Freight Audit Companies Fall Short in this One Area: Aged Invioces

by George Muha on October 11, 2011

This post is going to be short, sweet and to the point. I love what a good freight audit company can do for a shipper! These firms usually can process invoices way more effectively than a shipper can on their own. In addition, some of these firms can output metrics and business intelligence that can help companies make very smart decisions. But way too often I’ve seen freight audit companies fall short in one key area: AGING OF INVOICES.

Shippers reading this article who are shopping a freight audit company must make sure these firms have their act together when it comes to aged invoices. In particular shippers need to ensure freight audit companies have an air tight system for disputed invoices because that is where most of these aged invoices slip through the cracks.

What happens is a shipper disputes something on an invoice. So part of the invoice gets paid and a balanced due is created. The disconnect happens here because some (when I say “some”, I really mean “many”) freight audit companies do not have a good process to follow up with the client try to get this resolved. It also doesn’t help that carriers don’t kill themselves following up on this every week.

The real issue occurs six months later the carrier starts threatening the shipper and at that point the shipper is not even sure what the carrier is talking about. Then the carrier threatens to adjust their discount. Then the carrier decides not to deliver freight in the system. Meanwhile the freight audit company could have nipped this in the butt a long time ago but since they have no process to stay on top of this it was unstoppable.

So if a shipper is considering a freight audit company, they must ask them to demonstrate their process for aged and disputed invoices.

EXTRA CREDIT: A little known fact is that swift payment to freight carriers is a huge negotiating tool. Allowing freight invoices to age runs counter to keeping transportation rates low.

Tagged as: aged invoices, carrier invoice, freight carrier, LTL, motor carrier, Supply Chain Talent

About Me

George Muha is the founder and editor of Freight Savings Tips. George is also a consultant with a specialty in helping shippers improve profit gross margins by heavily focusing on supply chain. He has authored articles on best practices and supply chain savings ideas that have been featured and syndicated in over 50 publications.

http://www.tvlgroups.com crystal cui

Hi George
Good post! Since I have been working in logistics for few year, but something I have not knew at the all in this industry. after reading, actually, known some useful acknowledages from the post.

Thank you!
http://freightsavingstips.com George Muha

Crystal, glad you found value in this post and thanks for dropping by. Tell all your friends!
Coy Brown

George – How would the freight payment company know when they could pay these bills when the shipper disputes the invoices. Since the shipper disputed them it should be the shipper’s responsibilty to let the payment company know they can pay them otherwise balance due bills will keep coming through and be in dispute but the frieght payment company’s hands are tied. If the shipper put the dispute on the bill they are responsible for releasing it.
http://freightsavingstips.com George Muha

Coy, this is the exact thinking that I tried to convey is not healthy to this process. Disputes are inevitable. When a logistics company or a freight payment company labels this as the “shippers problem” then it doesn’t do the shipper any justice. If a freight payment firm stays on top of all invoices that are aging then they can help the shipper resolve these disputes and more importantly NOT LET INVOICES LINGER. Letting invoices age like that is unhealthy for everyone involved. I believe freight payment companies are in the best position to keep this process healthy.