Freight Audit & Payment: The 10 best practices
Freight Audit & Payment is increasingly becoming a commodity in the global Transportation environment. Moreover, we have noticed that the approach of Freight Audit is becoming more strategic. Many companies are looking beyond quick costs savings and use Freight Auditing as a profitable tool for Logistics optimization and Visibility.
Freight Audit has a lot to offer. However, it is a deceptive term as the name does not cover its’ promises and deliverables. Freight Audit is in its basic form checking and verifying of invoices to ensure that you pay the right amounts to your carrier. However applying that principle in a strategic way means that you have correct and undisputed data which serves many purposes that bring you savings, value and efficiency in all of your processes around logistics.
In this blog, we share with you the 10 best Freight Audit practices for Transportation and Finance professionals of 2016.
• No more paper, automation!
When you have the chance to force change upon your organization and your carriers make everybody go paperless, it makes the process more efficient and faster thus cheaper. This is a change a Freight Auditor should facilitate. There is only in a few countries a requirement to have the invoice in a paper format but in most cases, you should be able to get rid of it.
• No PO process
Rigid 1 to 1 processes often do not work with freight invoices as there may be data inconsistencies and unforeseen costs. Often there is such a focus on a PO that there is no process for add-on costs afterwards which then take a lot of time to be solved. A PO often indicates often only the estimated costs which may differ from the end cost. These costs are often hard to calculate with conventional systems. Better have a Freight Auditor take a holistic approach to all the cost components in such a way that all the costs can be adequately captured and dealt with.
• Show flexibility towards your carriers
If carriers are forced too much out of their comfort zone in terms of data format requests, specific processes, interfacing, etc things could progress very slowly and will take a long time, a good Freight Audit provider is flexible towards the carriers and is able to adapt to them to ensure on-time onboarding.
• Top down approach
Best set up in this business of bringing change to the organization is ensuring that management has committed itself to the project setting milestones for the rest of the organization to follow. This way the organization will have to comply with the set goals.
• Think and act strategically
The impact of Freight Audit goes much further than many think. The deliverables can stretch well into the sales and finance organization and not only in logistics. It also touches more points in logistics operations than one would think. Taking a holistic and broad view to the implementation of a Freight Audit and Payment structure is key to the eventual success and savings you will achieve.
• Standardize your rates
While implementing Freight Audit a lot of time is spent on ensuring that the rates are clear and well set up in the system. A good Freight Auditor will actively support you on making rates more simple, setting limits to accessorials and helps you to harmonize other cost mechanisms, this is not a one-time exercise but more ongoing but will deliver great benefits and will make the process for everyone more efficient.
• Automate your cost allocation
With an advanced freight audit platform, all the freight costs will be allocated automatically based on your cost centers and coding matrix, this will be sent automatically to your General Ledger via an interface, greatly reducing the workload in your AP or Finance department.
• Don’t use a scanning center!
Scanning centers are an unnecessary step in between as they make the process more laborious while the carrier send their invoice or their electronic invoice data file directly to the Freight Payment provider which is more efficient and more cost effective.
• Don’t use generic e-invoicing platforms
These platforms do the job for many invoices but the problem is that they capture only limited information which is not good for the details of a transport invoice. This means that in such a set-up there always needs to be a workaround process to capture and process more data. That is why this can better be avoided altogether.
• Work towards full logistics visibility
Take a broad view at Freight Audit and enjoy full transparency which will lead to superior reporting as for example cost to serve, shipping profile reports, a full understanding of your accessorials, of the spot shipments being used and much more. The visibility will support you to further enhance your organization.
About ControlPay Freight Audit & Payment
For over 12 years, ControlPay has been a leading Global and EMEA Freight Audit company with its headquarters in Breda, the Netherlands. For more information regarding our Freight Auditing Services, Data capabilities or extra service offering, please don't hesitate to contact us via email@example.com
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