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Invoices received from carriers contain a series of calculations for expenses incurred during transport, along with any discounts you, as the shipper, negotiated with them in your contracts. Alone, these invoices are not very complex or complicated, but for companies who ship large volumes, ensuring the line items they contain are accurate is extremely important.
On average, around one-third of freight invoices are estimated to contain inaccuracies. These simple mistakes account for an additional 5% in extra costs, which is significant even for small companies. For example, let’s say you ship 50 orders a day at an average of $15 per order. In a year, your total cost for shipping would be $273,750. If 5% of the cost of shipping is the result of errors, your small business lost almost $14,000.
The example above is for a small business, so you can imagine the millions of dollars companies that ship thousands of items per day by the truckload stand to lose in freight invoice mistakes. This is why ensuring that each freight invoice you receive is audited is important. This is especially true of large dollar invoices, though I would argue that every invoice should receive some level of scrutiny.
The good news is that you don’t have to set up an entire department to just look at freight invoices. Some companies do, but it’s rare. After all, checking the accuracy of shipping costs isn’t their business. Instead, there are specialized companies that make freight auditing their entire business. Those, of course, are outsourcers.
By outsourcing your freight auditing needs, you can tap into specialized expertise to ensure accuracy in your shipping invoices. These companies employ professionals adept at identifying discrepancies and errors that might go unnoticed. They have the tools, processes, and experience to review your invoices efficiently, allowing you to focus on your core business activities without the added burden of invoice auditing.
Outsourcing freight auditing can yield significant cost savings in the long run. By catching billing errors and overcharges early on, you can recoup funds that would have otherwise been lost. This improves your bottom line and enhances overall financial efficiency and accountability within your organization.
In addition to cost savings, outsourcing freight auditing can also enhance compliance with contractual agreements and regulatory requirements. These specialized auditing firms are well-versed in industry regulations and can help ensure that your shipping invoices align with the terms outlined in your contracts. This proactive approach mitigates the risk of disputes, penalties, and legal issues that may arise from non-compliance.
Outsourcing freight auditing can provide valuable insights and data analytics that can inform strategic decision-making. By analyzing trends and patterns in your shipping expenditures, you can identify areas for optimization and cost reduction. This data-driven approach empowers you to make informed choices that optimize your supply chain efficiency and maximize your competitive advantage in the marketplace.
Auditing invoices received from carriers is crucial for shippers of all sizes. By outsourcing this task to specialized firms, you can mitigate the risk of billing errors, achieve cost savings, enhance compliance, and gain valuable insights for strategic decision-making. Investing in freight auditing services is not just a cost-effective measure but a strategic imperative for any shipper looking to optimize its operations and drive sustainable growth.
Outsourcing freight invoice auditing can be strategic for companies looking to enhance efficiency and reduce costs. However, success in this endeavor hinges on carefully evaluating potential partners based on cost-effectiveness, industry expertise, technological capabilities, scalability, compliance, communication, and data security. By prioritizing these factors, businesses can navigate the complexities of outsourcing and forge successful partnerships, contributing to their overall operational excellence.
If your organization needs or is looking for an outsourced auditing alternative, iTech provides highly trained Rate Audit employees. We use comprehensive and specialized approaches to verify and audit freight invoices and rates. Our experience will ensure that discrepancies and errors are identified and that all potential cost savings in your freight billing process are captured.
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IDS Commander iTech2021
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