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7 Questions to ask Freight Audit Companies Before Outsourcing


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18Jan
Read Time: 4 minutes

Every dollar saved through freight auditing is a dollar added to your profits. An excellent outsourced freight audit company can give even a small company as much as two times the cost of implementing and running a freight audit plan in-house. For larger companies, savings can range between 5 to 15 times the expenditure incurred in partnering with specialized freight audit and payment providers.

The problem is that most shippers are not optimizing their freight audit process and, as a result, not adding these cost savings back into their profit line.

While shippers prefer to outsource rather than setting up a prohibitively costly in-house freight auditing system, not all freight audit and payment companies are created equal. Choosing the best fit is often challenging.

What to know before choosing a freight audit and payment company

Errors happen!

International freight can have wrong weights entered or agreed to discounts not applied. Domestic road freight has even more opportunities for mistakes. They often lack a hard-coded process, and there are more human touchpoints. A single-digit error can cause a loss in thousands if it gets into the system. You need to be confident that your freight audit company will catch this out.

If cost-saving is all you expect from your freight audit company, then proof of efficiency is all you need. However, many freight audit partners will offer multiple services and supporting tools. Business intelligence is essential, with freight visibility and actionable data now becoming an added requirement.

It is essential then to first decide on the ROI you expect from outsourcing freight auditing. The questions you ask will flow from these goals. Here is your 7-point checklist to evaluate your freight audit company.

Also, read Auditing Freight Invoices Internally vs. FBAP Service Providers.

1. Reputation and financial stability:

This should be the starting point of any checklist. The freight audit universe is large and deciding on a partner must take into account quality references. It does not stop there; it is just as important to know how long they have been active in this niche. After all, expertise is not built overnight. Then comes the assurance that the company is financially stable not to leave you in the lurch or misappropriate the funds (if they deal with payments).

2. Technology

Technology is the starting point for all freight audits, and technology changes at a breakneck pace. You must ask about their IT audits and certifications to ensure that “legacy” systems don’t hinder auditing, reporting, and analytics. Highly automated processes will ensure that your people only need to come in for exception handling.

Typical service providers will have freight audit software integrated with your freight management software and BI systems for tailored reporting and analytics.

3. Consolidate freight invoicing

Consolidating freight invoices as a practice can prevent workarounds by your logistics and finance teams. Every parcel, right up to a truckload, will produce paperwork. Add to this that a company will be dealing with multiple carriers and different modes of transport. Invoice consolidation for all shipments by each carrier your company deals with can be automatically merged in the TMS software. This can help you pull out or sort your shipments by different criteria, making life much easier for the finance department.

Surprisingly this cost-saving measure is often overlooked when evaluating a freight audit companies. Look for freight audit and payment providers that process full freight payments and implement a consolidated freight invoice payment for all their clients.

Also read: 3 Ways Logistic Providers Are Automating Manual Processes.

4. Global expertise

Global shipments must be compliant with different routing rules. Ensure that the Freight audit and payment provider you hone in can verify carriers and track multiple shipments using various transportation modes, tax laws, and geographies.

Knowing the logistical differences in Europe or South Asia, or the American subcontinent is an integral part of accurate invoice auditing. Another question to ask your freight audit company is their ability to handle different currencies and in-house expertise with other languages.

5. Real-time visibility and robust reporting

Your goal might be to reduce overall spend through process improvements and identifying problem areas. Any invoice audit provider worth their salt will assure rapid normalization of data. Yet you might end up waiting for days, if not weeks, instead of the minutes or at the most hours it should generally take to load data. A proof-of-concept can answer these questions.

6. Fully manual, fully automated, or a combination?

A service provider that provides freight audit services through an integrated process offering will ensure you recover all potential overcharges. For example, if the freight audit automation is integrated along with the transport management system, the TMS can automatically catch any variance. The freight audit customer representative then looks at only invoices with variance and works with the carrier to correct them. This can go into the exception handling, and new rules can be set to prevent future occurrences.

7. Pricing

You get what you pay for, but what happens if your expectations don’t meet reality? Many companies can find low prices the pivot of their decision-making process but end up paying for is essential services. Always be wary of a freight audit company that positions itself at the low end of the market pricing. They might not be qualified to help you get your freight rates and assessorial costs according to the market.

About iTech

As a US-based company, our account managers take a real partnership approach. Our expertise gained through decades of experience in this industry ensures you are in good hands.

If you would like to know more about our processes and systems for freight audit services, contact us for an exploratory meeting.


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