There are multiple routes that get to the same destination — just ask any freight logistics expert. That said, there’s often an optimal route: one that accomplishes the task quickly, with minimal risk or margin for error. It’s a concept that goes beyond route planning and, in fact, extends to freight bill auditing.
There are several ways to conduct an audit, but the question often comes down to which is the best. Should you audit at the shipment level or from an invoice standpoint? There are distinct differences between the two and, as a result, pros and cons that apply to how a company might choose to approach invoice reconciliation. Let’s explore the difference.
Two primary paths to freight bill audit
The purpose of freight bill auditing is simple: to make sure the amount a carrier bills matches the total for services provided, given the agreed-upon terms. To perform an audit, shippers must compare shipment data to carrier services at either the shipment level or the invoice level. The choice tends to depend on the nature of that company’s shipping operations.
- Shipment-level auditing is ideal for shippers who have standard weights and packaging and who use recurring carriers in specific lanes. This standardization makes it a simple solution for calculating freight quotes and comparing them to the Bill of Lading (BOL) of a shipment. Many TMS platforms have systems to do this automatically.
- Invoice-level auditing is a beneficial approach for shippers that have extensive variability between shipments. Different lanes, accessorials, freight classifications, tariffs, and other variables can all create discrepancies. Auditing at the invoice level makes it easier to juxtapose costs against terms for reconciliation.
While both forms of freight bill auditing are viable, it’s up to every shipper to look at the variables involved in their freight operations to determine which will be the most accurate and least time-intensive.
Pros and cons to consider
In examining both primary types of freight bill audit, shippers should consider the specific pros and cons that accompany them. A clear understanding of the benefits and shortcomings of both practices will put companies in a better position to audit with confidence.
- Shipment-level auditing offers the benefit of automation and repeatability. Cost variability should be negligible across recurring shipments, which makes it easy to zero in on factors like fuel or accessorial charges that might affect service costs. The chief drawback is that BOL data is sometimes prone to error, which can affect the way carriers and shippers account for freight costs.
- Invoice-level auditing is effective when dealing with numerous variables that may impact the total amount invoiced by a carrier. By comparing invoiced charges directly to service agreements and terms, it’s possible to achieve precision auditing — which means minimal overpayments and maximum recovery of funds. The downside? It’s time-intensive without robust software.
It’s worth noting that shippers with robust freight needs will likely use both audit methods at some point. Choosing a method isn’t a catchall for accurate invoicing — shippers still need to make sure they’re going through the steps accordingly. That’s why it pays to partner with a freight bill audit specialist like nVision Global. It’s a cost that will pay for itself in the savings generated by accurate auditing.
Freight bill audit is a complex and nuanced process, no matter which way you choose to approach it. Whether you’re examining costs at the invoice level or simplifying the audit process from a shipment standpoint, accuracy is of the utmost importance. nVision Global is committed to helping our clients maintain the integrity of their auditing operations. To learn more, visit our website at nvisionglobal.com