Like determinable insight, freight invoice audits also form an integral aspect of the logistics and supply chain viewpoints of the economy. This being a highly competitive and low-margin sector, logistics service providers and managers must ensure effective and accurate billing of the different freight services. Complexities associated with freight invoices include; fuel surcharges, various tariff levels, additional fees, and audits on the quality of service delivered. Considering the above factors, human error is very possible and often happens costing companies millions of dollars in some cases.
It is not enough to only learn the techniques of freight invoice audits to avoid mistakes, It is also essential for the establishment’s operational effectiveness. For effective auditing, businesses can shield themselves from overcharging, look for ways to cut back on costs, and still keep cordial relationships with their carriers.
In this article, we will elaborate on six key practices that will help you succeed in freight invoice auditing and bring financial security to your business’s logistics efforts.
1. Embrace the Power of Automation and Digitization
In an era of advanced logistics, the practice of manually assessing invoices has become too archaic. Not only is the manual process slow, but it is also susceptible to mistakes. From incorrectly identifying a tariff rate to simply missing out a line item, the chances of making such errors are far more likely whenever the process is done manually.
Companies like NaaviQ can facilitate the process of freight auditing by digitizing the invoice process. Automation tools can capture, store and analyze immense amounts of data, reporting discrepancies present as early as possible. This implies that the mistakes are corrected as they occur, not when a pile of invoices has accumulated. When coupled with devices that track locations such as FASTag, the system can also verify toll charges, distances covered, and time taken for deliveries thus reinforcing the accuracy of each component of the invoice.
Besides, a lowered-cost system enables a wide range of data interpretation thus allowing the consumers to identify patterns, inefficiencies, and small disturbances which are recurrent and would have been missed in the old system.
2. Create a Comprehensive Audit Process
A detailed and clear-cut audit workflow is equally necessary for conducting freight invoice audits. This process ensures that every invoice is assessed in detail without overlooking important aspects. A well-designed audit workflow will capture critical points where the auditors compare the charges with a set of contractual agreements and look for mistakes such as inflated charges, improperly billed extra services, and additional surcharges for lateness that were not agreed on.
The very first step of the audit should be to make sure that all the primary information on the invoice, including shipment date, origination, destination, and type of goods is in compliance with the services contracted. After this, the auditors’ attention should focus on certain line items in the invoice like the accessorial charges and fuel surcharges. This is because it is in these expenses that the carriers are most likely to sneak in extra charges that were either not provided for in the contract or were wrongly charged.
With this back end of the operation, every member of your staff will perform the same degree of assessment on all invoices hence eliminating any chances of expensive or time-consuming mistakes that could have been eliminated or avoided.
3. Leverage Freight Audit through NaaviQ TMS
Freight audit management is a critical aspect of supply chain operations, ensuring accuracy in billing and helping businesses save on unnecessary costs. NaaviQ Transportation Management System (TMS) takes freight audits to the next level by automating and streamlining the entire process. Through advanced analytics and real-time tracking, NaaviQ TMS ensures that every invoice is cross-checked with the original contract terms, carrier rates, and shipment details.
Manual audits fraught with error and stress are things of the past. NaaviQ TMS provides businesses with visibility and control to mitigate the risk of overpayment and expensive errors. It doesn’t just make audits easier, it allows visualisation of historical shipping trends for effective operational strategy and cost management.
Thanks to NaaviQ TMS, companies can devote their energy to growing their business as much as possible while a smart and trustworthy system takes care of all the details of freight management. For companies that want to take their logistics a notch higher, NaaviQ’s TMS is the solution.
4. Tracking the Historical Freight Data and Checking for Trends
The utilization of historical data can improve the effectiveness of your freight audit process. For instance, you can compare current invoices with previous ones for similar shipments to find evidence of overbilling, extra charging, or even cost variations. In cases when the current invoice appears to have an exorbitant cost in comparison to previous shipments of similar silliness, then this is a red flag that something is wrong.
When one has a deep pool of historical information at one’s disposal, it goes beyond just helping in making quick assessments. It provides a foundation for better contract deals with the carriers. If you realize there are certain carriers who are consistently overcharging or making mistakes, you will have the power to either amend the rates or change them completely.
Also, features for advanced data analysis geared towards the users of NaaviQ enable them to evaluate the current freight rates and assess them against the existing historical records, that is, any trends which are irregular will be flagged for further action. This is especially important in case of repetitive transport of freight in which there exists a high likelihood of discrepancies going unnoticed owing to the uniformity of the dealings.
5. Maintain Regular Communication with Your Carriers
When it comes to freight invoice audits, cultivating effective and open relationships with your carriers can prove vital. In many cases, billing mistakes can be attributed to communication issues between the shipper and the carrier, such as confusion over definitions, incorrect rate application, and typographical errors.
Keeping in touch with your carriers on a continuous basis helps in managing differences in the shortest time possible, and avoiding them entirely thereafter. Enjoying a cordial relationship with the carriers enhances trust, which translates to correct billing and minimal conflicts in the long run. Moreover, such understanding makes it easy to bargain for more favorable conditions.
NaaviQ regards carrier collaboration as one of the focal points of their supply chain optimization process. By the use of applications such as common platforms and graphed movements, every stakeholder can remain updated thus minimizing the chances of any miscommunication.
6. Track and Optimize Key Performance Indicators (KPIs)
The other aspect of freight invoice auditing is the identification of measures that help to locate unexplained or hidden discrepancies within the performance. Monitoring KPIs such as invoice precision, cost per mile, and time to resolve disputes, allows understanding of the freight performance as a whole. Such information is crucial in the enhancement of auditing systems and in lowering costs in the long run.
Sending an invoice always carries the risk of incurring costs that are generally however often unnecessarily, scrutinize the proportions of errors on invoices and determine which of the carriers is the most expensive for billing. This also applies to how long it takes before the billing issues are resolved. Such metrics also reveal the weaknesses in your systems’ processes. Such metrics help to assess the effectiveness of processes and assist in developing measures for their improvement. Further refinements can be achieved in the auditing operations as well as in the management of transporters.
Using NaaviQ analytics tools, supply chain management is able to monitor the physical indicators as explained above, so that 'decision-making' is done at the appropriate time to improve the efficiency of processes and ultimately attain cost reductions.
Conclusion
The process of freight invoice auditing is critical to any organization that operates in the field of logistics and transport. This is due to the high tendency that unmonitored and unrevised costs, particularly freight, can ‘ea t’ into the profits of the company, thus even a small invoicing mistake may cause losses. Companies such as NaaviQ can, however, reduce the chances of being overcharged and improve the efficiency of their supply chains by following the best practices suggested above-streamlining, a thorough review, use of FAPs, historical trends, communication with the carriers, and control of the metrics considering the KPIs.
It is the incorporation of these best practices that helps the business not only have a fix whenever mistakes occur but also stops such mistakes from happening in the first place, thus enhancing the economy, efficiency, and clarity of the supply chain.
For any additional questions or services, please get in touch with us via email at info@naaviq.com.
