Freight Audit and Payment
Q: What are the main benefits of outsourcing freight payment?
A: The top benefits are cost savings from auditing 100% of bills, efficiency gains by centralizing payments, data analytics providing supply chain intelligence, and maintaining security compliance.
Q: Approximately how much savings can a freight audit identify?
A: Industry estimates are 2-10% savings resulting from identifying billing errors, incorrect charges, duplicate payments, and non-compliance issues.
Q: How quickly do freight payment providers pay carriers?
A: Most providers pay carriers within 7 days or less of receiving the invoice. Prompt payment earns discounts and improves carrier relationships.
Q: What data security standards do reputable freight payment providers follow?
A: Providers should comply with data security standards like PCI-DSS for credit card data and SSAE-18 for financial reporting controls.
Q: Can freight payment services benchmark a shipper’s rates versus peers?
A: Yes. Leveraging their database of invoice data, providers can benchmark a shipper’s freight rates by mode, lane and other variables versus industry peers.
Conclusion
Freight audit and payment services are a critical control point in the supply chain. They oversee one of the largest variable costs that shippers face. By outsourcing these services, shippers can optimize efficiency, compliance, risk management, and data-driven decision making. This allows supply chain leaders to focus on their core business while leveraging specialists to manage the complexities of freight payment and invoicing. Companies that partner with dedicated providers position themselves for lower costs, improved operations, and competitive advantage in their industry.