Is Your Company Leaving Money on the Table? Learn How to Properly Audit Your Freight Invoices
Freight invoice auditing may be one of the most cumbersome, but also one of the most crucial tasks that should be conducted on a regular basis, especially if your business ships thousands or even hundreds of packages per week. Based on AllGreen’s experience working with shippers and carriers, we have identified the top reasons why successfully auditing freight invoices can be so difficult:
- The employee assigned to auditing freight invoices often has many other responsibilities that seem to be much more important or he/she is not well-trained on the auditing process.
- The carriers do not make freight invoice audits easy either. Data is sent in a PDF, along with unformatted excel documents, containing lines and lines of shipment records.
- An employee must scroll through this list and enter tracking numbers one by one into the carrier’s website.
- There is a limited window of opportunity to file a claim.
- Staff must be knowledgeable about shipping guidelines in order to determine if a legitimate claim can be made, including guaranteed times, fluctuations in commitments from carriers, and monitoring credits and exceptions.
However, with proper knowledge and resources, you can avoid leaving money on the table.
Turn Your Next Freight Invoice Audit into a Financial Win
According to market research up to 30 percent of all freight invoices are incorrect. To help ensure you are not missing incorrectly billed freight invoices, below are a few guidelines to keep top of mind when conducting your next freight invoice audit:
Time is of the Essence
Major carriers, such as UPS and FedEx, offer a service guarantee that if a package does not arrive on time, the business receives a refund. However, in order to receive this credit, the shipper must be proactive and request it. And, that refund request must be made within 15 days of the scheduled delivery date. Unfortunately, these carriers only issue invoices weekly so several days may be lost before the late shipment is discovered; therefore, it is critical to conduct freight invoice audits promptly.
Legitimate Reasons for Delayed Deliveries
Approximately, 98 percent of FedEx and UPS shipments are delivered on time. However, the remaining two percent, which are delivered late do not necessarily result in a refund even if the correct process is followed in a timely manner. On average only about 1.5 percent of late deliveries are credited. You may ask what are the legitimate reasons for delayed deliveries that result in a denial? Weather is most often blamed for late deliveries, and unfortunately, it cannot be used to obtain a refund. Other legitimate reasons that result in rejected claims are Acts of God, civil commotion, war and terrorism.
However, some reasons for rejection are open to interpretation. For example, mechanical breakdown may be cited as the cause for a late delivery. With this reason, you can argue that if the equipment had been maintained properly or a contingency plan was in place then the delay would been prevented.
Residential vs Commercial Classification
There are different shipping rates for residential vs commercial destinations. These rates are different because residences have a much lower delivery density. It may take four to five minutes to deliver a single package to a residence while it may only take two minutes to deliver a package to a commercial property, such as a mall or office building. Multiple packages are often dropped off at one commercial location at a given time, making it a much easier and quicker delivery. Home businesses still are billed at the residential rate, but properties, such as churches often fall into a gray area. It is critical to know how shipments are being classified. Shipments to residences often cost three to four dollars more than those sent to commercial properties. This can really add up if your company is shipping thousands of packages per week.
Address Corrections can be Costly
It is imperative that the correct shipping address is used. Unfortunately, even a little variation can result in a disproportionate extra charge to the tune of $16.40 per package. And, this fee is expected to increase again next year. The charge can be contested, but unfortunately, the recovery rate is only about 15 percent.
Save Time and Money with AllGreen
Auditing freight invoices can be more expensive than you may think if your staff is not properly trained and the process is just considered another burden on the company. With our proven system, AllGreen can be the perfect resource to turn this burdensome task into bottom line savings for your company. Recently, we worked with a client who spent $500K per year on international air and domestic air shipments with the two major carriers. However, many of their shipments were delivered late. With our audit process, we were able to recover $14,000 in refunds to their account.
AllGreen will work with you to acquire the necessary carrier data, which we then analyze through our comprehensive digital solution. If any questionable deliveries are discovered, we will work directly with the carriers to ensure your company is issued a refund. Any credit is sent directly to your company. Your savings can be reported to you as often as you would like in weekly, monthly or quarterly reports. Don’t lose another dollar to incorrect freight invoices, contact us today at info@ag-sc.com or 847-531-2209.