How to Evaluate Freight Audit Companies
Audits, love them or hate them, are an essential part of the business process. For most, the word sparks thoughts of an army of processors tediously combing through a stack of freight invoices and payments. This manual process is slowly giving way to a more digitized system where information is easily aggregated, deciphered, and turned into actionable insights.
As the supply chain has become more complex, so has the audit process. In recent years, organizations have started turning to freight audit companies to help streamline the process and reduce operational costs. However, finding and evaluating a freight audit company can be a daunting task.
A freight audit company will inevitably affect an organization’s bottom line, for better or worse. So, it pays to put them under the microscope and assess them with scrutiny. Knowing what to look for and potential pitfalls will help you find a solution that meets your current needs and can easily scale alongside your business.
Trax is a global leader in the freight audit and payment (FAP) industry, helping to simplify the complex challenges of transportation spend management through cutting-edge technology, machine learning, and artificial intelligence.
Understanding Freight Audit Companies
Before we can jump into the deep end, let’s cover a few basics to get you started. Freight audit companies cover a lot of ground and can impact several areas of your business.
First and foremost, freight audit companies are built to examine, verify, and adjust freight invoices. Most companies that handle this process internally go through these steps post-payment. In contrast, freight audit companies will put systems and processes in place to catch potential errors on the front end, saving time and money.
But the role of freight audit companies, like the supply chain itself, has evolved to include regulatory compliance, contract management, freight rate monitoring, customer service, and more. These processes are accounted for with a traditional business model, but they may be disjointed. Different processes may be in place to collect information or third-party data, leading to prolonged processing times and potential blind spots that limit insights.
Freight audit companies, and the FAP technology they leverage, centralize the process. Information is aggregated in a single platform, resulting in more reliable data, reduced overhead, and improved scalability.
The Benefits of Partnering with Freight Audit Companies
The central theme with any freight audit company evaluation will inevitably revolve around ROI – and rightfully so. The following four benefits should be measured and weighed as much as possible through the evaluation process.
At the end of the day, the goal is to put processes and systems in place to reduce transportation management costs, plain and simple. By catching potential invoice errors and correcting them before payment is made, you save money in two ways: with the payment itself and by eliminating the man-hours needed to identify and resolve with a post-payment process.
While this may be the first cost center you look at, it is far from the only one impacted by a FAP system. Fines associated with failed regulatory compliance, new vendor acquisition costs, and more can be reduced when you have reliable, comprehensive data.
Error Detection and Resolution
Manual auditing is an imperfect process, at best. Even the most experienced auditors won’t catch 100% of errors that come across their desks; even if they can catch the majority of issues, they only have so much bandwidth.
Tools powered by machine learning and artificial intelligence work constantly in the background, scanning data with the sole purpose of detecting anomalies and reporting potential errors. Factors constantly fluctuating, like freight rates, are analyzed in real-time, so even if a set of eyes is still involved in the verification process, it can happen before payment is issued.
As you evaluate a potential freight audit company, don’t overlook the potential value of data insights. Transitioning to a centralized digital process means you will have access to data that is accurate, comprehensive, and relevant.
Post-payment audits may generate data, but it more often than not, outdated and missing components, leading to a reactionary approach to decision-making.
With improved error detection and resolution, the payment process will inevitably improve. The process of manually issuing payment is replaced by an automated process when leveraging FAP tools.
Not only the speed with which invoices are paid but their accuracy, resulting in better vendor relationships. An accurate payment process removes the need for the all-too-common back and forth associated with rectifying errors in a post-payment audit process.
Selecting the Right Freight Audit Partner
Every company has different needs, challenges, and goals, making it hard to pinpoint precisely what is best for your organization. There are a few key components to look for and put under the microscope.
Criteria for Choosing a Freight Audit Company
Benefits and ROI might catalyze exploring a freight audit partner, but what should you look for? What are good signs compared to potential red flags?
Technology → Perhaps more than anything, the technology should stand front and center. Industry-leading FAP technology is designed to serve as a single source of data and should be powered by machine learning and AI. Anything less complicates the process, even if it goes through a single platform.
Implementation → Launching any new system or process across your organization requires time and resources. Some freight audit companies have the process down to a science, while others can drag on for months(a potential red flag), making generating ROI out the gate difficult.
Scalability → Chances are, your business is growing if you are looking at a digital freight audit and payment process. But what will that look like in five or ten years? Having a solution that can scale with your business provides peace of mind and saves time and money.
Industry Expertise → Not all auditing tools and companies are designed for logistics. That isn’t to say that they aren’t worth exploring, but inside knowledge means tools are built specifically for the challenges of working within the global supply chain.
Ongoing Support → We live in a transactional world, and many freight audit companies have adopted a SaaS model, where customer service is limited. Look for a company that provides ample ongoing support, including training opportunities and transparency when updates to the platform are made.
Cost → Yes, cost matters. Your budget is essential, and it should play a role in the process. That being said, you have to look beyond the sticker price to fully understand the total ownership cost. Consider the cost of underperforming carriers within your network and the savings generated from a pre-payment audit process.
Streamline Your Freight Audit Process With Trax
Choosing the right freight audit company as your partner is a big decision that will impact several business areas. But it doesn’t have to be overwhelming. You can streamline your process and reduce operational costs with the right approach and a clear understanding of your goals and current challenges.
Trax’s freight audit and payment tools are designed for global organizations that are looking to streamline how they manage their audit process. Our industry-leading technology can help you reduce transportation management spend, improve vendor relationships, and deliver fantastic customer service.
Connect with our team to learn more about our freight audit and payment tools.
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.