Most high volume shippers utilizing FedEx and UPS are having their invoices audited. It obviously makes sense. Guaranteed shipments are delivered late; duplicate invoices are sent and there are rate errors on these bills, ranging from incorrect discounts, improper accessorials and a number of other potential overcharges. 


    In-house versus outsource 

    There are a number of ways to accomplish the complicated task of auditing and capturing information from a company's parcel invoices. Outsourcing this function to a parcel auditing company is the most commonly used solution. Surveys show that over 50% of shippers currently use an outside vendor. The advantage to this method is that it virtually eliminates any time or resource requirements on the shipper's part. The downside is the ongoing auditing and processing fees. 

    Many shippers who don’t want to continue to pay these processing fees would like to perform this function in-house, but aren’t sure how to do it. In-house processing obviously assumes a certain level of expertise and requires a time and resource commitment on the shipper's part. If the bills are going to be processed manually, is there someone on-staff with enough technical knowledge to perform a satisfactory audit? If capturing data from the bills is important, does the company have the necessary data entry personnel to perform this task? Is there a system in place to check for late deliveries? Usually, this is the most expensive method to audit and pay freight invoices. 

    Automating the in-house process is a logical solution. However this method has its own problems. There will be a substantial commitment of IT time and resources required to set up and maintain these automated procedures. If the company does not currently have EDI capabilities, these will have to be implemented to receive electronic invoices from the carriers. 

    A program will have to be developed to check for actual delivery times from invoice and shipment status files received from the carriers. This information has to be compared against the guaranteed times to identify any late deliveries.

    A rating program will also have to be developed to automatically audit the invoices. Parcel rates are complicated, and most company's IT staff are not familiar with the complexities of working with different published list prices, variable discounts, minimum charges, fluctuating fuel surcharges, and dozens of different accessorial charges. And even when the rates are set up for processing, a substantial amount of time is required to update and maintain them due to fluctuating fuel surcharges, price changes, new account numbers, etc. 


    Available auditing and recovery software products 

    There is hope however. Parcel auditing and recovery programs are available which allow companies to automate and streamline their internal processing without the substantial time and cost required to develop an in-house system. 

    The overall objective of a system of this type is to allow you to audit your parcel invoices and capture information that will allow you to analyze and report your shipping activity. These programs typically offer the following features to accomplish this task: 
    • Ability to accept EDI invoicing from your carriers. This is critical to reducing processing costs by eliminating extensive data entry of hard copy bills. 

    • Auto-rating of carrier invoices. These programs will have your carrier rates built into a rating engine. As the freight bills are processed, they are compared to your contract rates and overcharges are identified. 

    • Ability to audit non-parcel invoices. If you’re going to process LTL and truckload bills also, most systems are capable of auditing and processing these types of invoices.

    • Automatic general ledger account coding. Account codes can be automatically assigned to expenses through shipper-defined programmed logic. 

    • Ability to create an adjustment file. You’re going to have to create a file of identified late deliveries and overcharges to submit to your carriers for credit. 

    • Data analysis and reporting capabilities. Probably the greatest benefit to these programs is the ability to easily query, analyze, report and export your shipment information. This function is invaluable for tracking parcel costs including fuel expenses and accessorial charges; allocating costs to account codes, customers and vendors; producing volume reports by shipping lane for carrier negotiations; etc. 


    Summary 

    Due to the large number of late deliveries, the complexity of carrier pricing and the increasing usage of accessorial charges, it's imperative that parcel bills be audited before payment. The cost savings realized and the data analysis and reporting capabilities available as a result of the process make this a wise decision for virtually any company doing high volume parcel shipping.

    Today, parcel auditing and recovery programs are available for companies that choose not to utilize the services of an outside provider. These systems streamline and automate the parcel audit process by utilizing EDI invoicing and autorating technology, and offering easy to use data analysis and reporting tools. 

    For further information contact: 

    Garry Oswald
    National Traffic Service
    goswald@natraf.com 
    800-775-8253 ext 206
    www.trafficprosoftware.com 

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