New Articles

Supply Chain – Your TMS Isn’t Enough: Why You Need a FAP Solution


Supply Chain – Your TMS Isn’t Enough: Why You Need a FAP Solution

You’ve heard of a Transportation Management System (TMS). You probably have one. You’ve heard of Freight Audit and Payment (FAP). You may have a FAP solution or think your TMS is adequate as a freight auditor. However, a TMS and an FAP solution are each essential components in a tech stack of supply chain management tools. 

No single piece of technology is ever going to seamlessly manage all aspects of a global logistics operation with countless variables and complexities. But together, your TMS, focused on shipment execution, and your FAP solution, focused on post-execution activity, can work harmoniously to create a mature and successful logistics operation. 

Freight Audit and Payment Software Systems

To optimize your global financial supply chain process, a freight audit and payment software system is crucial. Finding new efficiencies, ensuring compliance, and enabling cost reductions across your global transportation spend are just some of the valuable products of a holistic freight audit and payment system. However, achieving end-to-end visibility into your global transportation spend demands a sophisticated partnership with your freight audit and payment provider. 

Read on to learn more about freight audit and payment and how your FAP system can work alongside your TMS.

History of Freight Audit and Payment

Prior to 1980, the transportation industry was strictly regulated, so payment terms were cohesive across the board, and freight invoices had to be paid in a matter of days. When the industry was deregulated in 1980, logistics services changed, and shippers and carriers could negotiate the terms of their freight bills. This made the freight payment process more complex, and as technology has advanced over the past few decades, the need for a comprehensive freight audit has increased.

Technology for Freight Audit and Payment

When a more robust freight audit is performed, the amount of data gathered regarding a company’s transportation spend is significant. A powerful freight audit and payment provider can then analyze that data to provide a wide range of business intelligence, including carbon emissions, carrier performance, and other important KPIs.

Transportation Management Systems

What is a Transportation Management System?

A transportation management system, or TMS, is a software solution that enables companies to better plan and optimize their global supply chain and logistics operations through multiple modes and regions.

The core functions of a TMS are:

  • Shipment execution
  • Load tendering to carrier/logistics service provider via electronic interfaces
  • Load optimization – i.e., consolidation of LTL to full truckload and selection of proper carrier and service
  • Software-focused – not sold as a managed service
  • Basic freight audit – electronic verification that contract pricing is correct

The Evolution of Transportation Management Systems

Transportation Management Systems have evolved over the last 20 years. In the early days of TMS, there weren’t many integrations available, and manual data entry was common. The advancements in the early 2000s allowed TMS providers to serve not only shippers but brokers and third-party logistics providers (3PLs) through the same applications. When cloud-based solutions became the norm, it became affordable and widespread.

Today, basic freight audit is part of many transportation management systems, though the data captured does not provide a holistic view of an enterprise’s total transportation spend across their global transportation network.

The Goal of FAP & TMS Systems

It is not possible to control or optimize what you can’t see. You can plan your supply chain and bring carriers on board, but without the data to benchmark performance and monitor compliance, you are unable to see opportunities for improvement or spot the nuances that can affect spend.

Your TMS is focused on getting goods out the door as efficiently as possible, as it should. In best-in-class operations, it’s up to the data capture and analysis capabilities of a freight audit and payment system to provide the intelligence – what was actually executed by the carrier, how much it cost, and to spotlight any problems or opportunities for improvement along the way.

While your TMS will assist in managing operations efficiently, the integration, usually via EDI connection, of an industry-leading freight audit and payment solution empowers end-to-end visibility to your entire supply chain, matching what was shipped (over multiple modes, channels, geographic regions, and carriers) to what has been invoiced, while identifying any outstanding charges or anomalies.

Automate the Capture and Standardization of Key Data

The key data captured by your freight audit and payment solution isn’t worth much if it isn’t standardized – ingested, cleansed, normalized, and connected from disparate systems – to provide you with centralized intelligence on your transportation spend.

No TMS on the market can perform these tasks end-to-end, making it imperative to have a freight audit and payment solution that plugs into your TMS and automates the capture of that data.

