The tech revolution has paved the way for more efficient methods of managing freight billing audits and payments. Nowadays, shippers seeking to pay their freight invoices in compliance with their contracts face a multitude of barriers. These range from complex, outdated paper-based systems to difficulties in accessing and interpreting freight invoice data. This article will look at the challenges faced by shippers as they audit and pay their freight bills. Despite these issues, it’s not all bleak; I’ll also present eight innovative strategies designed to streamline and improve the freight audit and payment processes.

The Pitfalls Of Freight Invoice Processing And Payment.

Indeed, freight bill and payment processing can often be a complex and time-consuming endeavor, leading to various pitfalls for both shippers and carriers. To detail, below is a list of the ten most common pitfalls with freight bill processing & payment.

10 Pitfalls With Freight Bill Audit & Pay

1. Surprise Freight Bill Fees and Surcharges.
2. Shipper Inaccurate With Their Shipment’s Freight Classification Or Dimensions.
3. An Over Complicated Freight Bill and Audit Process.
4. Unnecessarily Tying Up Cash Flow and Working Capital In Freight Bill Processing.
5. Having Poor Visibility into Transportation Spend.
6. High Labor Costs Handling Freight Bill Errors And Overcharges.
7. Incurring Late Freight Bill Payments and Penalties.
8. Regularly Having To Dispute Freight Bill Charges And Lengthy Resolution Processes.
9. Losing Trust In Carrier Due To Their Lack of Transparency in Their Billing Practices.
10. Over Complicating Freight Bill invoicing With Different Discounts Depending Who Is Paying The Freight Bill.

For detailed discussion on these pitfalls, see my article, Spotlight On Freight Bill Payment: 10 Pitfalls To Best Overcome.

Spotlight On Freight Bill Payment: 10 Pitfalls To Best Overcome

8 New Innovative Technology Solutions And Methods To Make Freight Invoice Audit & Payment Easier.

Even though there are many deficiencies to overcome with freight invoice processing, it is not a time to give up hope and stick with the status quo. Indeed, with a little forethought and hard work, your freight bill audit and pay process can get easier. This includes streamlining this complicated process, reducing labor costs, cutting transportation costs, and improving partner relationships with your carriers. Below are 8 innovative technology and methods to make freight invoice audit and pay easier.

1. Simplify Your Freight Payment Terms.

Freight Bill Processing: The Preposterous Challenge And The Insidious Ways It Can Make Your Shipping Operations Go Blind

In many cases, just simplifying your freight payment terms is the easiest way to streamline your freight bill audit and payment process. Just work with your carriers to simplify your freight payment terms. Indeed, I have seen many transportation contracts that consist of dozens of pages and multiple amendments. Unquestionably, the more contract term just means there are more things that need to be audited. Or worse, verbose contract language can cause the payor to overlook key contract terms that are the primary cost drivers and source of surprise charges.So, why can’t the carrier and shipper work together to reduce the terms of the contract to a couple of pages?

For more detailed discussion on what makes freight bill processing so complicated, see my article, Freight Bill Processing: The Preposterous Challenge And The Insidious Ways It Can Make Your Shipping Operations Go Blind.

“… why can’t the carrier and shipper work together to reduce the terms of the contract to a couple of pages?”

2. Leverage A 3rd Party Audit & Pay Provider.

A 3rd party audit & pay provider is a company that verifies and processes freight invoices on behalf of shippers, ensuring accuracy and compliance. For example, a shipper may hire an audit & pay provider to review invoices, reconcile discrepancies, and make payments to carriers. On the other hand, the downside of using a 3rd party is that the audit company ends up controlling your shipment data. As a result, the shipper does not have direct access to the detailed shipment data for analysis to improve their operations. Now, not all 3rd party auditors make it hard for shippers to access their shipment data. For example, Reveel and ShipMatrix do well at sharing invoice data with their customers.

