Freight Bill Payment Services
Freight audit and payment services are essential for every global shipper. For companies that operate in these complex supply chain networks, the effectiveness of your freight audit and payment (FAP) process can directly affect costs. The process as a whole is no easy task. Improper management will increase your organization’s transportation spending.
A deep understanding of transportation charges—and the shipping industry as a whole—is crucial for mitigating potential overcharges and increasing your business’s bottom line.
We at Trax specialize in freight audit and payment services because we understand what's at stake. Everything from freight costs to freight bills to available capital is impacted when you don't have visibility into freight payment provider data. Read on to learn more about how mission critical this key function is.
Why Freight Bill & Audit Pay (FAP) is Essential
Managing and processing FAP can be a time-consuming, enormous undertaking for companies, especially when done manually. For organizations that send and receive tens of thousands to millions of shipments each month—often through a variety of systems and carriers—an inadequate freight audit process leads to inefficiencies, errors, and excess costs. Freight invoices and freight payments are often fraught with inaccuracies. When your freight invoice and freight payment processes aren't consistent and reliable, you face all types of challenges that impact long-term profitability. Without good data on freight invoices of freight payment, your business intelligence is effectively undermined.
It’s nearly impossible to audit every single freight invoice by hand, meaning your company could be missing frequent miscalculations and errors in cost estimates, which certainly add up over time. Relying on logistics services or freight forwards can be just as risky. In fact, in a typical freight audit process, freight cost estimates can vary as much as 40% from actuals, making it difficult to accurately plan for your business.
Yet, many companies still haven’t partnered with a freight payment provider to help automate FAP, ensure accuracy, and gain deeper insights. To avoid oversights in cost, complexities in third-party logistics, and risk of billing errors, you need to upgrade. As part of your broad transportation spend management processes, as well as to remain compliant with carriers, local laws, and regulations, your business needs an efficient freight payment system.
Freight Payment Process and FAP Options
As your company seeks to avoid overcharges and miscalculations, you’ll want to look to one of two options: in-house FAP or partnering with one of the leading freight payment providers for these services. Here's an overview of both options to help you determine which best suits your organization.
In-House Freight Payment Solution
Freight payment systems can be handled by an internal team that is dedicated to managing and processing bills for your organization. You’ll need to onboard and train employees to handle a variety of tasks, including:
Establishing pricing rules for all transportation modes
Uncovering duplicate charges
Verifying freight rates and charges
Ensuring routing compliance
Freight bill audit protocols
These in-house processes are often completed using paper invoices, which prevent your team from gathering and utilizing valuable, actionable data that can be tracked by a technology solution. Invoices are also complex and require industry and modal knowledge that your internal team may not possess. For optimal logistics management, full-scope transportation spend management software is a great way to access detailed reporting.
Transportation Management Software (TMS)
Many shippers try to use their transportation management software (TMS) for freight payment and freight audits. These tools allow your team to calculate savings for shipments, compare carrier costs, and track shipments. It’s important to note that TMS systems typically approximate your rate structures, which means your company still has to deal with rate miscalculations.
Even teams using TMS software to aid FAP are at risk for errors, as they still require manual input. Your staff will need a high level of industry knowledge to properly input data, and the tool will need to be configured to align with your company’s rules and regulations.
TMS software certainly has many other limitations, as well, such as the inability to capture data, manage data, perform contract reviews, and handle claims resolutions.
Read more: Your TMS Isn’t Enough: Why You Need a FAP Solution
Outsource to a Freight Audit and Payment Provider
A dedicated freight audit and payment provider eliminates manual processes and supports the goals of your supply chain staff. These services support freight carriers and teams by offering the tools and expertise required to manage global shipping transactions across multiple transportation modes and regions. They combine the benefits of TMS software with strong auditing experience, leading to overall cost savings for your organization.
But FAPs go above and beyond TMS software in terms of capabilities. In fact, many freight payment providers go a step further with transportation spend management. There are several unique capabilities total transportation spend management offers that TMS software doesn’t.
Transportation Spend Management
Proper FAP is a foundational building block for total transportation spend management. Transportation spend management is a set of solutions that offer a comprehensive, multimodal, and global ability to manage transportation and transportation-related spend.
Transportation spend management benefits include:
Data capture, management, and enrichment
Transportation spend allocation
Payment system management
Freight spend visibility
Tracking working capital
Managing information flow
Enabling cost allocation projections
Industry, modal, and regional audit oversight
Invoice adjustment and claims resolution
Accrual visibility and accuracy
Accounts payable process tracking
Other financial controls
A comprehensive transportation spend management program begins with an investment in the right freight audit and payment provider. Outsourcing your FAP to a provider with transportation spend management capabilities means gaining contract optimization support, supplier and employee compliance, network optimization, carrier insights, and load consolidation, which are all critical value drivers that can result in immediate savings.