Benefits of Freight Data Capture by FAP

The benefits of performing regular freight audits often pay for themselves. A structured freight auditing and payments system provides ample opportunities to uncover problems that may have otherwise gone unnoticed.

Uncover Unnecessary Costs

Investing in a freight audit process that validates your freight data can uncover excess charges and allow you to assess what your actual costs should be. For example, a freight audit can detect unnecessary detention and demurrage charges, which are fees for storage and delays in the return of a container. Further, by cross-referencing all of the fees included on your invoices, a freight audit can alert a company’s accounts payable team to unexpected accessorial charges, such as reweighing, and better optimize your supply chain to protect against these charges in the future. The sooner you adopt a structured FAP system, the sooner you cut extra costs and improve your return on investment (ROI).

Reveal Missing or Incomplete Data

Establishing a solid FAP process as part of your supply chain tech stack uncovers potentially missing or incomplete data by providing end-to-end visibility into operations. For example, if you’re missing information about routing rules or approval parameters, catching that early and filling in the missing pieces can save time, money, and even contracts while improving your relationships with your carriers. With complete and accurate freight data, the visibility into your global transportation spend provides you with invaluable business intelligence, allowing your enterprise to take operations to the next level.

Increase Efficiency

The freight audit and payment process uncovers operational inefficiencies in your supply chain operation. For example, when you replace manual FAP processes with a tech-based solution, you can increase efficiency across multiple departments and your supply chain. More efficiency in the freight payment process allows your finance department to focus on larger issues. More efficiency in your supply chain means lower transportation costs and even lower carbon emissions due to route optimization. As they say, time is money. Allowing team members to focus on core service issues is a better use of their time and, subsequently, better for your bottom line.

Future Proof Against Invoice Errors

Freight billing errors are inevitable – some estimates say up to 25% of freight invoices have errors – but uncovering them allows your company to address the issues and rectify them before larger problems emerge. If your internal FAP solution is properly auditing all invoices, you can quickly calculate shipping costs, see and pay freight bills on time, and streamline payment services. The key to preventing future invoice errors is to catch them early and determine the root cause. Then, you’ll have the chance to optimize logistics operations and make corrections for the future.

Author’s Bio

Chris Cassidy is the chief revenue officer for Trax Technologies, the global leader in Transportation Spend Management (TSM) solutions. Trax elevates traditional Freight Audit and Payment (FAP) with a combination of industry leading cloud-based technology solutions and expert services to help enterprises with the world’s more complex supply chains better manage and control their global transportation costs and drive enterprise-wide efficiency and value.

freight invoicing

How to Tackle the Freight Invoice Management Obstacles

A freight invoice is a detailed bill which includes information regarding the transportation of a company’s goods from one place to the other, along with the inclusion of the amount of charges, its weight, due dates, complete goods’ description, contact information, and names of both the receiver and the shipper, etc.

On the other hand, logistics is defined as the process of planning, implementing, and controlling the storage and movement of services and goods from the point of origin to the point of consumption within a supply chain, explains a top provider of Invoice Processing Services. The companies which deal with these processes become a part of the logistics industry and handle a few or all of the functions of supply chains as per the logistic requirements of the client.

Past Examples of Invoice Issues

-In recent times, an IT company was overbilled throughout 14 days by an amount of $935,578 owing to the incorrect weight applied by a parcel carrier.

-Auditing helped a national level entertainment retailer in saving around $35,000 from a wrong monthly invoice charge

-A worldwide renowned LED manufacturer had to pay $93,147 more due to incorrect billing currency, but the amount was recovered after the fault was discovered during the auditing process.

Top Freight Invoice Management Obstacles

Multiple Challenges

Managing invoices is extremely hard as a lot of challenges like reconciling contract terms with Bill Of Lading (BOL), invoices’ rating for correct rate selection, decisions about the acceptance of differences in charges, getting invoices resubmitted after making the carriers do corrections, etc. have to be dealt with extreme care. When these challenges are not addressed properly, they lead to errors, which further lead to overcharging, eventually adding to the overall Invoice Processing complexity.

Tedious Information Processing

The processing of information for the invoices is really tiring and tedious in nature. This is the reason employees who process the information for billing, weight, ledgers, data entry, and more commit multiple mistakes and make the final outcome inaccurate and hard to understand.

