The Complete Guide to Freight Invoice Processing For 3PLs
Third-party logistics (3PL) dwells at the core of the consumer goods and freight transport landscape. Research by CFS found that truck transports accounted for $10.4 trillion of the $14.5 trillion worth of goods that were shipped across the United States in one year alone. That’s 71.6%; an impressive figure when you consider all of the methods available to move freight and consumer goods across the continent.
The Importance of 3PL Freight Transports
Truck transportation of goods and 3PL freight transporters as a whole are truly the lifeblood of the consumer economy. In the US alone there are over a half million trucking companies. That number means there is a high degree of competition resulting in a very commoditized market. These companies must remain highly price competitive and that means they must ensure that cash flow moves as quickly as possible. To ensure that it does, invoicing must always be correct, often with incentives in place, to ensure timely payments by their shippers. Conversely, shippers, especially those who move a lot of goods, must ensure that they are not accidentally overcharged and can capture incentives they have in place with contracted transportation companies.
While the freight shipping and third-party logistics industry is comprised of companies whose singular goal is to ensure goods arrive at their destination safely and on time, that goal is driven by profit. To ensure the supply chain runs at maximum efficiency, carriers and shippers need the right technology. Enter 3PL freight invoice and audit processing solutions. Without the careful execution of these processes, potential shipper overcharges and carrier payment issues can occur and create some pretty severe impacts on bottom lines.
What’s in a Freight Invoice?
What are freight invoices and why is efficient and accurate freight bill processing so important to the 3PL industry and the supply chain?
A freight invoice, also called a freight bill, is generated for each job that a shipper creates and a transportation company accepts. These documents contain essential information about the freight shipment, the services that are provided in relation to that shipment, along with any other supplemental services that are rendered.
For a shipper, this is the document created by a freight carrier that shows all of the charges agreed to during the movement of their good from one point to another. For a carrier, it is the distillment of all of the charges from every Bill of Lading (BOL) associated with the movement of goods for a shipper.
The information on a freight bill will include the following.
- Origin and destination location info
- Description of freight
- Quantities of goods
- Cubic volume of shipment
- Cost for each service rendered
- Description of all services rendered
- Fees for supplemental services rendered
- Weight and packaging of goods
- Fuel and other miscellaneous charges
- Information on terms of payment and acceptable methods of payment
Freight bill accuracy and timeliness are essential because errors in these documents and processes will result in potential delays in payment for the freight carrier and potential overcharges for the shipper a carrier is providing service. And if freight bill errors are commonplace, this can add up over time. This is why it is important for freight transportation companies to ensure their invoices are correct the first time and for shippers to ensure the invoices they receive are accurate.
Many of these companies, both shippers and transportation companies, ensure accuracy by employing, either in-house or outsourced, specialists who can create accurate invoices on the transportation side, or process them accurately on the shipper side. Both employ auditing processes to ensure that invoices are always 100% correct and early payment incentives are captured and payment is made as quickly as possible.
Freight Invoice Processing and Audit Types; Benefits and Drawbacks
There are a few ways these processes are undertaken.
1. Manual invoice processing and auditing: An organization will hire on-site, or outsourced employees and train them to create or capture an invoice. They will audit have additional staff who audit them for accuracy. The benefit
of this is that invoices will almost always be correct. The drawbacks are:
- a. The potential for human error
- b. Cost and training of staff are expensive
- c. Time to create, process, and audit is based on the number of staff and their availability
- d. Attrition results in loss of knowledge
2. OCR invoice processing and manual auditing: An organization or outsourcer will invest in OCR software technology to automate the capture of invoices or BOLs. This will not negate the need to have a staff, either in-house or outsourced to audit these documents. The benefit is a slightly smaller staff. The drawbacks are:
- a. OCR only reads, staff must still ensure quality output introducing the potential for human error.
- b. Cost of software and staff are expensive
- c. Time to create, process, and audit is based on the number of staff, the quality of OCR, and staff availability
Fully Automated Invoice Processing and Auditing: An organization or outsourcer will invest in Machine Learning and Robotic Process Automation tools to create, capture, and audit invoices. The drawback for a shipper or carrier is the cost of doing so in-house. However, outsourcing these tasks to a company specializing in doing so has many benefits.
- a. The cost of processing and auditing is much lower
- b. The potential for human error is non-existent
- c. Turn-around times are much faster
- c. Invoice tracking is on-demand
Conclusion: Outsourcing Freight Invoice and Audit Processes Using ML and RPA is the best option
The top freight invoice processing and auditing outsourcing service providers have the time, technology, and resources needed to get the job done with the highest degree of accuracy, quality, and speed. A review of potential outsourcers should ensure that any company that claims to specialize in these services should not only have experience but provide the most up-to-date tools to ensure freight invoice and audit accuracy. The use of Machine Learning and Robotic Process Automation tools should be on your list of what to look for.
iTech uses a sophisticated Machine Learning-powered freight invoice processing software system that delivers exceptional results, even achieving automated data capture on unstructured and semi-structured data sets, which are notoriously difficult to process. By trusting your freight bill processing and audits to iTech, you’ll free your in-house resources to focus on other tasks, while our expert team leverages innovative technology to get the job done right. If you’re in search of a reputable, high-tech freight invoice processing company to serve as your outsourcing partner, contact the team at iTech today.