Freight rate bill auditing is a fact of life in today's logistics environment. If your company is not auditing your bill entry process on a regular basis, you could be underpaid by up to 7% in freight costs, according to Inbound Logistics. Freight rate auditing services examine your bills of lading to ensure that the information is correct.
However, there is more to auditing than correcting errors. A freight rate audit supplies your company with the data necessary to identify weak spots and highlight paths to improve procedural performance of the freight bill entry process.
Ultimately, an accurate invoice leads to a faster payment and fewer disputes. And we all like that!
A dedicated rater will verify all critical fields indicated by your customer and will look for common problems found on freight bills, including the basic checklist of items below:
Duplicate Invoices: Multiple invoices may be issued for a number of reasons, such as a counting one shipment as two shipments and data entry errors.
The review matches shipments to the original order number or purchase order to identify and eliminate duplicate invoices. The audit process will look for invoices with identical or similar dollar amounts, invoices with closely matching numbers, and invoices paid from separate accounts.
Proper Classification: The National Motor Freight Classification defines which of the 18 subclasses the freight should be in and charged to appropriately. The classifications are based on density, liability, handling and stowability. If the freight is misclassified, you could invoice an incorrect amount.
Base Rate Verification: Ensure the bill begins with the correct base rate, which may be a third-party rate or the carrier's proprietary base rate.
Discounts: Ensure that any contracted carrier discounts are correctly applied.
Accessorials: Ensure that accessorials are accurately charged, such as additional handling fees, residential delivery, and delivery area fees. Ensure that any contracted discounts are applied rather than the full rate.
Taxes: Verify that taxes collected reflect the current state law and federal laws, as well as customs fees and international taxes and tariffs when appropriate.
Amount Verification: After reviewing and correcting the bill, the auditor will verify the final amount. After recalculations and rates are completed, you will be able to invoice your clients accurately.
Partnering with an experienced professional outsourcer will provide clear, accurate visibility into your freight bill entry process. Curious to learn more?
Reach out to a DDC freight rate audit expert today!