April 25 2024 | 6 Min Read

Is auditing freight bills worth it? Yes, and here’s why

Posted By
Wendy Mackenzie
Is auditing freight bills worth it? Yes, and here’s why

The exact data and statistics vary by source, but errors within invoices are a major problem in today’s supply chain. By some accounts, errors have been found in one-third of invoices. Only a fraction of those may impact total cost. But you shouldn’t just accept errors. 

Carrier invoicing accuracy should play into whether you choose to continue working together. Billing errors happen. But how deep does the problem go and what can today’s shippers do about it?

To answer that question, let’s look at the growth of the market for handling freight audits and payment processes. As shared by Supply Chain Brain, a report on recent growth across the freight audit and payment market revealed a strong North American demand for technology and integrated systems across logistics. In fact, North America 42% of the global [freight auditing] market in 2019.” Clearly, even growth around the globe is no match for the demand seen in our neck of the woods around technology-driven optimization in logistics.

Let’s take a closer look at whether you should continue auditing freight bills and the true value of effective auditing processes. 

The ROI of freight auditing explained

block representing positive or negative freight audit resultsThere are a variety of factors that influence the ROI of freight auditing, including labor costs, volume of invoices, number of invoices per carrier, frequency of accessorials, O/D pairs, and changing data. It’s an endless list of things that can lead to error. On average, auditing freight bills with an in-house program reveals error rates of around 1.5 to 2%. While that may seem acceptable, it is inaccurate. According to some industry experts, up to 80% of freight invoices contain errors. 

An in-house program could potentially be overlooking up to 78% of errors. Even if they don’t impact total transportation spend, are you willing to continue working around errors? 

Here’s another question to consider. If the average rate of error is so high, what other problems may fall by the wayside? Carriers can make mistakes in their invoices, so the best strategy is to ensure your team has a comprehensive process for auditing freight bills in place.

The benefits of effective auditing of freight bills

Aside from direct cost savings, shippers can realize an even stronger indirect ROI of freight auditing, including:

  1. Enhanced operational efficiency — Automated freight auditing and integrated operations reduce the administrative burden associated with dispute resolution and invoice processing. This, in turn, accelerates the overall business cycle.
  2. Improved compliance and accuracy — Regular auditing protocols ensure adherence to contractual terms and minimize the risk of fraudulent charges. This systematic oversight fosters a culture of accuracy and integrity throughout the supply chain.
  3. Stronger carrier relationships — Transparent auditing processes establish clearer communication with carriers. This clarity enhances mutual understanding and collaboration, potentially leading to better service levels and more favorable rate negotiations.
  4. Data-driven decision making — The analytics derived from comprehensive freight audits offer critical insights into shipping patterns and costs. Complete business intelligence based on invoicing data also supports strategic decision-making.
  5. Scalability support — Advanced auditing systems adapt seamlessly to changes in business scale, maintaining rigorous oversight over freight costs and practices. The ability to scale is key to avoiding overspend.
  6. Enhanced productivity — Modern auditing software minimizes the costs of freight invoice management. This optimization frees up valuable staff resources and allows teams to focus on revenue-generating activities.
  7. Improved visibility and compliance-adherent auditing practices — Employing sophisticated auditing services improves compliance and data integrity. Such steps mitigate the risk of data breaches and strengthen strategic planning and execution.

Get more value from your supply chain by partnering with IL2000 for auditing freight bills

truck driver getting shipment paperwork readyErrors in freight bills can lead to higher costs when those errors impact freight rates or billed charges. But, it’s impractical to eliminate all errors. Even the most robust systems still rely on a manual data entry or point somewhere in the chain. Such touchpoints are the origin of errors. The trick is to correct them to keep your spending in check and hold carriers accountable when errors result in higher costs to your company.

Speak with a consulting engagement executive to find out more about the value of successful freight auditing as part of a partnership with IL2000. 


Topics: Logistics Management, Transportation Models, Business Intelligence, Freight data, Supply Chain Optimization

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