Bill Entry Issues

The very first concern which the logistics industry has to deal with during invoice management is the efficient functionality of the billing entry process which is defined below:

-Shortage of non-standardized processes and control due to operations which are not centralized for billing entry

-Multiple systems integration

-Due to missing BOL information, incomplete billable items are captured

-Multiple formats for BOL 

-Lost information regarding a customer or local-specific procedures for billing

Refund Management Issues

There are a lot of instances where the goods and services do not land safely at the doorstep of the receivers. In such cases, goods and services are returned back to the suppliers, which involves going through all the invoice processing steps again, which is extremely time-consuming for the owners of the logistics company.

Best Practices to Tackle Invoice Management Obstacles

Must-Include Invoice Listings

-Consignee and consignor names

-Shipment date

-Packages number

-Freight description

-Volume, weight, and measurement of freight

-Total outstanding charges

-Each carrier name engaging in transportation and movement route

-Shipment’s transfer point

-Issuer’s business address and remittance address

Freight Management Controls

It is important to incorporate internal controls which are powerful into the management structure of the freight. An authorization system, duty separations, and internal audits on a periodical basis are one of the most important tasks for managing risks like favoritism and fraud, which have the potential to bring down the overall profitability. 

The main objective is to make sure none of the employees have any chance for concealing and committing any illegal or unethical activity. For example, an employee who has been given the responsibility of getting the estimates should never be made the in charge of making the final freight invoice payment or selection.

Proficient Auditing System

According to a report by, wrong freight bills appear in about 5-6% of the entire invoices, which can raise the expenses of transportation to a great extent. With a proficient auditing system in place, along with a thorough recalculation and review can save you from overpaying due to inaccuracies in the freight bills. 

Apart from this, normal dealing procedures for lost shipment or damaged dealing, and timely claims reconciliation are an imperative part of a cost-saving management program for the freight.

Outsourcing Payment and Freight Audit

When it comes to finding the best solutions for streamlining the freight invoice management process, Outsource Invoice Processing remains a top favorite amongst the businesses due to its cost-cutting feature, along with the following benefits provided by it:

-Paper routing, filing, and handling elimination

-Centralized system for entire processing functions of the freight invoice

-Eliminating multiple systems and non-uniform processes

-Real-time insights into the invoices

-Latest technology use like artificial intelligence and automation

-Invoices’ long-term archival in the electronic form

-Carrier queries

-Increase cash flow to the maximum levels with timely invoice payments

-Receive correct and detailed accrual files and cost allocation straight into your system

-Gain visibility into operational metrics, invoice status, and payment information

Invoice Automation

Most of the industries have already incorporated the use of automation in a majority of their work processes, and have reaped great benefits in the following forms:

-Faster processing of invoices

-Elimination of costly human errors

-Invoice costs reduction by 80%

-Preventing payments duplicity and maximizing initial incentives for payments

-Enabling enhanced cash flow control and visibility

-Achieving 100% accuracy for invoice entry

Freight Software

Businesses who are trying to manage their freight invoices by themselves can ease their management workload with some of the top freight software mentioned below:

The Magaya Cargo System

This user-friendly software helps in eliminating duplicity of data entry, streamlining shipment workflows, generating Bill Of Lading, etc., along with a fully-integrated system for Invoice Accounting.

A1 Tracker

This software meets the unique business demands of the present scenario, make the working of the logistics systems smooth, and bring the required value to your business.


The online platform for global trade management and freight booking, along with providing logistics owners with digital sales tools.

Excalibur WMS

This is a software which is fully integrated for warehouse management, accounting system, and third-party logistics (3PL) service billing.

CargoWise One

A central software system platform for worldwide providers giving logistics services.

Managing the freight invoices is definitely challenging owing to the various complexities in the form of inaccuracies and irregularities in the data and work processes, respectively. These complexities can be brought down greatly with the use of automation, outsourcing, audit systems, etc., eventually streamlining the process of freight invoice management at large, along with saving time and money at the same time.


Gia Glad holds the position of Business Content Writer at Cogneesol – an outsourcing firm offering finance and accounting services along with other value-added services to the small and mid-sized businesses globally.