How does it save me money?
A freight audit can provide your business with a competitive advantage by improving your logistical workflows, optimising your operations, eliminating overbilling and reducing shipping expenses.
Audits are carried out using a combination of software to collect data and the manual monitoring of processes. This helps to identify issues such as workflow inefficiencies and over-billing which can eat into profitability.
In this guide, we are going to explore the freight auditing process in more detail. By the end of this article, you will know what a freight audit is, what’s involved, and what you can expect to learn from the process.
How are freight audits structured?
A standard freight audit consists of three stages. The first two stages are information gathering exercises that collect the data needed for analysis. The final stage is the analysis and presentation of the data along with solutions to solve the issues raised.
Financial Analysis
Financial analysis of your freight bills helps to identify billing inaccuracies that often occur between shippers and carriers. This analysis will highlight how much you are paying for freight services and whether you are getting the service you paid for.
Data collected during this stage is also used to compare shipping rates with industry standards to ensure you are getting value for money. Sound financial analysis forms the basis of every freight audit, with the data providing actionable insight into your operation.
Data Analysis
Data analysis helps to identify inefficiencies in your logistical workflows. This will give you a greater understanding of your processes and highlight areas that will benefit from optimisation.
The type of data collected includes mileage covered, shipping methods, weights, packing materials, payment terms, C02 emissions, freight classification, delivery guarantees and insurance.
Customer Support
The final stage is when the results of the audit are presented to management. During this stage, the data is presented along with the results of any workflow analysis that has been carried out.
Once the issues have been presented, potential solutions are put forward to solve them. This could involve new processes to streamline workflows, updated software to eliminate shipping errors and improved invoicing processes to reduce over-billing.
How freight auditing has evolved
Traditionally, freight audits were carried out manually with each invoice checked against a set of predefined criteria. However, this process was both time consuming and prone to error. It also limited the type and scope of analysis that could be carried out.
Today, freight auditing is carried out using a combination of automated processes and manual analysis. This dual-pronged approach will provide you with a much greater insight into the performance of your logistical operations while highlighting areas for improvement.
As a result, a freight audit today provides much more in-depth analysis than ever before. Where previously the scope of an audit was to check that invoices had not been duplicated or overcharged.
Today a freight audit can monitor warehouse usage and costs, manage freight tendering processes, provide rate management across the road, rail and air, provide real-time business intelligence and much more.
The role of the freight audit company
The primary role of the freight auditing company is to provide analysis of your shipping costs, processes and workflows. But as the logistic industry has become ever more complex the role of the freight audit company has also evolved.
Today freight auditing companies provide a spectrum of services to provide greater insight into the viability of your operations. Services include data gathering, analysis, performance optimisation, consulting services and much more.
While cost-saving and bill verification remain an important part of the service. A comprehensive freight audit can provide you with much greater insight into the profitability of your entire logistical operation, from warehousing to shipping.
A freight audit company can provide the following services:
- Overbilling protection
- Invoice verification
- Duplicate invoice detection
- Billing control
- Warehouse optimisation
- Advanced reporting (Business Intelligence)
- Greater visibility in operating practices
- Access to industry-standard rates
If you would like to know more about how the logistic experts at Ct Global Freight Audit and Payment Process can reduce over-billing and improve your logistical efficiency and workflows. Get in touch today to arrange a free consultation.
The different types of freight audit
Because freight management is a complex industry, freight auditing companies have developed a broad spectrum of services to support your operations. These include both pre-audit and post-audit services.
A typical audit will be tailored to the needs of your company and can include one or more of the following services:
Road Audit
A road audit includes an analysis of all your road logistics across the UK and Europe. Service analysis includes; same-day couriers, haulage contractors, shipping agents, express parcel delivery, specialist transport, insurance, tracking and more.
Rail Audit
A rail audit includes an analysis of bulk and intermodal transport using the global rail network. Rail logistics is a specialist industry with costs and regulations varying by country and region, so you must partner with an auditor experienced in this sector.
Sea Audit
A sea freight audit includes an analysis of bulk and container shipping services across the world. This includes your use of Full Container Loads, (FCL), Less than Container Loads (LCL) and Buyer’s Consolidation to ensure you are using the most optimal method.
