Freight Audit and Payment – Options and Best Practices

Learn what every business should expect from freight audit and payment tools/services, and how RLG can help guide you to a tailored solution.

Great freight audit procedures and practices take place on two platforms: Cyberspace and the hands of experienced logistics experts. Not every Accounts Payable department falls into the latter category, but modern technology makes it possible for businesses of every size to take advantage of digital and/or outsourced solutions.

With freight charges accounting for 10% of a company’s total spend and 30% of all freight invoices being incorrect, there is a lot at stake. It can be a time-consuming task for accounts departments to separate the right tools from the hype. If a business is relatively new to the world of logistics, it may not even know where to start.

Also, the right tools can ensure that you have a very good logistics “data warehouse” that can assist you with tactical and more strategic decision making. Having data to manage your logistics operations daily and/or long-term is critical, and having good data is even more important. 

We have assembled the main performance markers to look for from freight audit and data warehouse tools, as well as presenting the powerful solutions RLG can offer to help reduce your accounting burden.

In our blog today, you will learn:

• The basic functions freight accounting tools should provide

• The multiple benefits of outsourcing freight audit functions and what to look out for

• How RLG can assist you in deciding which direction to move in order to obtain a world-class freight audit and payment solution that will benefit your company in many ways

The basic functions that freight auditing tools should provide

There are many accounting tools on the market that claim to take the pain out of back-office work. Helping to calculate metrics like payroll, compliance and safety, insurance fees, and invoices is certainly valuable, but it is still only base-level performance. Number crunching is just the first step toward what your tools should provide, which is increased operational efficiency and reduced team effort.

Some more advanced accounting tools offer machine learning that puts them on the upper tier of options. The AI means these programs can study patterns, self-regulate and expand their capabilities.

Freight accounting tools should also provide more than a cookie-cutter bookkeeping program. The better options can be tailored to fit individual businesses and are designed/managed by teams that understand freight and logistics from the inside.

Tools should be cloud-based and not locked into a PC. Cloud connection keeps tools on the cutting-edge of performance, flexibility and security. If a company is currently utilizing a TMS system, then there may be some built-in freight audit functionality already in the software.  Finding and implementing the right freight auditing software in-house may be right for you, but you should also consider working with an experienced freight audit company as an effective financial tool.

The multiple benefits of outsourcing freight accounting

Finding a reliable freight audit partner to help with freight-based financial tasks can be burdensome, but it is crucial that you find a company that is financially sound and has a good base of large and small customers. However, just because they may be doing business with Fortune 500 companies doesn’t mean that they are “reliable”; you have to dig into their financial and customer service strength to ensure that they are a stable company. 

A reliable freight audit partner should also automatically provide savings on your biggest resources: time and money. First, your team saves time from an already overladen schedule by passing some of the financial burden along to an outside team that is 100% focused on that task.

Second, that higher degree of third-party focus greatly decreases the chances of an overstressed in-house team making preventable (and costly) mistakes. Your staff becomes more productive with less on their shoulders and that productivity produces profits.

Next is the fact that building an internal accounting and auditing framework can be expensive on two fronts, namely the setup and the cost to train staff. An outsourced partner brings those two elements with them as part of the service.

Reliable third-party freight audit companies help ensure your invoice processing is handled in a timely manner. You may only have 30 days to receive, process, audit and pay an invoice; therefore, utilizing a freight audit company that has many of these processes automated will ensure that your transportation suppliers are paid on time.

When paired with diplomacy, this helps ensure a more transparent and accountable financial environment. An experienced and reliable freight audit team can act as a neutral player to mediate and settle any account disputes in a professional manner, reducing your stress while respecting and maintaining the integrity of your logistics relationships.

Another advantage of a freight audit provider is that they can pay all your carriers directly without your AP team having to cut hundreds of checks to various carriers.  However, a word of CAUTION: You need to ensure that your freight audit provider is financially sound and is not playing games with your money.

There have been too many instances with freight audit and payment companies not properly handling their clients’ funds, and suddenly going out of business; however, you as the shipper are still responsible for paying the carriers. Therefore, we always suggest that companies set themselves up to pay the carriers directly themselves once the freight audit company has performed its job in processing the invoices. Please keep in mind, unless the freight audit company is a banking institution or publicly traded company, there are no regulations on how they operate or management accountability. Once your money is in their hands, they control which carriers get paid and when.

How RLG can deliver world-class freight accounting to you

We are here to assist businesses in exploring freight audit and payment options. We offer a cloud-based TMS system with freight audit capabilities that we offer to clients at a reasonable fee. Our team has also been in logistics operations working with large and small freight audit companies as their clients; therefore, we can assist your company in putting together standard operating procedures for your freight processing and audit that your freight audit partner should follow.  

From benchmarking transportation rates and contract language to helping companies manage large- and small-scale bids for all modes of transportation. Our focus is on optimizing your ability to accurately account for your shipping spend.

Our experienced team can also assist with managing freight claims processing and providing in-depth analysis of your logistics. This makes your current expenditure transparent and increases your financial awareness, which helps reduce transportation costs.

This high-level statistical reporting on your outlay can be combined with our world-class Transportation Management System — a must for any business seeking the perfect tool to make data-driven financial logistics decisions.

If you are wondering whether to insource or outsource your freight audit and payment functions (or want to leverage post-audit management), RLG can assist by helping you find the right solution that fits your unique needs. Connect with us for more on letting us reduce logistics stress while you maintain complete control.

Resource Logistics Group provides transportation and logistics advice combined with professional services and state-of-the-art technology. From contract negotiations to easing back-office burdens, we are your ally in excellence. Connect with us on our contact page for a free benchmarking analysis.