Do you lack of freight bill audit and payment visibility?
Streamline Freight Management with Invoice Audit and Payment Solution
Freightgate’s Audit & Payment Solution streamlines freight invoice audit and pay process by incorporating an advanced contract/rate management system. Our freight invoice audit and payment module streamlines the in-house freight payment process. Eliminates manual paper-based processes. Missed mistakes can cost shippers thousands of dollars in erroneous rates and accessorial charges.
Why Freight Invoice Audit?
Though the problem varies from mode to mode, Freight invoices have a long-standing reputation for being inaccurate and inconsistent. As a general rule, billing errors increase as service or price complexity goes up. Conversely, errors tend to drop as IT sophistication increases. Therefore, it is not surprising that ocean freight invoices present a much greater improvement opportunity than air invoices. While ocean carriers are working hard to achieve IT parity with other modes, their penchant for introducing new surcharges with dynamic effective dates and situational applicability ensures that billing will be more art than science into the foreseeable future.
Shippers are impacted multiple ways — on the income statement as well as the balance sheet. The most obvious problem is inflated transportation spend compared to what was budgeted and procured. This occurs when there is no audit and charge-back process of any kind. This added operations cost filters to the bottom line and erodes yields.
On the balance sheet side of the equation, the problem is cash flow. When a shipper overpays a freight invoice and only catches the error via post audit, there is a negative cash hit on the balance sheet. The cash to cash cycle is impacted by inventory levels, accounts payable and accounts receivable. The overpay and charge back process increases accounts receivable and the shipper gets nothing in return for the cost of the money.
Typical Freight Invoice Issues
The goal of freight invoice audit and payment is to reconcile the service/price agreed to in procurement with the service/price presented on the invoice. This is challenging even when the service procured matches the service invoiced. When the services vary, the difficulty multiplies.
But before digging into the specifics of a billing error, the error must be caught or flagged in the first place. An automated solution is required to cost effectively catch these problems in a pre-audit environment. The solution must be able to check for duplicates as well as wrong charges. The duplicates can be tricky, especially in international commerce governed by INCO-Terms. The same charge is sometimes presented to both the origin and the destination party. Simply looking for duplicate invoice numbers will not catch these instances.
Service performance can also be difficult to verify. For example, if a charge is contingent upon meeting a specific transit time, the freight invoice audit and payment solution must be able to check actual transit time before dispositioning the invoice.
Freight Invoice Pre-Audit Solution
As daunting as the above sounds, a properly designed cloud-based solution can perform effective pre-audits of ocean freight invoices. But in order to do so, it must have some specific capabilities, for example:
- Integration with a comprehensive and reliable rate data-base against which to audit, as well as the rating and routing logic to properly rate the invoice according to the INCO-Terms and rules that were in place at the time of shipment.
- Facility to receive and open electronic invoices, as well as map them properly to the charge categories in the rate database.
- Smart logic to flag duplicate invoices with different invoice numbers by comparing multiple parameters in combination — e.g. ship date, invoice amount, origin/destination, commodity, etc.
- Integration with a shipment tracking and tracing system (or systems) in order to verify service performance.
- Flexible business rules that can process the same type of error in different ways according to the specific agreement in place with each carrier.
- On-line work flow functionality to ease approval of new charges and management of exceptions.
In order to reap the expected freight invoice audit and payment benefits that emerged from the procurement process, it is imperative to pre-audit transportation invoices — particularly for ocean freight. A cloud-based solution with the proper integration and back-end functionality can perform this task admirably — protecting both profitability and cash flow. Though there are costs associated with implementing, the financial benefits quickly negate them and provide a substantial return on investment.
- Lower transportation spend by eliminating overcharges.
- Improve cash-to-cash cycle by catching errors in pre-audit rather than trying to recover cash through post-audit.
- Enhance competition and accountability by making invoice accuracy a PKI in carrier evaluation and selection.
- Eliminate the cost of outsourced post-auditing.
- Reduce data entry and manual look-ups through integration with Tariff-Trek! and Web service enabled communication with external systems.
- Reduce phone calls and e-mails by giving suppliers role appropriate Web access to their invoice information.
- Eliminate fax costs with the built-in Document Management Engine (DME).
- Reduce document storage and archive retrieval cost with the DME and electronic archiving.
- Dynamic Rules Engine – ensures invoices are rated based on the rates, surcharges, accessorials and other charges that applied at the time of shipment origination.
- Duplicate Invoice Logic – Identifies virtually all duplicate invoices based on a variety of business rules, events and parameter combinations.
- Data Integration and EDI – Can receive electronic invoices and communicate with customer accounting systems via any means available in the market today – including standard EDI, flat files, XML and SOAP.
- Data Uploader – Streamlines paper invoice processing.
- Payment Plan – Provides summary and detail information on invoices that have been approved for payment.
- Exception Management Interface – Provides a clearing house for customers to view and disposition invoices that require intervention.
- Approval Work Flow – Part of the Exception Management process, enables authorized personnel to quickly approve/reject charges that are not in the rate database.
The Freightgate Team excels at finding innovative solutions to improve Freight Invoice Audit and Payment with our vast arsenal of flexible cloud technology tools – take a logistics cloud demo of our Freight Invoice Audit solutions and experience the difference yourself first hand. Share with us your toughest Freight Invoice Audit and Payment challenge and allow us to come up with a creative, potentially out of the box solution.