Multiply Your ROI with Freight Rate Auditing
In a market with continually shrinking margins, there’s no doubt that carriers and 3PLs must audit their freight rates. Freight bill auditing is required for transportation and logistics providers to keep operations in the green. It provides instant value that’s directly linked to the viability of your business.
Organizations can multiply their return on investment (ROI) in freight rate auditing and freight invoice processing with minimum effort, meanwhile reducing errors and getting ahead of the competition.
The Freight Rate Audit Process
The freight rate audit process should begin as soon as a staff member enters a bill into your system. At that moment, the staff member should verify all relevant information.
Audit information includes freight terms, peripheral charges, destination fees, item counts, shipment weights, and other related variables. With a full understanding of all the factors affecting the final shipping bill, you can ensure it’s correct.
If you find an error, it’s important to address and fix the issue immediately. It’s never pleasant to tell a customer that their rate is higher than originally quoted. By pinpointing a mistake instantaneously, you can put the bill of lading (BOL) on hold and allow time to recalculate the bill. Once all parties agree, the bill can move forward into your system.
As you can imagine, this is a difficult task to maintain for every customer. Fortunately, this is just what a back-office partner can do for your organization – and at a fraction of the cost.
Learn More About Freight Rate Auditing
See how freight rate auditing can help your trucking be more efficient.
When you work with a back-office partner, they can receive paperwork directly from carriers, whether manual or electronic. Those documents are entered into your record keeping system. As a result, you’ll have the same visibility as if the BOL came to you directly. The difference is that your back office partner, with the time and resources to verify freight billing, is far less likely to submit invoices with errors.
Business processing companies specialize in verifying all the variables that go into the final cost of shipping bills. After an on-the-spot audit, your partner can also code and reconcile the invoice.
Why Auditing Your Rates is More Important Than You Think
Inaccurate data causes more than financial trouble. It wreaks havoc on the relationship between you and your customers.
Still, it can prove challenging to bill accurately. Often, each freight forwarder has conflicting information. The various freight forwarders along the logistics chain usually keep information on spreadsheets, which may not always be shared.
Calculating the correct rate for goods that have passed through several forwarders can prove to be daunting. As a result, many organizations check invoices randomly and hope that their observations represent a holistic view of what's occurred in the process. In many cases, manual documents are still the primary mode of documentation. Digitizing can make the freight billing process much more efficient simply by scanning documents and minimizing keystrokes. As an added benefit, the digital versions of your manual documents are easily accessible online and will give you the data you need for comprehensive analyses. Empowered with information, you can reduce risks and make better decisions in a volatile market.
For many companies, outsourcing is the most effective way to achieve accurate freight rate auditing while cutting costs. Business processing partners can audit your invoices for a fraction of the labor cost of doing it internally.
Moreover, you’ll increase your short-term revenue by collecting the correct payments in a quicker timeframe. This helps increase long-term revenue by maintaining strong customer relationships with a stellar reputation for fair and accurate billing. A back office partnership can also help develop a sustainable system for automatic cost allocation and comprehensive reporting. This results in empowering your organization to make actionable and beneficial decisions by leveraging a wealth of proprietary data.
Expert Tip: Get Rates Right the First Time
Set the bar high from the beginning and prioritize metrics that will empower your organization to deliver the best service possible.
Effects on Productivity and the Internal Team
As logistics companies grow, the cost to maintain auditing using in-house personnel grows prohibitive. Accordingly, a third-party auditing service adds value in many ways.
Carriers and 3PLs are in the business of transporting goods. Still, it takes considerable record keeping to keep track of all the factors that determine final freight rates.
Unfortunately, as a result, many carriers and 3PL companies miss out on revenue when they don’t have a dedicated team to oversee auditing responsibilities.
Sometimes discounts are overlooked. Other times, employees disregard shipment minimums and omit fuel charges. Furthermore, they may forget additional extraneous, but important, fees that make a deal viable. Add the frequent occurrence of duplicate invoices, and the losses add up even more. Unfortunately, these tasks are often seen as tedious and take a large amount of time and energy to execute accurately. This can lead to a decrease in job satisfaction and ultimately burnout.
Expert Tip: Invest in Your Team
Boost morale and the quality of output by investing in external support, subject matter experts, and the technology that you need to stay on top of freight rates.
Keeping up With a Volatile Market and Regulation Compliance
Recently, freight rates have served as a growing challenge for logistics professionals. Oil prices have sent shipping costs on an upswing. Unfortunately, the cost of oil directly affects all shipping activities. Fluctuating fuel costs and little-to-no indicators of future costs make it highly challenging to forecast future expenses.
At the same time, it’s getting harder to find drivers willing to do long hauls. Across the nation, truckload contract rates are rising. As a result, shipping rates tend to increase considerably. As an example, the food shipping industry absorbed losses of more than $150 million in 2018. Resultantly, shippers in the industry have raised their rates to cover freight costs, which isn't necessarily sitting well with customers.
The most significant driver of rate hikes, however, is sharp spikes in demand. Without enough information, carriers are unprepared to handle rapidly changing volume. Still, demand is continuing a jagged, uphill climb. In this environment every dollar is important.
Expert Tip: Invest in Your Team
Stay on top of market activity, tariffs, and other vital factors that affect freight rates.
Team up With an Expert toMaximize Audit Results
In today's complex logistics environment, freight rate auditing is an essential part of business. Companies that fail to audit continually lose 7-10% in annual revenue, and the larger your company, the more significant your loss.
By partnering with a back office partner, like DDC FPO, you’ll have the dedicated team that you need to verify all deciding information for every freight shipping bill. You'll also benefit from a reduction in resources allocated to billing while increasing the accuracy when it comes to freight billing. As an added bonus, your internal team can then focus on driving bottom-line results and providing value to your clients.
DDC FPO can deliver clarity in a complex market with variable costs and shrinking margins. Contact one of our freight rate experts today to learn how to make billing more satisfying and profitable for your organization.