Freight payment services have been around since before the deregulation of motor carriers but really exploded as a competitive service post-deregulation. This service provides a great value to shippers.
A freight payment service usually consists of one or more levels of combined services. They may include freight auditing services, information reporting for logistics and freight data analysis, work with a combination of both Electronic Data Interchange or Connect Services, and paper freight bills.
The model consists of carriers redirecting your freight invoices to your third party logistics company. Through freight audit details such as origin and destination, bill of lading matching, obtaining a signed proof of delivery, and more are confirmed.
If you audit your freight invoices against your contract pricing with the carrier, that is a good start, and you are ahead of most companies. However, that should be only part of the freight payment audit process. You also need to compare shipment details. Does the bill of lading data match the invoice data? If you use an outside freight payment service, how are you supplying the freight payment firm with that data?
Because Thomasholmes is not a freight payment house, we integrate the entire payment and audit process. Our customers use our transportation management system to create freight shipment records. Using the TMS, our shipper knows the price at the time of shipment. When the carrier sends the freight invoice, Thomasholmes audits the bill twice, both automatically and manually, because we MUST. If Thomasholmes makes an error, we pay the difference because we invoice our shippers what was quoted when the bill of lading was created at time of shipment. If the carrier makes a freight invoice billing error, and we don’t catch the error, we will pay the difference. Therefore we are highly motivated to catch all errors. If a freight payment house makes an error, it doesn’t cost them; YOU pay the difference.
There are also post-audit freight payment services many shippers employ rather than a freight payment house. This type of service is a second look at freight invoices after shipment to correct errors that slipped through the pre-auditing of freight invoices. A post-freight invoice audit helps you recover some of the costs, but it typically only catches 50% of errors. Post-auditing of freight invoices also does not allow you to eliminate future errors. A post-audit firm has ZERO incentive to review your process, or the carrier’s process, to eliminate future errors. That action reduces their income. At Thomasholmes, we have every incentive to reduce errors. We gain no revenue, but we do reduce costs. Cost for us, cost for the carrier, and cost for YOU, our customer.
If you would like more information on how Thomasholmes can provide you with a comprehensive freight payment solution included as a part of our freight accounting services when you are a Thomasholmes customer, please contact us or set up a freight invoice analysis today.
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