If a customer’s ship-to address is incorrect, if your shipping department overlooks a less expensive option, or if a carrier overcharges, your shipping costs increase. Regardless of the reason, catching errors has traditionally been an after-the-fact, if-I-have-time responsibility for employees who are already overloaded. Fortunately, today’s methods to audit shipping charges have improved significantly. If you’re not already keeping a watchful eye on your shipping invoices, here’s how to step up to more savings.
In the beginning: the MANUAL Audit
Everyone starts this way. Invoices arrive and it’s someone’s job to review them for errors and approve them for payment. This approach works fine initially, but when the volume of orders rises, and the designated person has other job responsibilities, it gets patchy. Things are missed. The percentage of errors found falls, which means your company is likely not finding all the errors and thus overpaying for some shipments.
At some point, your carrier invoices are barely being looked at. But someone should be monitoring them, right? Enter the consultant.
We can’t take it anymore: the EXTERNAL Audit
Auditing companies have been established to review your shipping invoices on your behalf. They make money by keeping a portion of your overcharges for themselves. This is easily justified if your internal people just can’t keep up and you otherwise would not have anyone reviewing your invoices. After all, getting something back is better than nothing.
After a few years, you’re still paying an outside service, but you could have paid for audit software several times over by now. Plus, who’s auditing the auditors? You feel a loss of control over the high volume of money spent on shipping… and to monitor shipping. You want more visibility, but no one wants to return to a manual process. What’s your next step?
Enter auditing software.
Keep it simple: The AUTOMATED Audit
With shipping auditing software like Varsity’s ShipAudit™, you enter your pre-negotiated contract rates in advance. Then, as invoices are received electronically, the software automatically checks your invoices against your contract. Everything that aligns is marked ready for processing and sent automatically to your Finance or accounting department. All the details related to any exceptions, duplicate charges and accessorial fees are collected and presented together, along with recommendations to pay, require an adjustment based on your contract rate, or deny.
Now, what used to take an internal person half a day or more what your internal person never quite got around to doing is condensed into a brief report with all supporting details. After a quick review, legitimate exceptions are paid and the details for the contested charges are submitted back to the carrier for correction.
Could a third party with software do this for you? Yes. But you’d still have to pay them. Here, your audited savings cover the cost of the software in a few months and the rest is savings. Plus, there is one additional benefit from keeping your audits internal: a well-trained shipping staff.
Feedback loop: The CONTINUOUS IMPROVEMENT Benefit
When your automated auditing software discovers errors, particularly those that cause expensive accessorial charges, the fault doesn’t always lie with the carrier. There are many potential errors that your shipping software and/or your employees can help you avoid. These include dimensional weight pricing, residential surcharges, address corrections and more.
Having auditing software will help you recoup carrier overcharges. Having the right shipping software in place can help you identify the types of overpayments that are internal. For example, a package might have been sent Regular Delivery to a residential address (causing a surcharge) vs sending via Home Delivery. Additional employee training to reduce internal errors can be another great way to minimize your shipping costs. Your auditing program will surface the examples you need to help them learn.
While rising shipping costs will continue to be an area of concern for most companies, keeping a close eye on your costs with internal auditing software will help you make the most of your company’s shipping expenses.
Ready to learn more about how Varsity's ShipAudit™ software can help you? Reach out today to schedule a ShipAudit™ demo to see how auditing software can help you avoid costly shipping mistakes.
Varsity Logistics is the leading provider of shipping software for companies running on an IBM i (Power i, AS/400) platform. Varsity’s ShipSoft™ software can be paired with the company’s ShipAudit™ module to automatically receive data from your carriers, reconcile charges, complete a line-item audit of all accessorial and freight charges, create discrepancy reports and seamlessly interface with your accounts payable system. Monitoring carrier charges has never been easier! For more information or to arrange a demo, visit varsitylogistics.com.