Virtual Transportation Management, Inc.

Everything You Need To Know About Freight Audit

Freight audit is a critical part of any shipper’s control system over their spend. Check out this guide for an overview of everything you need to know about freight invoice audit & how VTM saves our clients 2-4x their processing fees.

  • What is freight bill audit?

  • The challenges behind effective freight audits.

  • VTM’s freight audit services.

freight audit process

What is Freight Audit?

Freight audit is a critical part of any shipper’s control system over their spend. Research suggests that many of your freight invoices contain issues that can only be detected with a detailed audit of each shipment.

At its core, a detailed freight invoice audit involves a deep dive into each invoice, reviewing & verifying the charges issued by carriers against the agreed-upon terms, rates, service failures & completeness of data. This process encompasses checking for discrepancies such as overcharges, duplications, inaccurate freight classifications & unapplied discounts. By carefully examining each line item & comparing them with the contract terms, shipping quotes & other relevant documentation, freight audit providers like VTM can identify billing errors & ensure shippers are only paying what they owe for a shipment.

Invoice pre-audits are the only way to stop overcharges & data inaccuracies before money leaves your bank account. An effective pre-audit is no simple task, but freight audit & payment providers like VTM have developed complex systems & teams of experts that detect issues with your freight invoices for you.

At its core, a detailed freight invoice audit involves a deep dive into each invoice, reviewing & verifying the charges issued by carriers against the agreed-upon terms, rates, service failures & completeness of data.

Do I really need my freight invoices audited?

The importance of freight invoice audits cannot be overstated, as they directly impact a shipper’s bottom line. Inaccuracies in freight billing can occur due to various reasons including human error, system glitches, or misunderstandings of complex freight rate structures. These errors, if left unchecked, can lead to significant financial losses over time.

Additionally, freight invoice audits enable shippers to gain deeper insights into their shipping costs & operations, helping them to make more informed decisions about carrier selection, shipping methods & cost optimization strategies. This level of scrutiny also encourages carriers to maintain high standards of billing accuracy & transparency, fostering a more trustworthy & efficient supply chain ecosystem.

How much can a freight audit save?

The potential savings a shipper can realize by taking advantage of a freight audit provider like VTM can be substantial. The savings you specifically can expect varies depending on several key factors such as your shipping practices, the modes of transportation you have & the diversity of your carrier mix.

2-4x

Typically, VTM shippers save 2-4x their processing fees in audit savings. For shippers with extensive shipping operations, especially those utilizing multiple modes of transportation or those who frequently incur a large number of accessorial charges, the likelihood of billing discrepancies increases, thereby amplifying the potential for savings.

Additionally, freight audit providers often bring more than just error detection to the table – they offer other value adds like insights into optimizing shipping routes, carrier performance analysis, contract negotiation support & advanced analytics, which can lead to further cost efficiencies beyond the immediate corrections of billing inaccuracies. In essence, the value of partnering with a freight audit provider extends well beyond the direct financial recoveries from invoice errors, contributing to more strategic & sustainable shipping cost reductions.

Ready to start saving on your freight spend?

The Challenges Behind Effective Freight Audits

Conducting an effective freight audit is difficult for shippers of all sizes, in all industries. The nature of the logistics industry presents a set of challenges that require great attention & specialized expertise. The primary obstacles we have seen shippers going it alone face fall into a few categories:

  • Lacking expertise with internal resources
  • Rate complexity
  • Efficiently handling scale

For shippers that are with the wrong audit partner, the headaches can be even worse. Lack of transparency, miscommunication & failure to meet expectations erode trust & can be a real issue in this industry. Changing audit partners is risky & can be disruptive when the change is not managed correctly, so it is critical that you select a partner with a well-defined implementation plan.

Lacking expertise with internal resources

Freight invoices are not like the other invoices you AP team is processing. Freight invoices are more difficult & complicated to validate, more expensive to troubleshoot & more likely to have incomplete or inaccurate data than invoices for your goods or services.

Some of the things we see most commonly stump AP teams include:

  • Meeting carrier payment terms – Your freight invoices likely have some of the shortest payment terms on your books. This is a necessity for many carriers based on the current economic conditions. Delays in invoice processing because of trouble receiving documentation or validating the charges can lead to missed payment & credit holds more quickly than it would for your material suppliers.
  • The meaning & applicability of accessorial charges – These additional charges applied for services beyond standard pickup & delivery can vary significantly by carrier & situation. Some of the most common charges include fees for residential delivery, lift gate service, inside delivery & storage. Identifying & validating that these charges are appropriate for a given shipment requires a deep understanding of carrier practices & an examination of service details.
  • How to resolve discrepancies – Even if your AP team does uncover an issue with an invoice, the resolution can be time consuming, expensive & ultimately not worth pursuing without the right tools & carrier contacts for proactive dispute resolution.
  • Substantial IT resources required – Any solutions that ease the burden of these challenges require technical solutions & IT resources that many shippers do not have available. When the resources do become available, projects end up running behind schedule & over budget.

