Freight Invoice Audit: An Essential Process to Ensure Zero Profit Loss Due to Freight Invoice Processing
The digital era and the Covid situation has resulted in an eCommerce boom. Millions of products are being purchased online by customers all over the world. Due to this every single day millions of goods and materials are being sent across the country. This has given rise to a need for well-coordinated carrier networks that can deliver goods and materials as per the need of the customers.Â
For companies, their success to a greater extent is dependent on the efficiency of the freight shipping network. Hence, a large portion of their total cost is spent on these freights. Because of this, any error in the freight invoice processing can add up to a significant cost which can have a marked impact on the company’s profitability. Â
As transactions are huge there is often a heap of freight invoices that need to be processed by the company, and this becomes a challenge at times for them to manage without any error. To ensure that companies do not lose profit due to an error while freight bill processing, frequent freight invoice audit is required to be conducted.
What is Freight Invoice Audit?
A Freight Invoice Audit is a business process that ensures that the actual freight invoice placed to a company for payment matches with what the carrier company had quoted at the time of shipment. In this process, the freight invoices are examined, verified, and adjusted to bring accuracy. The comprehensive process has three goals:
• Checking for Errors: The freight invoice audit checks whether the figures align with the price quote by the carrier company
• Looking for loopholes in the entire shipping process: Identification of the loopholes can help the company to save money by making their processing better by covering the loopholes.
• Serve as a learning tool for the company: The freight bill audits provide significant insights regarding the company’s strengths and weaknesses in the entire process. A freight invoice audit can also help a company understand market trends and forecast future freight expenditure. It can also help in making strategies for having a more efficient shipping process in place.
The primary objective of a freight invoice auditing process is to check for errors in the freight invoice processing. The first thing which is checked is if there is a duplicity of bills. Some of the information in an invoice that is checked during this process are:
• Carrier information
• Shipper’s information
• Tracking number
• Bill of Lading
• Mileage
• Shipment weights
• Price
• Discounts
In case an error is found, the freight audit and payment company, if appointed, would reach out to the carrier to get the invoice rectified.
What are the Major Errors?
Other than the normal human errors while preparing the freight invoice audit, some errors are often the cause of the variance. The four major ones are- Â
The inaccuracy of Shipper’s Information: This happens when the company staff while processing the shipment, makes a mistake causing the carrier to obtain the wrong set of information about the shipment. It can be something like an incorrect weight of the shipment.