Why Companies Use A Third Party To Audit and Pay Their Freight Bills

Why Companies Use A Third Party To Audit and Pay Their Freight Bills?

Time isn’t on the side of most busy Traffic Managers. The personnel in the Accounts Payable Department aren’t thrilled with the stacks and stacks of freight bills that enter their office each month. Who really has time to breakdown each individual freight bill and make sure each is correct? Not only are freight bills often incorrect but are often billed to the incorrect party. How many freight bills does your company receive each year where: the freight has been misclassified, extra charges have been added on or you received an incorrect discount?

A freight bill audit and payment service (FBA&P service) can audit each and every freight bill for accuracy, classify each shipment with the correct GL code and provide valuable data on the company’s freight. I know in these times we are not looking to pay for any services that can’t save us time and money. The good news is, a freight bill audit and payment service might not cost your business anything. In fact, utilizing a third party service might even put money back in your pocket through the savings they uncover. Worst case, think of all the time your employees will get back to focus on more important tasks.

Typically manufacturing companies or anyone that has a large amount of LTL freight will use FBA&P services. How the service works is simple. The carriers will submit their freight bills to the service directly. The service will review each freight bill against the bill of lading or delivery receipt. The auditor will then review the shipment vs. the tariff or contract on file between the manufacturing company and the individual carrier. The auditor will review the shipment for inconsistency in: classification, weight, discount provided and additional charges. If there is any inconsistency found the auditor will report it to both the customer and the carrier. Once the freight bill is corrected it will be submitted for payment.

Most manufacturing companies rely on multiple carriers to move their outbound, inbound and third party freight. Multiple carriers and multiple shipments can stress an accounts payable department with hundreds, even thousands of freight bills each year. Utilizing a FBA&P service will allow an accounts payable department to pay all of their carriers and all of their freight bills with one electronic payment per week.

FBA&P services find mistakes, correct freight bills and typically save companies money. These services also make the life of an accounts payable department much easier. The value of using an FBA&P service goes beyond these two points. For many shippers the data collected by the service is invaluable. As freight bills are processed data is collected by the service to the specifications of the customers. From the data collected invaluable reports can be created that will tell a company who to bill and for what shipment. Reports can often be sorted by: volume of each carrier, destination, weight, accounting code, inbound, outbound or third party freight.

Industry estimates put the typical domestic savings from auditing freight bills at two to six percent.*

Submitted by Greg Lefebre, General Manager of Integrated Logistics & Associates a twenty year old Freight Bill Audit & Payment company located in Farmington, NY. * Inboundfreight.com

From the Auditor’s Desk

If your AP Department is auditing hundreds of invoices per week, it’s not as easy as it may seem.  When changes are made, it’s easy to mix up the right from wrong.  On August 10, 2017, the NMFTA announced that the freight classifications were changing.  The biggest change in classifications is with density items.  Sub 4 (products with a density of 4-6 pounds per cubic foot) were raised from class 150 to class 175. But that’s not the end of it. There are new item numbers, additions and subtractions from what product falls under what item number, and new rules about packaging and transporting certain goods.  Does your AP staff have the tools to know when and what gets updated in the auditing world?  An incorrect classification could result in just one freight bill being over charged by hundreds or even a thousand dollars.

From density items to hundreds of NFMC numbers, it’s easy to make a mistake.  Is the shipper over charging you?  Are you sure you’re being billed correctly for the freight you are moving?  Is your product really that NMFC number? Are they billing the correct density?  Is a dimensional fee applicable to this invoice?

Here at Integrated Logistics, we know how important it is to learn the ins and outs of your company. From the contract, to the products you ship, we know it’s critical for each and every one of your invoices to be correct.  Why not let us make sure you aren’t over paying on your freight costs!

Integrated Auditing Team

Losing Control vs. Saving Money

Do you have to give up control of your logistics to save money? Answer: No!  So many companies use titles like 3PL or 4PL.  These companies will typically demand total control of all of your shipping decisions to potentially save you money.  Sometimes jumping into a marriage or partnership before a long engagement period is a bad idea.  Using a logistics consulting firm instead of inking with a 3PL might be the way to go.

I think consulting firms often get a bad rap.  Knowledge is power and typically leads to efficiency.  Efficiency when it comes to logistics has to equal savings.  Maybe it’s time to stick your toe in the water with a third party consulting firm that isn’t looking for control of your business.   

Improve your supply chain without giving up total control.  http://www.intlogistics.com

How Many Freight Bills Just Get Paid?

How many freight bills just get paid?  Does your accounts payable staff have the experience to know when an LTL invoice is correct?  We just received a customer’s invoice the other day that I’m guessing most AP people would have paid. The invoice was for $500 after the carrier’s very generous $1,200 discount.  A $1,600 shipment that is only costing my company $500, why wouldn’t I pay this invoice?

Let’s look further at this invoice.  Is the class on the invoice correct at 250?   Or based on the density of the commodity shipped, is this invoice really supposed to class 125?  You guessed it, it was supposed to be class 125.  Now that $500 invoice is only $250.  Your company was just charged 100% more than it should have been.   Would you pay $5.00 for a $2.50 gallon of milk at the store just because the scanner said so?

Maybe it’s time to bring in a third party expert that can review each and every one of your LTL invoices for less than $1.00 per freight bill?