Just as critical as reducing spend is your company’s ability to review and analyze key data points, which can be utilized for higher-level decision-making. Freight audit and payment performed by industry experts with a modern tech stack ensures a solid process that captures in-depth details, resulting in additional long-term savings.
The Benefit of Freight Audit & Payment Services
Freight audit and payment services tackle the responsibility of reviewing your contract and routing compliance and managing all claims, regardless of location or transportation mode. By choosing the right provider for your business, you’ll reap a variety of benefits that in-house FAP and TMS software can’t offer.
In-house auditing and freight payment are time-consuming and leave your organization vulnerable to miscalculations, which can become expensive over time. Likewise, TMS software still requires manual processes that slow down transactions.
With the proper freight audit and payment service, these inefficiencies are eliminated through modern technology that supports high volume and extensibility to other systems, like TMS software and enterprise resource planning (ERP) systems.
In addition to these powerful tools that automate the process for cost-savings and visibility, freight audit and payment providers offer managed services from subject matter experts that understand complex supply chain challenges and take a white glove consulting approach. This means you’ll spend less time worrying about transportation costs and more time focusing on your business.
Your business decisions should be based on accurate, actionable data. Understanding and controlling your transportation spend begins with gaining visibility into a multitude of variables—from fuel surcharges to taxes to volumes to utilization. Having a digital payment process improves financial security, overall business intelligence, and supply chain management. With key tracking and monitoring capabilities, you get visibility to valuable data for essential insights that affect your bottom line.
Growth Aligned with Your Company
Your business is constantly maturing, which means your transportation spend management journey is evolving, too. An experienced freight payment provider that offers robust solutions will have the ability to grow alongside your organization with scalable technology, a strong product roadmap, expert-managed services, and forward-thinking savings opportunities. By choosing the proper freight audit and payment service, your investment will be backed by powerful tools and consultants who can supplement your team for success.
Successful freight payment processes decrease the inefficiencies and errors that lead to increased transportation spend. By relying on a provider that is well-versed in freight auditing and offers modern technology solutions, you’ll have the right support and data to begin reducing balance dues and rebills. Your investment in a strong FAP solution will help you realize immediate savings of 3-5%, and overall transportation spend management—which unlocks 10-15% savings opportunities—as your journey evolves.
Key Capabilities of a Freight Audit & Payment Provider
Not all freight audit and payment providers are created equally, so it’s essential to consider some key capabilities that drive success when choosing a service for your organization.
Verification of Charge Rates and Claims
Your procurement and supply chain teams have worked hard to negotiate specific contracts—but that’s only the beginning. The hard part is verifying that the bills are compliant with those contracts. The right technology can utilize different validation methods based on data to determine the validity of residential surcharges, oversize charges, and more in the carrier invoice.
Establishment of Global Pricing Rules for Auditing
You’re likely sending and receiving shipments through multiple modes of transportation, which means you’ll need a complex set of pricing rules for proper auditing. A rich freight audit and payment service will create those rules based on both modal and contract specifications, which allows for complete audits of base rates, fuel charges, and more.
Invoice Duplication Detection
It can be tedious and time-consuming to manually identify duplicate charges on each individual invoice, but uncovering these errors is another essential part of the audit process. Freight audit and payment solutions can automatically detect duplicate invoice numbers and shipment identifiers to guarantee your balance dues are accurate.
Validation of Routing Compliance
Global shipments, both inbound and outbound, need to be compliant with routing rules. This can be difficult to track and manage for multiple shipments, transportation modes, and regions. A freight audit and freight payment provider that uses flexible business rules to verify the right carriers and services for every shipment allows you to rest easy knowing that you’re always compliant.
Resolution of Claims
Claims management is a time-sensitive process and, if done incorrectly, can result in higher balance dues. It’s critical that your freight audit and payment service can resolve claims quickly to reduce those dues and rebilled charges. Look for a solution that uses both a pre- and post-payment resolution approach based on carrier and region specifications and can work directly with carriers and logistics service providers (LSPs) to review disputes. A powerful service should provide both industry and modal auditors to avoid oversights and reduce errors over time.
Freight Audit and Payment with Trax
A freight payment company can combine the knowledge of industry experts with a modern, cloud-enabled tech stack that can reduce your overall transportation spend, increase visibility, and ensure your organization is compliant—regardless of carrier or region.
Freight audit services from Trax can grow with your business by providing scalable technology and expert payment services throughout your transportation spend management journey.
To see how your organization can benefit from a powerful freight audit and payment solution, contact Trax today.
Trax is the global leader in Transportation Spend Management solutions. We partner with the most global and complex brands to drive meaningful optimizations and savings through industry-leading technology solutions and world-class advisory services. With the largest global footprint spanning North America, Latin America, Asia, and Europe, we enable our clients to have greater control over their transportation performance and spend. Our focus is on your success.