A freight audit & payment service usually consists of one or more levels of combined services. They may include examining, adjusting, and verifying freight bills, information reporting for logistics, and work with a combination of both Electronic Data Interchange, and paper freight bills.

A freight audit & payment provider should have the capability of verifying the origin and destination in a variety of ways, including bill of lading matching, and obtaining a signed proof of delivery. As a result, accuracy and efficiency of a freight invoice processing should be assured, because these services audit for freight rate, freight discount, misapplied accessorial charge, and prevent possible duplication of payment.

• The Complexity of Freight Audit

With high fluctuations of fuel costs, low visibility of the future freight costs and high complexity of the freight quotes, freight cost verification are vulnerable to human and process errors and this requires proper auditing to ensure that the organization does not overpay for services it did not incur.

• The High Volume of Freight Bills

The carrier freight rates are usually maintained in multiple spreadsheets and usually each carrier has a different freight rate format to the customer. An organization is daunted with the task of calculating the freight rates manually and this task can be challenging when they spent millions of dollars on freight annually.

• The High Cost of Freight Audit Processing

Freight payable cost components include direct labor costs, indirect labor costs, equipment costs, postage / supply costs and administrative costs. According to inboundlogistics.com, freight costs can make up 10% of an organization’s expenditure. In addition, it is proven that customers can expect on average 2.8% of annual transportation spend in audit savings. By outsourcing the highly labor intensive freight audit service, the company can save at least 3%-5% of total freight costs.

Most organizations do not have the manpower to calculate all the freight invoices issued to them and at best, they perform random sampling to check if the sample invoice is billed correctly. Some organizations have the manpower to perform freight audit themselves, the manual and tedious efforts required for a freight audit will usually end up much more expensive than an outsource vendor might be able to provide.

• Cost of processing freight invoices is reduced to pennies vs. dollars.

• Improved Carrier relationships. Quick & Accurate payments.

• Rate & Service validation savings from 3% to 5%.

• Cost avoidance opportunities typically 5%.

• More time to spend on core competencies.

• Leveraging the intellectual capital and technology.

• Business Intelligence: Information to enable opportunities for improvement

The pre audit take place prior to payment, while the post audit happens after the payments.

Pre audit was transformed from post audit, but has more combined values. Post audit arose in 1980 with Deregulation of the transportation industry. They would work on a contingency basis whereby they would collect 40-60% of all overcharges recovered by their auditing the last three (3) years of bills. 

Then this post audit transformed into a pre-audit where the shipper paid a provider a flat fee per bill for checking the bills for overcharges prior to payment. This pre-audit service became a core value-add process upon which the freight payment process was built.

Today, the pre-audit process has become much more robust and widely used with several value added services. This includes: a verification of freight rates for compliance with the customer's contracts, checks for previous payment, checks for shipper’s liability and other edits and validations to insure the bills meet the shipper’s requirements for payment.