Freight Audit and Payment Services: Stacking Up Savings

audit

Freight bill auditing and payment has long been about leveraging data—scrutinizing invoices to discover billing mistakes that can cost shippers thousands of dollars in erroneous rates and accessorial charges. No question, ferreting out errors is still important. But many freight audit and payment companies are now delivering an entirely different set of benefits using the data shippers share about their freight bills.

Today’s freight audit and payment services focus on applying deep analytics, married with supply chain consulting expertise, to glean insights from data—then delivering those findings quickly and clearly to help shippers drive both tactical and strategic decisions that improve supply chain efficiency and remove costs.

Increasingly, those needs and expectations don’t apply just to shippers’ domestic freight bills. More shippers are seeking the same level of visibility and analytics about international freight activity, unified in a single platform with consistent formats that resolve differences in language, currencies, units of measure, and other variables.

To meet these needs, freight payment and audit companies are investing in technologies, processes, and expertise to deliver value to shippers—and differentiate themselves in a crowded marketplace.

These developments have considerably driven up the value freight audit and payment customers receive for their money. Current rates for audit and payment services are 40 percent lower than they were 10 years ago, one provider estimates.

Not all shippers have their freight bills thoroughly audited. Many freight audit and payment customers are large companies, although activity among mid-size shippers is rising. Of those companies that do engage a freight payment auditor, only a fraction take true advantage of the full range of services they’re paying for.

MOre for your MOney

Many freight payment companies offer services in addition to auditing and paying invoices. For example, these invoices provide a complete picture of a shipper’s supply chain, while the data forms a snapshot of the supply network’s current design that freight audit and payment providers can query and scrutinize to better understand what’s going right, and identify opportunities to improve efficiency.

Analyzing the data can reveal trouble spots that shippers and carriers can address to head off future costs, such as unnecessary accessorials or incorrect mileage calculations. A deeper look can drive strategic decisions about issues such as carrier rate negotiations and facility site selection.

On the Up and Up

To enhance these value-added offerings, and help shippers reap greater insight from their data, many freight payment companies are continuously upgrading their IT platforms and professional services.

“Shippers are increasingly turning to us for data analytics,” notes Allan J. Miner, president of Cleveland-based CT Logistics, which provides post-audit, pre-audit, freight payment, business intelligence, transportation management consulting, and global transportation management systems (TMS).

“Our Professional Services Division helps shippers with challenges such as rate analytics, benchmarking, and bid analysis. Our clients receive the full expertise of a seasoned logistician who can help them use the capabilities of TMS and data analytics, and provide specific supply chain consulting. By outsourcing to CT Logistics, the shipper doesn’t have to hire a full-time employee to perform those tasks.”

Everyone Benefits

Freight payment data can reveal a lot to shippers about their business. In response to customer feedback and requests, many freight payment companies have developed new types of services, improved reporting capabilities, and added more telling key performance indicators (KPIs). Projects initially customized for one customer often develop into a product any freight payment customer can take advantage of.

For example, Austin, Texas-based logistics IT service provider Fortigo receives frequent customer requests to conduct closed-loop audit services—cross-referencing freight data elements with corresponding information from their sourcing, visibility, or manifesting systems. While a freight invoice may seem accurate, cross-referencing can reveal discrepancies—for example, a service the shipper requested may be different than the service the carrier actually provided, calling for a chargeback.

Shippers also are expressing growing interest in real-time reporting, which allows them to view KPIs online and drill down for more granular data, rather than waiting for periodic reports, notes George Kontoravdis, president of Fortigo. Another common request is route optimization based on historical shipping data, which shippers can also use to improve the routing guides they issue to suppliers.

“The freight audit process uncovers numerous findings shippers can funnel into their decision-making,” notes Kontoravdis.

Many shippers have set a goal to measure the true landed cost of their goods by SKU, order number, or other metric. But calculating true landed cost has proven challenging because of all the variables that impact it, and the difficulty in gathering its components—including accurate invoices, customs duties, taxes, and accessorials.

Some freight payment companies, including Carmel, Ind.-based supply chain consulting and IT services firm enVista, are enabling shippers to overcome these hurdles by compiling all the data needed to calculate a true landed cost.

“Once shippers know the true landed cost of their goods, they can use historical data to better plan, predict, and execute future performance for events such as key product launches or peak seasons,” explains Doug Kahl, vice president of sales for enVista.

All Data Under One Roof

Some providers complement their freight payment and audit services with a full TMS to tender and track customer shipments. At Memphis-based supply chain management and technology provider CTSI-Global, about 70 percent of clients use at least some modules of the company’s TMS, in addition to its freight audit and payment services. Some customers use CTSI-Global to supplement in-house functionality; others entirely outsource shipment tendering and tracking.

Housing all the data in one place means shippers can gather the information they need from a single source—rather than collecting various components from carriers, freight payment companies, and TMS solutions—to gain full supply chain visibility.

“Companies can access one global data warehouse to analyze on-time deliveries or shipping cost per unit, for example,” explains Brian Scott, senior vice president, global sales, at CTSI-Global.

Other providers blend freight payment and audit services with financial services. “The more advanced customers want help managing cash flow to maximize their advantage,” says Rick Erickson, global director of freight payment solutions for financial services company U.S. Bank, headquartered in Minneapolis.

“Extended term financing, for example, allows shippers to maximize cash on hand without delaying payment to carriers,” he explains. “We pay carriers on their due date, but the shipper doesn’t have to repay us for 90 days. This service essentially extends the shipper’s terms with carriers without having to renegotiate contracts, which could potentially result in increased freight rates.”

 

Source: Inbound Logistics

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