Freight Invoice Audit and Payment – Old-School or New-School?
by Mike Starling
Believe it or not, there are still a lot of companies out there that use in-house resources to audit and pay their freight invoices. This is the old-school approach for processing and payment of freight invoices. For whatever reason, either upper management believes it doesn’t need to spend the “extra” money to have an outside third-party perform this function — or even worse, the executive responsible for transportation does not understand the positive cash-flow implications of the need to audit freight invoices, which typically yields a positive return on time and resource invested.
What typically happens in the old-school world is the manual in-house process “makes sense” when shipment volume is low and slow, and management is looking for ways to gainfully employ the in-house resources. But over time, the company grows, shipping volume grows, and one day it becomes obvious that the mountain of paper freight invoices is consuming a body full time. There is a limit to the amount of invoices a person can process in an eight-hour day. Once you reach this point, the time has come to transition to the new-school method for handling audit and payment of your freight invoices. Yep, automate and outsource.
In this digital age, when freight audit and invoice payment is highly automated, invoices can be handled by a 3PL vendor for pennies per invoice. In most instances, this outsourcing process will pay for itself and still yield a positive return. Auditing is automated and typically yields a 3 to 5 percent return due to billing and NMFC classification errors on the invoice.
Note, determining a NMFC classification error is not always obvious, and a 3PL can provide the expert help needed to catch this as part of the overall service package provided to the shipper. However, transitioning to a new-school approach can provide the dual benefit of freeing up a valuable worker from doing freight-invoice clerical work, enabling the worker to do more productive work AND generating positive cash-flow returns from the 3PL freight audit and invoice payment process.
Still processing freight invoices in-house, the OLD-SCHOOL way? Maybe it’s time to move on to the NEW-SCHOOL approach!
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