The impact on transportation costs through parcel audits is often forgotten. Shippers may feel parcel audits lack value, and still others avoid them for irrational reasons. As explained by shippers may be able to recoup up to 5 percent of parcel shipping costs through proper auditing procedures. But, the word, audit, can be frightening to businesses trying to stay out of the spotlight. Therefore, it is important shippers understand the top misconceptions of parcel auditing and how parcel audits can add up to big savings.
1. Parcel Audits Draw Unwanted Attention
Fear remains a top factor among shippers thinking about using parcel audits. What happens if the shipper discovers a major violation of trade law, or what could happen if accounting has been incorrectly paying freight invoices? Some shippers may feel audits will draw unwanted attention, but in today’s age of transparency and visibility, highlighting inaccuracies or inconsistencies in shipping invoices is not necessarily a bad thing. Instead, it will allow both carriers and shippers to identify areas in need of improvement and work to ensure compliance with appropriate statutes or regulations.
2. Auditing Small Packages Will Put off Carriers
Performing parcel audits implies a direct review of all transactions and communications between shippers and carriers.
For example, carriers may notify shippers of late deliveries, even when guaranteed deliveries were included in the rate. Thus, shippers may want to avoid putting the proverbial spotlight on incorrect carrier activities or billing practices for fear of retaliation.
This would theoretically result in the breakdown of business partnerships between shippers and carriers, including carriers refusing to complete shipments for certain shippers. However, today’s carriers have a vested interest in ensuring all shippers the proper level of attention and accuracy in all transactions. Failure to do so would result in a shipper choosing to work with another carrier, of which there are many.
3. In-House Auditing Requires Minimal Technology and Time
A common belief among shippers, especially among shippers spending $10,000 or less annually on small parcels, is using in-house auditing is more effective than outsourcing the service. On the surface, auditing 10,000 packages sounds simple, but if a single audit takes five minutes to complete, that would equal a full-time employee working eight hours per day, five days a week, for nearly 21 weeks. If 50 percent of audits results in the need to file a claim or seek reimbursement from carriers, the average time spent to manually complete the audit could easily double, if not triple. Unfortunately, some carriers have strict time limits for filing a request for reimbursement due to incorrect billing issues.
By outsourcing parcel audits to a third party, you can alleviate the extra burden on your staff caused by conducting in-house audits. Furthermore, automating the process through a proven software, platform or technology, such as the small package auditing service offered by Thomasholmes, can run the entire process automatically, well within the time frames required by carriers.
4. Each Audit Tells Its Own Story
The aforementioned example also reveals another issue for companies looking to conduct audits in-house; it is impossible to track and manage each audit independently of all audits conducted. In other words, shippers must see overarching savings and findings from parcel audits. This is where reporting makes a difference when working with an outside company. Reports should be thorough and show consistent returns.
For example, weekly, monthly or quarterly parcel auditing reports should show the number of incorrect billing statements, the amount recouped from the carrier and the amount saved by the company after all third-party fees have been paid.
5. Returns Management Has Nothing to Do with Parcel Audits
Parcel audits also play a role in effective returns management. When a consumer wants to return an item, late delivery or problems with delivery can be the reason for the return. These issues need to be identified and addressed to prevent future delays, which should also result in fewer returns due to late or inconsistent deliveries.
6. Audits Can Delay Delivery
Believe it or not, some shippers still believe audits can delay delivery. While this may be true for shippers managing in-house auditing practices, resulting in delays completing other shipping paperwork, it is illogical when working with third parties. Since audits are conducted after delivery, they do not impact delivery.
7. My Current Shipping Rate Is the Best Rate
Regardless of what the carrier may say, transportation costs vary widely and frequently. Even if a specific bill of lading or invoice claims to have lowest freight classification and rates assessed, shippers still could be paying too much. Fortunately, working with a third-party can open the door to re-rates of previous shipments to achieve greater savings. In addition, the ability to re-rate past shipments allows shippers to recapture revenue from past, paid shipping charges. In other words, although shippers have already paid the bill, carriers may send a reimbursement payment, provided all necessary paperwork and documentation to show the carrier was at fault for not adhering to appropriate shipping terms is provided.
In a Nutshell
Parcel audits might seem like a thing of the past, considering the advancements in modern technology. New platforms, like the Thomasholmes Rater, a comprehensive transportation management system (TMS), handle most, if not all, of your outbound or inbound shipping needs, including providing better rating and accountability in your shipments. However, carriers do make mistakes, and a strong parcel auditing program is essential to recapturing lost revenue from inaccuracies and issues with your shipments. In fact, the top misconceptions of parcel audits prove the value in working with a third party to handle your parcel auditing needs.