Accounting teams have a lot on their plates, particularly those who oversee the finances of transportation and logistics.
Shipping is a complex practice with many moving parts, numerous documents, and hundreds of line items that need reconciling for a single transaction. Imagine your AP team attempting to complete this process accurately and efficiently for hundreds or thousands of invoices every month.
A recent study shows that a staggering number of invoices are duplicates. The study found that nearly 10% of invoices are duplicates, and shockingly, the worst offenders were contract logistics providers, specifically shipping lines.
Humans are not machines; missing paperwork and entry errors often slip through the cracks. These errors delay shipments and cause supply chain fragility. Additionally, when your AP team takes too long to approve and pay vendor invoices, you could face credit holds that disrupt your operations.
It is a vicious cycle of inefficiency and waste, but not an uncommon challenge for those managing shipper invoices. For example, we recently found a $518,000 discrepancy tied to a single shipping invoice. So what is the golden ticket for companies that handle hundreds to thousands of variable cost vendor invoices monthly?
The answer is automated invoicing technology. This preventative solution accurately audits freight invoices in real time, eliminating the risk of duplicate payments, overspending, fraud, and much more.
Here are five things an automated freight auditing technology can check for within minutes of invoice capture:
- Proper classification - The National Motor Freight Association (NMFA) publishes an annual classification guide, which groups all commodities into one of eight classes, ranging from 50 to 500. Such classes have different freight rates based on four factors: density, storability, handling, and liability.
- Accessorial fees - Were charged accessorial fees? Were you at fault? If you were at fault, are there steps you could take in the future to prevent such fees? For example, were you charged for fees you had negotiated away previously?
- Duplicate billings - Research estimates that duplicate payments happen at a rate of 2%. While two percent may not appear much on the surface, duplicate invoices significantly impact enterprises. For example, if an organization's AP invoices total $75 million annually, duplicate payments may account for $1.5 million of their wastage.
- Contractual compliance - Your team works to negotiate the most favorable rates, but were the arrangements you made upheld? If you agree with your carrier on discounts, check that they are appropriately applied. Further, if the carrier made a late delivery, this may reduce, if not negate, the shipment cost. If there is a late or damaged delivery, immediately note that on the bill of lading.
- Financial accuracy - After verifying that charges are correctly applied, you must ensure the numbers add up. Calculation errors occur on both sides, so double-checking your work is a wise way of ensuring you are paying only what you should be.
Real-time freight auditing technology alerts companies immediately of discrepancies between invoices and contracts. This allows the AP team to work with vendors to resolve issues quickly, avoiding service disruption and maintaining financial accuracy.
OpenEnvoy is the first and only real-time freight audit provider. While legacy freight audit vendors deliver low-quality audits that require drawn-out disputes, OpenEnvoy can perform a complete forensic audit in any currency, language, or vendor across all industries in 72 hours.
Explore how OpenEnvoy can help your team save time and money through auditing by connecting with an expert today!
