The Gold Standard for Logistics Financial Settlement

Jay Wilson

Vice President of Processing Services 

Transportation Insight

More companies are turning to an experienced outsourced provider to assist with the day-to-day functions of business. One area of interest for many manufacturers, distributors and retailers is their freight cost and spending initiatives. By investigating Freight Bill Audit and Pay (FBAP) processes, companies are discovering areas for improvement and gaining new insight into vital best practices. Many organizations find that third party logistic providers (3PLs) which offer financial settlement as part of their bundled solution, provide the best option.

When it comes to the Freight Bill Audit and Pay, two items which rise to the top of the list of “must haves” are time and accuracy. Your outsourced provider must demonstrate the ability to pay all modes in a timely manner. There is not an operation in business today that can afford to have their supply chain and production shut down for a day due to late payment or credit issues. Once a company has entrusted the logistics payments to an outsourced provider, the provider is responsible to guarantee they have the right processes in place to ensure accurate, audited invoices are funded to the carriers within payment terms.

There are a few fundamental principles to look for to ensure your provider is taking care of your account. Collecting all pertinent documentation is certainly one area to consider. We all know the necessity of having a Bill of Lading (BOL), or a weight certificate to accompany the carriers invoice. I’d suggest checking on the data accuracy and integrity of your provider and their systems and processes. It is important to visit your provider to learn first-hand how their audit process will respond to your business needs, or at least have them provide some information on their data accuracy. If you are allowing a provider to pay invoices as presented without an audit process, you might want to seek alternative outsourced providers. 

At Transportation Insight, our seasoned keying group performs at 99.9% accuracy, when entering carrier invoices and weights from the BOL. When there are discrepancies on clients’ rates, professional business analysts audit the invoices and manage error correction. On average those types of inaccuracies and inefficiencies equate to more than two percent of a company’s total transportation budget. A solid audit process conducted by well-educated business professionals can save clients hundreds of thousands in annual hard and soft costs, depending on freight spend. The audit process also provides the basis for more advanced business insight.

In addition, one cannot overlook the importance of carrier agings to provide proactive inquiry into carrier invoices. It is the carriers’ responsibility to present the invoices for documentation, but they occasionally have systems/people that fail or allow invoices to slip through the cracks. A good FBAP provider will take the initiative to ensure all carrier invoices have been received. No one likes getting hit with a back log of invoices that should have been paid weeks, and even months prior.   

You should expect your provider to be capable of handling Electronic Data Interchange (EDI) and have an experienced processing team in place. EDI is very useful in the supply chain to increase accuracy and reduce lag time. Within the logistics and supply chain field, EDI is simply an electronic recap of documents that generally contain the same information the carriers provide in a paper format, used for the same function. That is why reliable 3PL providers take steps to ensure the EDI is accurate.

Your outsourced provider should have experienced professionals that are trained and knowledgeable in accurately reading and auditing invoices and applying tariffs to all modes. Invoice corrections made by your provider will allow you to see the due diligence of your logistics team. A provider’s ability and processes to provide timely and accurate invoice payment can reduce your overall freight cost and help you more efficiently manage your transportation spend. When it comes to selecting a Freight Bill Audit and Payment provider, select a strategic partner known for being the Gold Standard in the industry.

Blog Archive

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