Freight Audit: Behind the Scenes of Marked Down Expenses

Gary McKenzie

March 26, 2019


Freight Audit Basics

First, you should never pay a free bill without a freight audit. Now whether you do that yourself or whether you hire a third party to do that, they should audit every bill. The reason for that is: errors happen.

In the case of freight, the errors are usually big dollar amounts. When we analyze an invoice, we have software for those errors. We look at every single line item expense and there are so many possibilities of error. In freight, believing the carrier, know that the carriers are not doing this on purpose. But it happens and a lot of it is manual. This still happens in the carrier networks as they are today. Using an automated, third-party process saves you money. It does this by auditing your bills before you pay them. This is because you're not paying for expenses that you didn't actually incur.

How Does a Freight Audit Improve Operations?

One of the primary ways that an audit can help improve operations in a company is it by auditing the invoices. We actually uncover inefficiencies in how your shipping process actually works. For example, you may order a shipment to go from one place to another. You may do this without realizing that the folks on the receiving end do not have a dock. In freight, that's very important. The equipment used to deliver that product for those with a dock and without a dock is different.

This means that knowing that information before you ship it can actually save you money. You can negotiate discounts on lift-gate fees. That's what that's called. Other ways that you can save money includes addresses. Also, understanding the audit process. This applies to both parcel and freight. It's about understanding how often you have the address incorrect in your database. And then exactly where and to which of your customers. We can provide that information so that you can correct your database. This way you can avoid carrier fees for that. There are countless ways you can save money by analyzing the bills.

Density Matters

In your operations in the warehouse, you may believe that your product is a certain type of product. In the freight world, certain types of product have different densities. Those densities affect the price you pay to ship it. If you are incorrect, the carrier will always correct you. Often that leads to a much higher cost for that shipment. But more than that there are also fees associated with the fact that they had to do that in the first place. So knowing your product, knowing how you're packing it, knowing how you're shipping it. All of that you can find out when you audit the invoices.

The primary difference is then the technology that's used to do it. Often it's about volume. Whether you have the resources to do it in-house or not. In high volumes, it's often that the shipper's resources are not allocated for this. What happens in those cases is they automate the payment process. When the auditing process is not. With a third-party auditor, you have a key advantage. You are working with somebody who has audited not only bills like yours, but other bills every month. So the intellectual capital of the people who oversee the audit process is high. With enhancements to the technology, this has only gotten better. By the sheer volume that has been going through that audit process, this means you'll get a better audit.

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