As someone who has spent years overcoming data challenges within the transportation industry, I’ve found few problems as baffling or costly as freight bill processing. It’s a process so intricate it rivals telecom billing, often demanding seasoned transportation experts just to verify a single charge. Yet, beyond this inherent complexity, many shipping departments cannot even access the crucial financial insights trapped in these freight invoices.

Without a doubt, freight bill audit & pay isn’t just inefficient; it’s a monumental waste of talent, diverting shipping experts from optimizing their operations to the mind-numbing task of auditing freight invoices. That’s why I’ve written this article: to expose the preposterous nature of freight bill processing and illuminate the insidious ways it blinds our shipping operations. Specifically, I’ll identify nine critical ways this process hobbles both operations and finance, and share practical tips and resources to streamline this disjointed mess. It’s time to gain the clarity and control that our shipping operations desperately need. Read on.

1. Disjointed And Incomplete Freight Bill Data – Complicates Invoice Processing and Degrades Shipping Services.

Generally, data in the freight bill industry is disjointed and incomplete. This modus operandi leads to billing challenges and even degrades service performance for customers. To illustrate, below is just one example of how disjointed shipping data both complicates invoice processing and degrades shipping services.

Billing Example of Disjointed Shipping Data for a Large Package

Poor Shipping Data – Here Are The 4 Reasons Impeding High Tech Visibility And Actionable Analytics

• First, Shipper Provides Inaccurate Data. For instance, the electronic shipping manifest has the wrong package dimensions for a very large express overnight package.
• Carrier Scans Accurate Data. Next after package pickup, the carrier electronically scans and captures the package’s actual dimensions.
• Carrier Voids Service Guarantee, Delivers Package Late, and Re-Bills with a Large Package Adjustment Fee. Because of inaccurate, disjointed data and a complicated carrier contract, the customer does not get the package as promised, and the shipper is surprised by unexpected shipping fees. Worse, much administrative labor is expended auditing the freight bill adjustment.

Indeed, disjointed and incomplete freight bill data is quite normal. This is because of shipping data mismatches between operations and finance. To compound this, the disjointed shipping data is both duplicated and spread across many different enterprise systems. For a more detailed discussion on this topic, see my article, Poor Shipping Data – Here Are The 4 Reasons Impeding High Tech Visibility And Actionable Analytics.

2. Manual Freight Bill Processes That Raise Costs, Reduces Efficiencies, And Limits Visibility.

Particularly for non-parcel shipping, there are too many manual processes. As a result, both the carrier and shipper expend much administrative labor processing paper-based documents instead of leveraging automation if the freight bills were electronic. Additionally, manual audit processes make it more difficult to reconcile shipping charges against actual carrier services provided per the contract. For instance, auditors can expend much labor and delay payments chasing after Proof-of-Delivery (POD) and determining if a package was late or not. At the same time, most companies are digitalizing their processes, however beware. In many cases, digital transformations do not yield the results businesses need. For advice on digital transformation, click here.

3. Complex Contract Negotiations And Rate Structures.

Also, the transportation industry has extremely complex rate contracts. This results in many shippers not really understanding what exactly are the terms of carrier contracts, nor the specific costs that they will incur. Moreover, this makes it very challenging for the shipper to compare prices between carriers. Below are some examples of the complexity of contracts:

Examples of Complex Carrier Contracts

Freight Payment Terms: A Painful Money Game, Its Purpose, Is There A Better Way?

• Complex Pricing Models. For instance, it is a common practice for transportation contracts to have tiered discounts, peak charges, minimums, delivery area charges, and hundredweight pricing. Then there are the variable fuel surcharges, pickup charges, residential charges, and re-weight fees. This is then followed by dimensional weight pricing, return to shipper charges, zone pricing, large package charges, and so on.
• Challenging Comparing Prices Between Carriers. Moreover, carriers many times use different pricing models or surcharges that are not easily comparable between providers. For example, one carrier may have a separate residential or peak charge. Then, the other carrier just has a single freight charge for a particular type of shipment with no accessorial charges. As a result, shippers are challenged to determine which carrier offers the best value for their needs.

For more ideas on how to simplify transportation contracts, see my article, Freight Payment Terms: A Painful Money Game, Its Purpose, Is There A Better Way?

4. Complex Electronic Invoice Charges That Obscures Billing Errors, Non-Value Charges, And Service Deficiencies.

Package Delivery – See How To Stop Surging Costs And Make Your Customers Happy

Even when shippers successfully import shipment data into their systems, they face an overwhelming challenge of wading through the messy data from multiple carriers. Bottom line – there are too many data formats and an excessive volume of data from carriers. For example, a transportation carrier may have over 500 data elements for even a single $8 shipment. As a result of this data overload, shippers are numb to insights, leading to missed billing errors, undetected non-value charges, and unable to identify charges for services not rendered. Consequently, shippers either dedicate significant administrative resources to auditing freight bills or give up, blindly paying their carriers.

For more ideas on identifying billing errors and non-value charges, see my article, Package Delivery – See How To Stop Surging Costs And Make Your Customers Happy.

