What are the Steps to Audit Freight Bills?


What are the Steps to Audit Freight Bills?

If your organization is serious about capturing true value from logistics, lifting it out of the service role and making it a true profit center for your business, you will have to take steps that many more conventional organizations would not bother with. In so doing, you stand to capture millions in savings and contribute to significant gains in your sales and revenue figures based on the excellent performance of your logistics – one of your most important public-facing functions.

If you would like to see logistics evolve in this manner, then you should begin with a freight audit. A freight audit can tell you a great deal of otherwise “hidden” information about the value of the logistics services you are getting from suppliers. Once you have this information, you will be free to seek additional value by strategically optimizing your supply chain: This often means using a metric-based approach to seek out better agreements elsewhere!

Freight bill auditing requires a great deal of expertise, often from individuals who previously worked with major carriers. Those who do not have direct insight from carrier operations often do not have the ability to detect patterns that can indicate that something has gone awry with your freight bills. Freight bill auditing is intended to uncover malfeasance, of course, but it more frequently uncovers a series of accidents, attributable to human error, that have no pattern.

A freight bill audit is often the only way to discover these issues and recover your money.

Here are the key steps to a freight bill audit:

Development

The beginning of the process of freight auditing is simply gathering all of the relevant invoices. Naturally, your accounting system should already have access to these records going back for at least some while. Even if you do not have immediate access to the needed documents, you can expect that any reputable carrier will be able to provide them to you.

Discovery

During the discovery phase of freight auditing, the invoices gathered are examined by a team of experts. This will generally include both manual examination and automated examination using a specialized piece of software. While the experts can spot unusual individual occurrences, certain types of invoice mistakes are more easily uncovered by a computer.

Recovery

Recovery is the most important phase of any audit. When mistakes have been discovered during the process of an audit, it means that money is owed back to you. Companies rarely wish to provide the recovered funds in the form of cash, but they are obligated to credit your shipping account with funds in the amount of the mistaken charges, no matter how much time has elapsed.

Naturally, uncovering such errors places you in a stronger bargaining position vis-a-vis your business partner. While it is reasonable to say that a certain amount of human error is inevitable in such a complex field as logistics, such issues represent a major blow to any carrier’s credibility. This provides you with greater negotiating leverage when it comes time to review the terms of your contact – another step which you should be taking on a regular basis to maximize the savings available throughout your supply chain.

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