Transportation makes up a significant portion of the costs
associated with getting goods to an end user. In this 3 Minute
Explainer we look at how automated freight bill auditing works and
Controlling transportation costs is vital for any organization that
ships goods. However, in many companies there is a disconnect between
what logistics managers have agreed with carriers, and the staff that
Freight bill auditing software automates the process of approving
freight bills. This enables an organization to manage freight spend
and control supply chain costs.
Shipment History vs Carrier Invoice
bill auditing solutions begin with a shipment’s history. This
includes movements, origin and destination addresses, package weights,
volumes and relevant tracking numbers.
The shipment history also includes anticipated freight costs. These
estimates could be generated by a company’s transportation
execution solution, transportation management system, or a third
party application. These estimates are used for auditing once the
invoice has been received.
Once a company has received the carrier invoice, this is uploaded to
the freight bill auditing solution. The carrier invoices contain
details of the billed shipment, including a breakdown of the costs for
that shipment’s movement.
Invoice Matching and Review
The next step is invoice matching. This compares the shipment history
to the corresponding invoice via tracking numbers.
The solution will match the values based on the appropriate cost
type. In other words, the estimated movement costs are matched to the
actual costs, and anticipated fuel costs are matched to the actual
Once the matching is complete, the solution reviews the invoice. If
there are no invoice errors or discrepancies the invoice is
automatically approved. Furthermore, if there is a small difference
that does not exceed a company’s predetermined threshold, the invoice
is also approved.
However, the system will generate an exception should a disparity be
found. An exception is also created if the solution cannot find a
match between the estimates and actual costs.
An exception alerts the relevant personnel that there is a problem.
Staff will then compare the shipment history and the carrier invoice
to see what has caused the error.
When the source of the mismatch is identified, a company can choose
to accept it. Then the discrepancy can be allocated to the shipper or
the supplier, or both.
If the carrier has made an error, the process for disputing an
invoice will be applied.
Once the invoice has been fully reviewed and audited it is then approved.
Freight Bill Payment
The final step is the payment process. Freight bill auditing software
can also be configured with general ledger rules. Therefore, a GL
account breakdown can be generated. This can be sent to a company’s
An organization can choose to batch approved invoices together as
part of the payment function. After this, all appropriate reports,
including the payment report are generated.
Users can also generate discrepancy reports. These identify issues
found during the auditing process and highlight discrepancies where a
company expects to receive credits from the carrier.
The Benefits of Automating Freight Bill Auditing
Freight bill auditing offers an analytical, financial review of
carrier invoiced costs versus supplier agreements. Therefore, it is an
essential part of controlling supply chain costs. This is true whether
you ship via ocean freight carriers or expedited parcel carriers.
Companies that process carrier invoices without auditing them for
accuracy are likely overpaying. This can add up to a significant
amount over a financial year. Furthermore, companies do this without
However, manually auditing carrier invoices is time-consuming.
Therefore, many companies outsource this to freight auditing and
Automated freight audit systems allow companies to move this process
in-house. This gives them more visibility and control over their
shipment data, without having to use time-intensive manual processes.
Best-in-class freight bill auditing solutions can process, check and
reconcile high volume carrier invoices. This includes parcel carrier
invoices that are hundreds of pages long and include tens of thousands
of line items.
A comprehensive automated freight bill auditing solution should offer
the following functionality:
Identify unexpected accessorial charges
Address correction to avoid paying surcharges for incorrect or
non-existent delivery addresses
Global capabilities so that all invoices can be audited,
irrespective of language, currency, geographical location, carrier
or mode of transport
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About QAD Precision – Trusted Global Trade and Transportation Execution
QAD Precision, a division of QAD Inc., provides industry-leading global
trade compliance, and multi carrier transportation
execution solutions from a single, integrated platform. An
ISO-certified company, QAD Precision assists companies to streamline
and transportation operations, optimize deliveries, and increase
logistics ROI. QAD Precision’s scalable and extensible solution easily
integrates with existing ERP and WMS solutions. Industry leaders in
every region of the world rely on QAD Precision’s global support
centers to leverage thousands of carrier services and manage millions
of global trade and shipping transactions every day. For more
information about QAD Precision, visit www.qadprecision.com.