ShipLab – A Better Parcel Invoice Tech Integrator That Makes Access To Rich Data Easy

3. Implement An Automated Freight Invoice Payment Systems EDI / APIs.

Automated freight payment systems use electronic data interchange (EDI) or application programming interfaces (APIs) to streamline the invoicing and payment process. For instance, a transportation management system (TMS) can integrate with a carrier’s system through APIs to automatically generate invoices and initiate payments based on agreed-upon rates. On the other hand, the downside of this solution is that there are significant upfront costs and IT integration expertise needed to implement these types of systems in-house. Another option is that you can use a 3rd party integrator to gain access to your freight invoice data. For example,  Shiplab provides shippers’ carrier billing data pipelines from most parcel carriers.

4. Leverage Artificial Intelligence (AI) Automation For Freight Invoice Processing Analytics.

Now, AI technology can be used to automate invoice processing by extracting relevant data, validating accuracy, and flagging potential errors. For example, AI algorithms can analyze invoice documents, extract key information such as shipment details and amounts, and cross-reference them with predefined rules to ensure accuracy. In this case, it is important to compare these “AI-powered” systems against traditional automated freight payment systems. Indeed, it may be the case where the realized benefit does not justify the additional costs. In addition, most major transportation Management Software (TMS) vendors are continuing to automate freight bill matching to include the use of AI. Some examples of AI-powered freight invoice matching software solutions include GOCOMET and itimize.

5. For Some Use Cases, Leverage Blockchain And Smart Contracts.

Blockchain technology enables secure and transparent transactions through decentralized ledgers and smart contracts. In freight invoicing, blockchain can be used to create immutable records of transactions, automate payment terms based on predefined conditions in smart contracts. Thus, this type of tech can provide better financial visibility across the supply chain.

Without a doubt, one of the major challenges of blockchain-powered invoicing is for the payor and carrier to agree on the standards and freight payment terms. Indeed, the main reason for blockchain’s slow adoption rate for invoice processing is that this technology requires the all parties to agree and invest in setting up a blockchain-based invoice system. Further, other challenges include interoperability between different blockchains and privacy challenges. In regard to privacy, the downsides include potential insider access, too much data transparency, and data immutability that could allow personal information to be exposed and exploited.

6. Start Using Instant Freight Invoice Payment.

Instant payment refers to the immediate transfer of funds upon invoice approval, eliminating delays in payment processing. For example, a shipper may use real-time payment platforms that enable instant transfers to carriers upon invoice verification. Without a doubt, this is a major benefit to carriers to get paid faster. However, payor’s working capital will be adversely affected. For more on electronic funds transfer (EFT) trends, see my article,  Business EFT Payment Trends: Now And The Best Opportunities Ahead.

14 New EFT Payment Technology Trends In The FinTech Industry

7. Use Cryptocurrency As An Alternative Payment Option.

Also, cryptocurrency can be used as an alternative form of payment in freight invoicing. In fact, this form of payment can provide faster transactions and reduced fees compared to traditional banking systems. For example, a shipper may offer cryptocurrency options like Bitcoin or Ethereum for carriers to receive payments. In some cases, such as international shipping, there are real benefits to carriers offering a cryptocurrency option for receiving payments. Of course, cryptocurrency has several disadvantages to include price volatility and lack of financial regulatory controls.

8. Implement A No Freight Invoice Option: Pay Based On Electronic Shipment Manifest And IoT Data Capture.

A Data Centric Business: The Best Way To Agility, One Truth, Simplicity, Technology Innovation

This particular solution is really “thinking outside the box” in that it precludes the carrier from having to present an invoice to the payor. For example, if you are a data-centric business, you may already have better data on a shipment in your systems than what a carrier provides in their electronic invoice. This includes all shipment characteristics such as dimensional weight and shipment status such as proof-of-delivery (POD). For more on data-centric, see my article, A Data Centric Business: The Best Way To Agility, One Truth, Simplicity, Technology Innovation.

In this case, why can’t you just pay off your shipment manifest data or bill of lading (BOL) instead of a carrier’s invoice? This would save significantly on costs for both the carrier and the payor by eliminating invoice processing and auditing. For example, the payor would make payment calculations based on electronic shipment manifest, carrier shipment status, and Internet of Things (IoT) data capture. Now, the carrier would still have the opportunity to submit an adjustment where they determined they were short paid. At the same time, both the carrier and the payor would be motivated to minimize payment discrepancies over time by making sure the payor has all the data to make an accurate payment. 

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

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