5. Limited Data Visibility Between Operations And Financial Systems.

Multi-Hop Reasoning For Supply Chains: This Is The Way To Make Better Decisions And Avoid Unintended Consequences

Also, internal data silos prevent the appropriate decision-makers to evaluate carrier charges accurately. Thus, stakeholders cannot make informed decisions about their operations. For example, if financial systems do not have access to recent shipment activity data, it can be challenging to forecast and manage cash flow effectively. On the other hand, many times transportation operations do not have visibility to detailed shipping charges. This is a challenge. For example, without detail charge data operations have no effective way to know about excessive charges such as recurring address correction charges to the same delivery address.. Nor, can they evaluate ways to reduce charges and still maintain service levels.

Without a doubt, supply chains are particularly challenged with getting data access and realizing insights across many different enterprise systems. However, emerging tech such as AI and advanced analytics are starting to offer solutions to gaining rapid insights from multiple data sources. For details, see my article, Multi-Hop Reasoning For Supply Chains: This Is The Way To Make Better Decisions And Avoid Unintended Consequences

6. Limited And Complex Data Integration Between Shipper, Auditor, And Carrier Systems.

The Best Ways To Access Data – Tech Solutions To Unlock Your Data Silos

Setting up external data interfaces is a technical challenge that often leads to poor shipment visibility, invoice processing delays, and inaccurate billing. For example, without up-to-date shipment delivery status from carriers, freight bill auditors struggle to conduct timely and accurate freight audits. Moreover, integrating invoice data and shipment status between systems is time-consuming and costly. However, without proper system integration, auditors resort to manual website lookups or downloading and importing data into Excel workbooks. As a result, auditors, key stakeholders, and decision-makers do not have an unified view of either their shipping data, nor their financials.

However, do not give up hope. There are increasingly many more options to choose from when transfering data. For details, see my article, The Best Ways To Access Data – Tech Solutions To Unlock Your Data Silos.

7. Invoice Adjustments And Disputes Are Labor-Intensive With Low Financial Yield.

With freight bill audits, it is difficult for companies to resolve issues quickly and efficiently. For example, if a shipper disputes a charge with a carrier, it can take weeks or even months to resolve the issue. This can result in delayed payments and strained relationships between shippers and carriers. Additionally, there are significant labor costs. For instance, many times it takes an experienced transportation expert to catch errors. For ideas on how to simplify fright bill and audit processing, see my article, Freight Invoice Audit & Payment: New Tech And Methods That Will Make It Better.

Freight Invoice Audit & Payment: New Tech And Methods That Will Make It Better

8. Hard To Onboard New Carriers Due To Shipper Requirements Such as Audit, Finance, and IT Integration.

Data Interoperability For Supply Chains: The Best Ways To Unlock Your Digital Assets And Empower Innovation

Without a doubt, adding new carriers is challenging for shippers, and servicing new customers is equally difficult for carriers, primarily due to complex data integration requirements. For instance, many shippers demand extensive auditing, financial documentation, and specific data integration before onboarding any new carrier. In many cases, these excessive requirements can exclude smaller carriers. Also, even large corporations struggle to add new carriers if their finance departments cannot process the carrier’s proprietary invoice data format, highlighting how these integration projects are slow and difficult. While there’s no easy fix, businesses can significantly improve their data interoperability to mitigate these hurdles.

For ideas to streamline data integration and interoperability, see my article, Data Interoperability For Supply Chains: The Best Ways To Unlock Your Digital Assets And Empower Innovation.

9. Dysfunctional And Legacy Systems Constrain Operational Innovation, Decision-Making, And Flexibility.

Unquestionably, most, if not all, large companies are constrained by dysfunctional and legacy systems that directly affect their transportation operation and corporate decision-making. For instance, take a shipper or 3PL that is using outdated software. They are hamstrung to integrate with more modern logistics platforms and API services. Thus, it is challenging for them to compete against more innovative competitors. For a more details on the operational and financial challenges with enterprise systems, see my article, Agile Supply Chain Decision-Making: First You Need to Know The Truth About Enterprise Software.

Agile Supply Chain Decision-Making: First You Need to Know The Truth About Enterprise Software

More References.

• TraxTech’s The Ultimate Guide to Freight Audit.
• Shipware’s Freight Payment Process 101.
• Also, for tips on reducing package delivery costs, see my article, Package Delivery – See How To Stop Surging Costs And Make Your Customers Happy.
• For more information on strategic sourcing, supplier selection, and supplier management, see my article, The Strategic Sourcing Process And Data Analysis: The Best Ways To Secure Unsurpassed Supplier Results.
• Also, for some ideas on how to get access to better freight bill data, see my article, Simple Data Access To Quality Electronic Freight Bills: Here Is How To Make This Less Painful For Shippers.
• Lastly, There are many benefits to improving your freight bill audit process. Indeed, it is a win-win for both your shipping and financial departments. For more tips, see my article, The Best Ways To Make Your Freight Bill Audit Process Better Benefit Your Shipping Operations.

The Best Ways To Make Your Freight Bill Audit Process Better Benefit Your Shipping Operations

Need help with an innovative solution to make your supply chain analytics actionable? I’m Randy McClure, and I’ve spent many years solving data analytics and visibility problems. As a supply chain tech advisor, I’ve implemented hundreds of successful projects across all transportation modes, working with the data of thousands of shippers, carriers, and 3rd party logistics (3PL) providers. I specialize in launching new analytics-based strategies, proof-of-concepts and operational pilot projects using emerging technologies and methodologies. If you’re ready to supercharge your analytics or if you are a solution provider, let’s talk. To reach me, click here to access my contact form or you can find me on LinkedIn.

For more from SC Tech Insights, see the latest articles on Finance, Shipping, and Data Analytics.