Prevent overpayments: how freight auditing protects your budget in a volatile market

In today's dynamic market, managing freight costs is a significant challenge for businesses. Fluctuating rates and billing errors can lead to substantial overpayments, straining budgets and impacting profitability. 

Implementing a robust Freight Audit and Payment (FAP) solution is essential to safeguard your finances and ensure accurate billing.

In this blog post we’ll explore how freight audit and payment solutions can help protect your budget and prevent overpayments in a volatile market.

The hidden costs of overpayment in freight

Overpayments in freight invoices often stem from rate volatility and carrier billing errors. Studies indicate that errors can occur in up to 10% of freight bills, leading to unnecessary expenses. [1]

For businesses handling numerous shipments, these discrepancies can accumulate, resulting in significant financial losses.

Common billing errors include incorrect freight classifications, inaccurate accessorial charges and duplicate billing.

A review of nearly 250,000 less-than-truckload (LTL) invoices revealed that approximately 4.5% contained errors, with inaccurate accessorial charges accounting for 42.8% of these discrepancies. [2]

Why freight auditing is essential in cost management

Freight auditing involves systematically reviewing freight invoices to verify their accuracy. By comparing billed amounts against contracted rates and actual services rendered, businesses can identify and rectify overcharges, ensuring expenditures align with services received.

Key benefits of freight auditing

1. Error detection: Regular audits uncover billing inaccuracies, preventing overpayments and ensuring financial integrity.
2. Cost control: By identifying discrepancies, companies can recover overpaid amounts and avoid future errors, leading to significant cost savings.
3. Operational efficiency: Automated auditing processes streamline invoice reviews, allowing staff to focus on strategic initiatives.
4. Data-driven decisions: Audits provide valuable insights into shipping patterns and carrier performance, informing better decision-making.

Case study: how Peet’s Coffee achieved financial and operational visibility across all distribution channels

Specialty coffee roaster and retailer, Peet's Coffee, faced challenges regarding data visibility across all modes of transportation. Transportation stakeholders had access to several data sources – including internal sales order and carrier billing data – with no way to tie those disparate data sources together to establish one source of truth in a business intelligence (BI) tool. 

To address these issues, the company knew that accuracy and efficiency gains were achievable with the help of the right partner to optimize its transportation finance processes and distribution network. 

Partnering with Infios, the company was able to:

•  Create allocation and accrual dashboards.
• Achieve financial and operational KPI visibility across all distribution channels

Protecting your budget amid market volatility

Market volatility can cause freight rates to fluctuate, making cost management challenging. Implementing a freight auditing system helps businesses monitor these changes, ensuring that billing aligns with current market conditions and contracted rates.

For example, during periods of high demand, carriers may impose surcharges or adjust rates. Without a robust auditing process, these changes can go unnoticed, leading to overpayments. 

An effective FAP solution provides real-time monitoring, allowing businesses to detect and address such discrepancies promptly.

Freight auditing: beyond error detection

Freight auditing offers benefits beyond identifying billing errors. It enables businesses to optimize logistics operations, negotiate better carrier contracts and enhance overall supply chain efficiency.

• Carrier performance evaluation: Regular audits provide data on carrier reliability and cost-effectiveness, informing future partnerships.
• Contract compliance: Auditing ensures carriers adhere to agreed terms, preventing unauthorized charges.
• Process improvement: Insights from audits can highlight inefficiencies in shipping processes, leading to operational enhancements.

Selecting the right FAP solution for your business

Choosing an appropriate FAP solution is crucial for effective freight auditing. Consider the following factors:

1. Scalability: Ensure the solution can handle your shipment volume and adapt to business growth.
2. Automation: Look for features that automate data collection, analysis and reporting to reduce manual effort.
3. Integration: The solution should integrate seamlessly with existing systems, such as your WMS and Enterprise Resource Planning (ERP) software.
4. Reporting capabilities: Comprehensive reporting tools are essential for analyzing audit results and making informed decisions.

Infios's FAP solution exemplifies these qualities, offering scalable, automated auditing with robust reporting features. By integrating with existing systems, it provides a comprehensive view of freight expenses, facilitating better cost management.

Freight auditing as a strategic tool for cost-conscious businesses

In a competitive market, controlling freight costs is vital for maintaining profitability. Freight auditing serves as a strategic tool, enabling businesses to manage expenses proactively, ensure billing accuracy and optimize supply chain operations.

By implementing a robust FAP solution, companies can protect their budgets from the impacts of rate volatility and billing errors. 

This proactive approach not only prevents overpayments but also contributes to a more efficient and transparent supply chain.

Final thoughts: safeguard your budget with freight auditing

As the market continues to evolve, businesses must adopt strategies to manage freight costs effectively. Implementing a comprehensive freight auditing process is a critical step in this direction. 

By ensuring billing accuracy and identifying cost-saving opportunities, freight auditing protects your budget and supports long-term financial health.

Investing in a reliable FAP solution equips businesses with the tools needed to navigate market volatility confidently. 

By leveraging advanced auditing capabilities, companies can maintain control over freight expenses, enhance operational efficiency and achieve sustainable growth.

References

[1] Verizeal – 5 of the most common freight billing errors and how to avoid them
[2] AFS - Stat’s Incredible: Common LTL Invoicing Errors