In the most simple sense, a freight bill post payment audit is the process of reviewing and validating your freight carrier’s invoices. It’s an extremely tedious and careful process where an outsourced party is tasked with verifying the accuracy of bills and payment thereof. The overarching goal of a freight bill post audit is to determine if your carrier has overbilled you or has been overpaid, and all such overpayments are returned to the shipper.
While a pre-audit is performed prior to payment being made, a freight bill post audit is performed afterward. Organizations that do not regularly perform post audits are likely to sustain ongoing and significant losses. Because transportation and logistics are extremely complex with many moving parts, situations involving overbillings or overpayments do not always indicate malice or nefarious intentions. It can simply be the product of oversight or human error. However, if you do not identify and correct the problem, it’s likely to continue well into the future. Let’s take a closer look at the freight bill post audit process, and why it’s best to partner with the experienced professionals at Trans Audit.
Collect Data to Begin Freight Bill Post Audit
One of the first steps to performing a freight bill post audit is to collect shipment and payment data for the past one to five years. The most sophisticated organizations make it a practice to outsource their transportation invoice processing or log and upload invoices to an online cloud database or TMS the moment they are received. These practices allow for the ready provisioning of the information necessary for Trans Audit to conduct a successful post audit .
Let Trans Audit Do the Heavy Lifting
Once contracted with Trans Audit, we will work directly with your outsourced provider, IT or AP staff, and carriers as necessary to ascertain the information and access needed to commence the post audit review. Trans Audit makes the implementation process simple, quick and non-resource intensive for Clients.
Trans Audit Reviews for Errors or Overpayments
Trans Audit’s team of modal subject matter experts review shipment, bills of lading, payment, and carrier data to identify overbillings and overpayments Trans Audit’s line item detail review identifies a plethora of errors whereby the shipper has overpaid for the services received. A few of the most common errors discovered through a freight bill post audit are listed below.
Overpayment Errors
There are a vast number of reasons multiple payments of the same invoice occur. Erroneous payments can be related to duplicate payment of the same invoice, payments to the wrong party, payments made under different reference numbers, payment of an original and revised bill, payments in the incorrect currency, payments for invoices that should never have been paid in the first place, or many other reasons. Regardless of the root cause, payment errors all result in sizable losses for your company.
Incorrect Rates
Freight rates or “line haul charges” vary greatly in accordance with contracted rates, carrier tariffs, distance, and other factors. Trans Audit ensures that your freight, per container, or per car rates are correctly assessed in accordance with your contracts or carrier tariffs where no governing contract exists. Trans Audit also ensures that the most effective freight rate is applied, as sometimes negotiated rates may be more than a carrier’s current tariff rate or a mileage based rate contained in your carrier contract. Freight rates also have a corresponding impact on fuel surcharge, as most fuel surcharges are a percent of the freight rate or line haul. If the line haul is overstated, the fuel surcharge will also be correspondingly overcharged.
Incorrect Accessorial Charges
Freight carriers have the ability to charge for thousands of accessorials or additional services, which vary greatly in accordance with the mode of transportation utilized. Trans Audit analyzes all accesorials to ensure that they are applicable; allowable under contract and are charged at the correct rate.
Misapplied Discounts
Oftentimes, you’ve negotiated discounts for shipping. It’s critical to ensure these discounts are effectively applied and deducted from freight invoices.
Mis-Classification of Freight
As may be aware, there are different product classifications that can be based on stowability, freight density, commodity, liability, and handling. A complicated series of regulations governed by the NMFC set forth these classifications and the application of the correct class is contingent upon the type (s) of products moved and individual contracts. Certain classes are less expensive or easier to move, so are contractually less expensive, even though a carrier bills for a higher class or charges a single higher class for all items, though varied, in a shipment. Trans Audit’s modal and NMFC experts ensure that all products in a shipment are correctly classified, FAKs are applied, and all are billed accordingly.
Service Failures
Regardless of your industry or mode of transportation utilized, shipping delays happen. If your contract mandates a special rate for time sensitive shipments, or refunds or reductions to charges due to late deliveries, Trans Audit pursues the refund in entirety or via an adjustment to the service level achieved.
Recovery & Refund Management
When billing and payment errors are discovered during the audit process, it can mean monies are owed back to the shipper. In order to receive such refunds, claims to the carrier must be fully substantiated, documented, generated, and officially submitted to the responsible carriers. Consistent and structured follow up on each claim is necessary to ensure that the carrier responds appropriately and issues the refund due. Claim follow up can be a very time consuming process. Hence, the reason that Trans Auditt has a dedicated team of Carrier Relations Managers and support personnel that are fully responsible for the submission, followup, escalation, and resolution of claims, including the confirmation of refund receipts. This team of almost 10 professionals are dedicated to this role and are assigned on a carrier by carrier basis to ensure that a positive relationship and rapport is maintained with all carriers. In order to be continually successful, the claim submission and recovery process must be managed in an amicable and collaborative manner. Trans Audit is well adept at recovering extensive refunds with limited Client involvement and without carrier consternation.
Analysis of Findings & Insights
Just as important and sometimes more important than the refunds generated, are the insights that a post audit can provide into recurring errors and process improvements. Trans Audit believes that a post audit should deliver more than just monetary benefits, and more importantly provide continuous improvement insight into Clients’ payment processes and supplier relations. Trans Audit provides an unsurpassed proprietary cloud-based claims analytics system, TransPortal™, to view and analyze claims activity online. TransPortal™ is updated on a daily basis allowing Clients to view claim status, claims aging, error types, claim distribution by carrier and mode, and other pertinent claim information. TransPortal™ identifies the type of claims filed (reason for the claim) by carrier and provides the capability to query and drill down by claims status, mode, carrier and claim error type.
While the primary goal of a transportation post audit is to identify, resolve, and ascertain refunds for overcharges and errors, it can also reshape your business practices, reduce recurring errors, and improve your bargaining power with carriers. The extensive information and insights provided by Trans Audit and TransPortal™ are highly effective for claims management, and more importantly, process and carrier evaluation, management and improvements.
Additionally, Trans Audit’s comprehensive transportation post audit services also result in the identification of cost reduction methods and contract improvement opportunities. Best of all, our implementation process is simple, swift, and straightforward with minimal upfront and ongoing involvement from you. We will work directly with your carriers, providers, and internal staff to facilitate a streamlined implementation.
Ready to learn more? Contact Trans Audit today.
