08 Sep
You will be amazed to know that 20% of all freight bills have errors, and some of them lead to overcharges of around 5-15% per invoice. Poorly tracked freight bills can quickly increase the bills and unnecessary expenses. Hence, freight audit acts as a crucial tool for businesses to reduce costs.
But all audits are not the same. Businesses frequently choose between pre-audits and post-audits to manage the freight bills. Though each audit has unique steps, advantages, and disadvantages, these two types of audits aim to ensure error-free billing.
Let’s understand and analyze freight audit services, both pre-audits and post-audits, to help you decide which approach can result in long-term savings.
What Are Freight Audits?
The process of confirming and validating freight bills that carriers generate to ensure billing accuracy is known as a freight audit. Overcharges, duplicate charges, inaccurate weight classifications, accessorial charges, and other discrepancies are among the issues that these audits help identify. Freight audits ensure you pay the right amount by keeping a check on the billing mistakes, overcharges, or duplicate charges. Freight audit services offer financial transparency in logistics operations and protect businesses from unnecessary expenses.
Freight audits are typically divided into two categories:
- Pre-Audit
- Post-Audit
Both have different methods and implications. Let’s explore them.
What is a pre-audit of a freight bill?
A pre-audit of the freight bill is done before the carrier is paid. In this process, the freight invoice is studied and confirmed against the terms of the contract, shipping information, and agreements. With pre-audit of the freight bills, you can save money, ensure that the contracts are followed, and verify correct taxes.
Key Features of Pre-Audit:
- Cost Verification Before Payment.
- Immediate Cost Savings.
- Rate Compliance.
- Reduced Risk.
This method is helpful to businesses that handle a large number of shipments and want to regulate each freight payment.
What is a post-audit of a freight bill?
The post-audit of freight is conducted after payment to confirm whether you have been overcharged or overbilled. It involves the establishment of recurring feeds of electronic invoices, lading bills, contracts, and payment details to perform a review.
Key Features of Post-Audit:
- Identifies overcharges & duplicate billing
- Check of invoices, contracts, & tariffs
- Files and manages claims to recover overpayments
- Finds opportunities for savings
- Improves long-term freight management
This method benefits all kinds of businesses with significant freight, shipping costs, or logistics. Even minor billing errors can cost large amounts.
Freight Bill Pre Audit vs Freight Bill Post Audit
| Parameters | Pre Audit | Post- Audit |
| Timing | Conducted before payment of bills. | Conducted after payment, usually a few months later. |
| Scope | Limited to a specific set of bills. | Analyse all payments through ongoing feeds. |
| Insight Provided | Only checks bills before payment. | Provides a comprehensive view of billing. |
| Error Detection | Detect billing errors before paying. | Find hidden or ongoing errors missed in pre-audit |
| Business Impact | Prevents incorrect charges, but doesn’t show the full picture. | Helps avoid large, ongoing, and significant losses. |
| Best Practice | Should be paired with a post-audit for a complete picture. | Integral to long-term cost recovery and billing accuracy. |
Which is better for your Savings?
Depending on your business’s logistics plan:
- Businesses that focus on cost control from the beginning should use Pre-Audit.
- Post-Audit is a stepping stone to resolving past inconsistencies and crafting plans.
Best Practice: Any logistics and transportation department will certainly have many moving components and be complex! This makes it simple to experience overcharging and billing problems. It’s critical to realise that these mistakes are frequently the consequence of human error. Regretfully, these mistakes cannot be fully captured by a pre-audit of the freight bill unless you do a post-audit as well. Because if these issues are not identified and fixed, they may persist for a long time and have an unfavourable effect on your profitability. Pre-audits, on the other hand, stop overpayments beforehand, safeguarding your business’s cash flow and lessening the administrative strain of subsequent fund recovery.
This is where comprehensive freight audit services become important. The Computyne team has put in place a mechanism that can promptly identify mistakes and recover funds that are due to your company. A smart combination of both Pre and Post-Audits offers holistic protection, effective cost saving, and long-term benefits.
(CTA) Computyne offers reliable outsourcing of Freight Audit Services. The team is dedicated to assisting companies related to different niches in achieving operational effectiveness and financial solutions.
