Did you know? About 83% of freight invoices are inaccurate. The solution? FBAP (Freight Bill Audit and Payment)
Freight charges comprise about 10% of your company's total expenses. Plus, fuel surcharges and other fees make the cost higher. Hence, inaccurate freight invoices can cost you more than 10% of your total expenses.
This is where FBAP comes in. In a nutshell, FBAP makes the process easier and more accurate for you.
But what exactly is freight bill audit and payment? What are its benefits? Does it have any disadvantages?
In this article, we'll talk about FBAP, its benefits, and its disadvantages.
FBAP is the process of checking and verifying freight bills. It involves cross-checking these bills with their corresponding shipments.
Companies usually outsource their freight bill audit and payment to other companies.
First, these third-party companies receive the bills from the clients' carriers. Then, the bills enter into the FBAP provider's system.
Once the data goes into the system, the audit begins. Then, the auditor looks for discrepancies in the bills. These include incorrect carrier names, numbers, discount rates, and accessorial charges. The auditor also checks if the weight, size, and item count of the shipments are correct.
Due to the many possible errors in invoices, FBAP providers often recommend a pre-audit and post-audit.
A pre-audit involves checking the bills for any errors before you pay your carrier. On the other hand, a post-audit checks a batch of invoices every few months.
While FBAP seems easy at first glance, it is not. FBAP is a complicated process that calls for ultimate accuracy. Hence, you must make sure that the provider you're working with is reliable and experienced.
Here are the benefits of freight bill audit and payment:
Inaccurate freight invoices can cost you over 10% of your expenses. Worse, you will pay more than what you're supposed to by accident. As a result, you will lose a lot of money.
FBAP helps you avoid this. An accurate audit can save you a great deal of money by pointing out errors that you can correct before paying your bills.
An accurate freight audit also helps you negotiate a better rate. Aside from finding errors, an auditor also finds a way for you to get better rates from your carrier.
For instance, an auditor can look into the data provided by carriers and use it to find your leverage for your next carrier contract negotiation.
Freight bill audit and payment is a time-consuming process. Unless you're an auditor by profession, you will find it difficult. Plus, FBAP's learning curve is quite steep.
By having someone else do the audit for you, you save time. You can then use the time you saved to do high-leverage activities to scale your business.
Let's face it: freight auditing is stressful. If you try to do it yourself, you will be stressed. Even if you do it decently, the mistakes you might make along the way can stress you out.
FBAP helps you avoid stress. By letting someone or some software do the audit for you, you don't have to blame or stress learning how freight audits go.
As mentioned, FBAP requires accuracy and experience. It is also complicated and time-consuming.
Given FBAP's complexity and need for accuracy, it becomes prone to errors.
Even if you find an FBAP provider with the right skills and experience, they cannot turn in perfect audits each time. After all, humans as we are, we are prone to making mistakes.
The solution? A software that allows you to do your freight auditing in-house.
By having software that can do freight audits, you can expect nothing but the best.
For one, freight audit software eliminates the need for manual freight auditing. By automating everything, your audits become highly accurate.
You can also save a lot of money using freight audit software. When you transfer your freight audits in-house, you don't have to pay third parties.
Lastly, your data becomes more secure. Your bills won't go through any third-party systems that might lose or breach your data.
AuditERP is a freight auditing software that does complex audits for you. By using AuditERP, you can easily collect, upload, and categorize invoices. You can also seamlessly verify charges, analyze data, and set benchmarks.