But in freight invoicing, the potential for these "tiny" errors to scale with your workload means that these minor mishaps could end up costing your company some serious time and money.
7 Common Errors Found During Freight Auditing
Here are some of the most common errors we have encountered:
Errors on the Bill of Landing and Shipper Mistakes
The bill of landing is perhaps the single most important document in this process, and errors here can lead to many problems.
These include shipping delays, loss of the right to limit liability, loss of P&I coverage, and others such as overcharging/undercharging and incorrect rate applications due to misclassification of the merchandise.
A standard fee in the industry that is assigned for delaying the carrier's pickup time, detention errors can be an expensive line item if not monitored and controlled as much as possible. Regular auditing of your detention error rates will help you determine whether you are being undercharged or overcharged fees.
The two most common detention fees are per diem and driver detention fees.
Per diem fees apply when the shipper does not release the merchandise at the agreed-upon time. In contrast, the latter applies when the driver is detained beyond the "free time" allotted for loading and unloading the truck. Detaining the driver generally happens at either the point of origin or the freight destination.
Extra and Costly Accessorials
When you ask a carrier to perform duties outside of the regular pickup times and delivery routes, you can be assessed various accessorial charges for re-consignment or limited access delivery, liftgate services, inside delivery, and other commercial/residential pickups.
The best way to avoid this issue is clear communication with your carrier. As long as you know how the shipping destination will receive the goods, you'll steer clear of accessorial charges!
If you have negotiated a discounted rate with a freight service company, you need to make sure this is reflected in the documentation you receive from them and what you are charged. Should you locate an error, clear it up as soon as possible.
Wrong Freight Classification
Freight is classified according to density, liability, how it is stored, and many more factors. Because there are 18 different classifications for freight, misclassification can end up costing your firm money.
Outside of overcharging for services rendered, duplicate invoicing creates a raft of issues regarding data entry and bookkeeping, though, thankfully, this makes it somewhat easier to spot than other errors.
Taxes and Tariffs
The incorrect application of taxes and tariffs will ultimately have to be resolved when reconciling your accounts at the end of the year. Failure to apply taxes altogether is one side of the coin, but the other, more nuanced issue here is misapplying taxes and tariffs only to have to correct this error later.
How to Avoid Freight Auditing Errors: Audit Automation
Companies must monitor their shipping costs to avoid any losses. That’s why it’s no secret that your company’s success depends on a freight invoice auditing solution. Check out how our solution AuditERP sets your business up for success.
Sign up today for a free product demo of AuditERP, the SAP-integrated freight audit software.
For more information on freight audit, check out these resources: