Freight auditing is an all-encompassing term for a broad mix of service models, modes covered, and pricing structures that are chosen to serve your particular freight shipping situation. No two shippers are completely alike so no two freight audit solutions will work the same for all shippers. Knowing your overall freight shipping spend, what modes you primarily ship, what pricing model you prefer, and what other benefits your potential freight auditor can provide are all key factors in deciding what kind of freight audit will best serve you and your company.
The first step in preparing for a freight audit is to determine your total freight shipping spend. This number will vary greatly depending on your specific shipping characteristics. Be sure to include less than truckload (LTL) freight, full truckload (TL) freight, ocean freight, air freight, and rail freight into your total freight shipping spend. This number will be instrumental in deciding upon which pricing model you choose.
Typically, freight audit pricing is one of two possible pricing models – a percentage of audited freight spend or a flat fee per bill of lading audited (transactional pricing). Each of these pricing models have their benefits and drawbacks so be sure to conduct a thorough analysis of which pricing model will work best for you and your company’s freight operations.
There are tons of freight auditors in the marketplace, which can make selecting the right freight auditor for your business a very challenging task. Typically, most decisions between freight audit providers comes down to the pricing models (and associated fees) offered along with the additional benefits that each auditor can provide. A top-tier freight auditor will be able to provide such things as enhanced reporting, advanced GL coding, and personalized insights and recommendations into your shipping operations.
Since freight shipping costs can easily make up 10% of an organization’s expenditure, a freight audit is a great way to ensure that your freight carriers are held accountable for the services they provide. In certain cases, the discrepancies found on freight shipping invoices can be as much as 8.8% of the total invoice charges. These two facts make deciding to audit your freight a no-brainer for most large organizations with high freight shipping spends.
There are a slew of benefits that come as a result of freight auditing. Firstly, you’ll no doubt lower your company’s shipping costs. By actively targeting invoice errors and requesting credits from your carriers on your behalf, a freight auditor is able to make sure you are not overpaying for your freight shipping invoices. Typically, most companies will also reduce their administrative expenses. Since freight auditing is a very time and labor-intensive process, our team of experts can help free up some overhead as we hunt down and recover credits. Another big benefit of freight auditing is the reporting and shipping analytics that your freight auditor will provide. The level of dedicated freight reporting that a quality auditor provides is normally much more comprehensive than what the shipper already has in place. With this advanced level of reporting comes a deeper level of insight into your freight shipping operations – allowing you to recognize new efficiencies in your supply chain.
All in all, a freight audit is a great way to reduce your shipping costs and streamline your operations. Throughout the relationship you’ll gain a better understanding of yourself as a freight shipper, and will be able to identify and actualize new efficiencies.