Air Audit
Airfreight is up to four times more expensive than road transport, so it requires careful planning if costs are not to get out of control. An air freight audit examines your entire process including packaging, use of consolidation services, carrier collection and more.
Parcel Audit
Parcel audits review invoices from major parcel carriers such as FedEx, UPS and DHL. These invoices are often several pages long, with each invoice containing several errors such as incorrect surcharges, duplicate charges and missed discount appropriation.
Warehouse Audit
A warehouse audit examines both inbound and outbound logistical processes. Streamlining these processes can improve profitability by reducing inventory costs, making better use of technology and optimising warehouse space.
Workflow Audit
A workflow audit essentially examines your processes and workflows to ensure your business is operating as efficiently as possible. Workflow audits can identify bottlenecks in your operation and highlight areas that would benefit from a more integrated approach.
The benefits of a freight audit
As logistical demands become ever more complicated and costs keep rising at an exponential rate. Freight companies need to ensure they keep a close eye on their workflows, processes and costs.
A freight audit can provide the information your company needs to streamline processes so that you remain competitive and profitable. Let’s take a look at how a freight audit can deliver this.
Over-billing is an issue across the freight industry. The reasons for overbilling can vary, but often it is down to third-party logistics companies using outdated billing software that has failed to keep up with the demands of the industry.
Over-billing in the freight industry is so entrenched that some companies simply regard it as a cost of doing business. These companies however are often surprised just how much they are being overcharged each month.
While over-billing is not going away anytime soon, you can ensure your company is not over-billed by auditing every invoice before it’s paid. This is easier than it sounds because the process can be automated using freight billing software.
We know that many companies are struggling to cope with the logistical demands of their business. Often they are operating without proper oversight of systems, which can lead to service delivery issues and unhappy customers.
A freight audit can provide you with a solid understanding of where your business stands from a logistical operations point of view. This will allow you to streamline systems, improve service delivery standards and ultimately increase profitability.
An experienced freight auditor should be able to act in an advisory capacity, helping you to develop systems to exploit new opportunities. In short, a freight audit goes much deeper than simply monitoring costs. It can help you transform your business.
Many companies are managing their logistics using outdated systems that have been cobbled together to provide the services today’s customers demand. However, these legacy systems are often inefficient and prone to errors.
By updating these systems to more modern integrated alternatives can deliver huge benefits to your company. You will be able to do more with fewer resources, while management will have more time to develop new business opportunities.
Systems that can help improve your business include; ERP solutions to streamline the back office. Integrated warehouse management systems to reduce shipping errors and billing software to automatically monitor invoices for over-billing and duplicates.
An in-depth freight audit should analyse the data you produce every day to give you greater insight and understanding of your operations. This goes far beyond the standard freight audit practices of monitoring costs and over-billing.
Through in-depth analysis of your data, a freight audit will highlight previously undetected patterns. You can then use this insight to better optimize your operations and services, thereby increasing productivity and profitability.
Having deep analytical data at your fingertips will also allow you to recognise new business opportunities as they present themselves. For example, you may be able to launch a new product to support an industry that is being neglected by your competitors.
Efficient logistics depends on close cooperation with third-party logistics providers. But it is also vital that you monitor the performance of these partners to ensure they are delivering on the promises.
A freight audit can help monitor the performance of third-party logistic providers such as haulage contractors, parcel delivery companies, air freight companies, forwarding companies, bonded warehouse operators and more.
Partner companies can be continuously monitored to ensure they deliver services in line with predefined service level agreements (SLAs). Companies that are continually failing to meet SLAs can then be identified and problems rectified early to prevent escalation.
How CT Global Freight can help streamline your business
Hopefully, you can now see how a freight audit has the potential to transform your business. A freight audit will highlight areas for improvement, allow you to streamline logistical processes, reduce overbilling and allow more productive use of assets.
Ct Global Freight Audit and Payment Process is one of the world’s leading freight invoice, audit verification and payment companies. We have developed a unique 3-way match verification process that results in cost savings of between 4-7% a year per client.
In 2020 we saved our clients a combined €76.8 Million. ($91 Million) in shipping costs. So if you would like to know more about how we can optimise your shipping processes. Get in touch with us today to arrange a FREE consultation by completing the contact form here.