The insurance cost associated with quality invoice checking is very modest when compared to the potential failures; in fact, I cannot remember when the cost of thorough checking outweighed the benefits by a long, long way.
Effective freight invoice checking is a vital component of any supply-chain control process. Whilst we always consider that freight company overcharges are the reason to check accounts, and we should do this, there are two other elements that if left uncontrolled will cost the organisation far more than price errors or duplicate overcharges.
1- Monitor your team
It is essential that we monitor what our teams are doing as their errors can be huge. For example:
- Selecting airfreight services rather than road.
- Using an express carrier instead of a pallet carrier.
- Requesting VIP couriers rather than Standard.
A simple change in personnel can create major issues. We had a situation where the return of stock from Tassie to go back to the DC in Melbourne was air freighted rather than sent by sea. This occurred over weeks, and the budget impact was huge.
We regularly identify situations where airfreight services were used rather than road, parcel rather than pallet, or VIP couriers rather than Standard. The impact of all of these is huge and can occur for long periods. The carriers in the main don’t provide support on service selection errors and when you think about it, it is not in their interest. It is up to the shipper to control.
2- Volume and Weight checks
The other area is volume and weight validation. It can be difficult to control; however, it is imperative that some rigour is involved. The carriers openly admit that they increase charge weights when underweight consignments are identified, but do not reduce when the reverse occurs.
Eight years ago when we entered the freight auditing niche, we conducted historical annual audits. Issues such as those described above created the need to move to monthly checks and then to be weekly. The reason for the increased frequency was not charging errors, as they could always be recovered even if they were a month or so old, the bigger issue was the inability to recover the cost of wrong selection carrier nominations.
On a final note, is the person entrusted to undertake this vital checking task equipped to identify the issues and provide the feedback that may resolve a cost disaster. With the complexity of freight invoices and well developed transport strategies, without strong processes and dedicated software, we would suggest that few are able to complete this task successfully.