Aparajith Vangal   15th Jan 2023

freight audit process

Freight billing errors, duplicate freight bill payments, complex tax rules of different countries; All this data requires efficient auditing by companies for better freight management. The freight audit process appears complex and difficult to comprehend for many businesses. But, an expert can pool-up all the relevant data and audit the freight bills. In this article, we will discuss the challenges faced by shippers during the freight audit process.

Why is the freight audit process complex?

Freight tariffs are complex, which are negotiated at the time of agreement between the shipper and carrier. It requires SME’s to understand the Freight tariffs, invoices and ensure proper billing by the carrier.

Freight rates proposed by shipping carriers change frequently; it could be due to fuel prices, tariffs, etc. That’s why freight auditing is vital for shipping companies. But, the freight audit process appears complex as it requires detailed invoice checking, diligent staff, and scheduling carrier payment in time.

The process becomes complicated when shippers have in-house manual audits that are not error-free. Also, the traditional way of freight auditing is time-consuming and stretches resources. Shippers face many challenges during the freight audit process.

The six common challenges faced by shippers during the freight audit process

The traditional way of auditing freight invoices does not solve the root cause of freight billing errors. Further, auditing involves disputing billing errors with the carrier, keeping track of freight disputes and requesting corrected invoices from shipping carriers. So, here are six challenges shippers face and the solutions to overcome these challenges.

  • Duplicate invoicing

Shipping carriers invariably issue duplicate freight invoices, companies dealing with huge shipping volumes receive thousands of freight invoices every year. Without proper auditing, businesses pay multiple times for a single invoice; thus causing huge loss of revenue.

  • Discrepancies in freight rates

Freight rates change constantly, but some companies use old freight rates during price calculations. It leads to confusion and disputes between the companies and the shipping carriers. Discrepancies in freight rates lead to inconsistencies in invoices and quotes.

  • Incorrect freight classification

Freight classification (NFMC) for shipments is essential for calculating shipping charges. This classification has 18 freight subclasses with different specifications for density, size, stowage, and liability of the goods shipped. Error in identifying the correct NFMC code for calculating freight charges will prove costly for shippers.

  • Shipping discounts

Shipping carriers offer discounts to their regular clients. Shippers can negotiate with shipping carriers for the best shipping discounts for freight shipping. However, if contract negotiations with shipping carriers are not updated regularly, shippers can lose out on the shipping discounts.

  • Tax and Tariffs

Applying tax rates for state, federal, and global shipping is vital for calculating freight charges. Wrong taxes or incorrect custom duties will affect the entire shipment. In addition, if taxes are not a part of the invoices, it will cause a delay in shipments, wasting valuable time and money.

  • Accessorial fees

Surcharges or accessorial fees influence freight shipping costs. It is essential to have an accurate accounting of Fuel surcharges, terminal handling surcharges, emergency bunker surcharges, peak season surcharges, etc. The wrong application of surcharges will lead to incorrect invoices and needs to be disputed with carrier..

These are some of the challenges faced by freight shippers that need quick resolution. The manual freight audit process involves teams that manage payment exceptions and vouchers. Further, the overworked staff of the audit teams is prone to cause human errors. So, it is essential to have digital solutions for optimizing shipping processes.

What are the solutions to overcome the challenges?

Technological innovation strategies and their implementation assist in the management of freight auditing. Automation of freight documents like freight billing will eliminate duplicate payments. Each invoice is validated to prevent overpayments with the help of effective auditing systems. In addition, shippers get greater visibility of the freight rate system with automated reports and innovative dashboards. With state-of-the-art freight post-billing solutions, shipping companies can understand freight classifications. Freight auditing software streamlines audits of freight invoices. Its real-time data helps in better negotiations with carriers for shipping discounts. In addition, it can schedule disputing errors with carriers in optimal time and receive corrected invoices without any hassles. Data accuracy ensures accurate tracking and monitoring of freight surcharges to shipments. Hence, state-of-the-art technologies and strategies help in effective freight management.

Benefits of partnering with Audintel

A freight audit provider, Audintel, provides quick audit solutions for freight billing inaccuracies. Shipping companies can improve their business processes with an efficient freight audit process which consists of 25 audit points. At Audintel, we do three-way match file audits that compare and validate the invoices of the shipping carriers and the shipment files. In addition, we carry out audits on freight rates, duplicate invoices, accessorial charges, and fuel surcharges. Our freight audit tools help in requesting corrected invoices from shipping carriers. We track and monitor accessorial fees so that our clients do not overspend. Our negotiating team experts conduct carrier contract negotiations for our clients and save money.

Final thoughts

Freight auditing may appear complex with complicated terms mentioned by shipping carriers. A trained eye can detect freight billing errors and claim corrected invoices immediately. With real-time intuitive dashboards and expert analytical resources, Audintel reduces freight costs and gives our clients a competitive edge. We, at Audintel, streamline the freight audit process for our clients. Discover more by reaching us, or by checking out the Audintel website or contacting us at 408-675-2750.