Auditing Tips for Shippers
When freight bills don’t match your expectations, the transportation costs add up fast. Auditing your freight bills not only identifies discrepancies but also helps you save money. Here’s how shippers can streamline their freight bill auditing process and catch costly mistakes before they impact the bottom line. This article contains essential auditing tips to help shippers reduce transportation costs, hold carriers accountable and catch costly mistakes before they impact the P&L statement.
Check the Basics: Contracted Rates and Spot Quotes
A solid auditing process starts with your contracted rates. For every shipment, you should have either a contracted rate or a saved-down spot quote stored in your Transportation Management System (TMS) or ERP system. This system allows you to compare carrier invoices against the rates already locked in.
If your ERP system is fully integrated, it can flag discrepancies as soon as invoices arrive. But don’t stop there! Keep an eye on your carrier invoices over time. If shipment billing errors are consistent, it may mean your rate contracts need adjustment or closer auditing.
If your auditing process is manual, you’re likely missing key details and not fully capturing potential savings. First, making the process scalable is essential for catching all discrepancies consistently, not just when time allows. Second, automation ensures greater accuracy by eliminating human error—especially with tasks like assigning GL codes, where manual processes often lead to messy exceptions and inconsistencies. When you automate, you set up business rules that the system applies reliably, even with complex cases. If you want to scale and maintain accuracy, automation isn’t just helpful—it’s necessary.
Audit Contracts and Invoices for Accuracy
Carrier contracts and the invoices that follow should always align. If invoices routinely stray from contract terms, it’s time to re-evaluate. Errors may signal outdated rates, inaccurate data entries, or changes in your carriers’ billing policies.
To stay on top of this, regularly compare your contract rates with what’s reflected in the TMS system. Doing so ensures you’re paying the right amount and receiving accurate invoices, and it highlights patterns that could be corrected with carrier adjustments.
Auditing saved-down spot quotes and contracts is crucial for keeping carriers accountable and controlling costs. When unexpected charges—like a high liftgate fee—appear on an invoice, you can quickly check the tariff to see if it aligns with agreed terms. Even better, by uploading tariffs directly into your TMS, you can automate this accountability. The TMS will flag any discrepancies in real time, ensuring you’re not overcharged and making it easier to enforce accurate billing practices with carriers. This proactive approach strengthens vendor relationships and keeps your budget on track.
Watch for Reclassification Charges and Density Issues
If you often receive reclassification charges, your internal processes could be at fault. For example, LTL shipments with density-based pricing require precise measurements. If your team isn’t calculating the correct PCF (pounds per cubic foot), you may see added fees.
With a TMS like ViewPoint, you can automate density calculations and ensure the right freight class every time. This minimizes surprises on your invoices and keeps reclassification charges to a minimum.
Auditing Tips: Review Historical Data for Contract Opportunities
Historical data is more than just a record; it’s a powerful tool for finding savings. Auditing past shipments can reveal lanes where spot quotes appear frequently, potentially creating opportunities to secure contracted rates.
By analyzing this data, you can pinpoint high-volume lanes, frequent shipment patterns, and areas where you may have leverage to negotiate better rates. If a carrier proposes a rate increase, you can input the new rates into a rating engine alongside historical data. This allows you to simulate how the increase would affect overall costs across your typical shipping patterns, revealing the true price impact. This data-driven approach ensures you’re equipped to negotiate effectively, targeting high-cost areas and securing the most favorable terms.
Historical shipment data is a powerful tool for identifying negotiation opportunities and understanding real cost impacts. So, if you really are looking to secure supply chain visibility be sure to investigate your historical data. Look for consistent routes or recurring patterns in your freight movements. Shifting these lanes to contracted rates not only stabilizes costs but also strengthens your carrier relationships.
Verify Deliveries with Proof of Delivery (POD)
A completed delivery should always come with a Proof of Delivery (POD). Ensuring every shipment has a POD provides essential documentation and compliance, especially in regulated industries like pharmaceuticals.
Storing PODs for each shipment allows you to verify delivery and creates a secure audit trail. A TMS can automatically archive these documents, ensuring compliance and simplifying retrieval if needed.
Evaluate Cargo Liability Coverage
Liability coverage should match your freight’s true value. It’s important to assess your cargo liability needs frequently and ensure your insurance provides enough protection. If gaps are found, adding supplemental coverage in a system like ViewPoint TMS is easy and cost-effective.
It’s important to assess your cargo liability needs frequently and follow these auditing tips to ensure your insurance provides enough protection. Regularly auditing your coverage helps you avoid financial loss from insufficient coverage and makes certain your cargo is fully protected, especially for high-value shipments.
Leverage TMS Tools for Cost Center and GL Code Accuracy
Automating cost center and GL code tracking streamlines auditing and makes financial reporting faster. Assigning accurate reference numbers for each shipment allows you to audit cost centers effectively, eliminating human errors.
With the right TMS, reference numbers can be generated automatically, providing real-time accuracy in both cost allocations and reporting. This feature allows for efficient auditing of expenses and supports quick, accurate financial analysis.
Simplify with a TMS or Managed Transportation Service
A robust TMS streamlines the entire auditing process, from rate comparisons to documentation. Platforms like ViewPoint TMS automate many auditing tasks, reducing manual workload and enhancing accuracy.
If auditing feels overwhelming, you can also delegate this process to a managed transport service like MyFreightAudit.com. They provide expert oversight to help you identify errors, avoid carrier billing overcharges, and ensure compliance.