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