Shippers need resources with real logistics expertise backed by the right tools to effectively do the job. These are all things that even the most seasoned AP veterans do not have.

Freight invoices are more difficult & complicated to validate, more expensive to troubleshoot & more likely to have incomplete or inaccurate data than invoices for your goods or services.

Rate complexity

Freight rate structures can be complex & carriers like it that way. The harder it is for you to understand what you are agreeing to in your annual bid, the more likely it is they can add extra costs to your shipments. Your carriers know exactly what they are doing & you need real expertise on your side.

If you have not negotiated rates with carriers or rely primarily on the spot freight market, the challenges continue to grow. The use of dynamic pricing models by carriers, influenced by market demand, capacity, fuel costs & other variables, means that shipping rates can fluctuate frequently. Keeping track of these changes & verifying that the correct, approved, rates are applied to each shipment can be particularly challenging.

These challenges compound further as you introduce more carriers, modes of transportation & exceptions to your audit process. In our nearly 30-year history, VTM’s industry veterans have seen it all & know how to design solutions with speed, accuracy & service in mind.

Efficiently handling scale

Even if your AP team does have a logistics expert on staff, the sheer volume of invoices & the granular detail contained within each invoice will quickly overwhelm them. This is especially true for shippers with extensive shipping operations. The dynamic nature of shipping rates, accessorial charges & fuel surcharges further complicates the freight audit process, requiring auditors to be constantly updated on current rates & contract terms.

Integrating & harmonizing data from disparate sources, including various freight invoice formats, contracts & shipping documents, poses another significant challenge, necessitating sophisticated data management & analysis tools. Moreover, the negotiation & recovery process for identified discrepancies can be lengthy & requires strong negotiation skills & industry knowledge. These challenges underscore the need for specialized freight audit providers who not only navigate these complexities with expertise but also leverage advanced technologies to streamline the audit process, ensuring accuracy & efficiency in uncovering & recovering billing inaccuracies.

Leveraging technology to automate & facilitate the audit process is essential for handling large volumes of invoices & data. However, implementing & maintaining the necessary software solutions, as well as integrating them with existing systems, adds an additional layer of complexity. Even large shippers find that the cost of implementing, supporting & maintaining a specialized system is not feasible.

VTM’s Freight Audit Solutions

Implementing a robust freight invoice audit process requires a blend of industry expertise, attention to detail & the use of specialized audit software. Many shippers choose to partner with VTM because we offer expertise in navigating the complexities of freight contracts & billing practices.

As technology & data analytics have evolved, freight invoice auditing has become more sophisticated, enabling shippers to achieve greater savings, enhance operational efficiency & build stronger relationships with their carriers. With a carefully crafted freight invoice audit process, shippers safeguard against unnecessary expenses while ensuring their logistics operations run smoothly & cost-effectively.

VTM brings solutions that capture savings while managing & improving carrier relationships.

Advanced Audit Solutions & Expertise For Shippers of All Sizes

For nearly 30 years, VTM has been trusted by shippers of all sizes to find savings. We have spent that time refining our robust audit system that pairs complex data validations with expert feedback to find every penny. Our advanced rating system checks each invoice against your negotiated rates for the lane & the shipment contents, including any accessorials billed. Our audit also covers validating critical information like B/L Numbers, dates, quantities, locations & many other fields based on your unique business rules.

The best part – you are never on your own when you are with VTM. Our teams of experts understand your business, scenarios, documents & products, which helps them find more savings & spot concerning trends to discuss with you.

Proven Audit Savings

Many freight audit & payment providers are making big promises about savings. But, do they back those promises up with a clear & easy way to hold them accountable? VTM does.

Transware’s Audit Value Realization Scorecard is a simple, transparent, way to track your net hard-dollar savings & the return on your investment.

Transware Audit Overcharge Detected

Relationships That Last

VTM helps improve relationships all around your organization by simplifying complicated processes & clearly communicating to each of your stakeholders.

With VTM, your logistics team always know how many invoices are waiting to be processed, your finance team has clear visibility into cash demands & your carriers also enjoy VTM’s experienced & professional carrier helpdesk. We partner with your carriers to educate & inform them about the payment process.

Ready to start saving on your freight spend?

Put VTM to work validating your invoices against custom business rules & watch the savings add up.

Connect with VTM today to get a free demo and to get started.

By submitting my data I agree to be contacted

Our Solutions Solve Real Problems

Accurate Accruals & Cost Visibility

Accurately accruing costs for shipments is one of the biggest challenges for shippers of all sizes. To produce accurate accruals, there are a lot of moving parts but VTM’s expertise and tools can help simplify the process and drive better results.

More Accurate Accruals & Cost Visibility Benefits The Whole Team

Learn about how a national shipper of industrial materials & supplies took advantage of our easy integration process to get accurate shipping costs upfront and make planning easier for all of their teams.

10 minute read

Quick & Easy Onboarding
Analytics Deep Dive
Transware for Freight Audit Payment Image
Least Cost Carrier Insights

Never overpay for a shipment again. Get VTM’s Transware platform to improve visibility, decrease cycle time, and improve carrier relationships.