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The freight payment is the financial collection process that ensures invoices are received, audited, processed, and paid between carriers and shippers. A freight audit refers to the verification of shipment details against the Bill of Lading (BOL) in order to identify discrepancies.
Fremont, CA: A freight audit refers to the verification of shipment details against the Bill of Lading (BOL) in order to identify discrepancies. The process is essential for carriers, independent truck drivers, owner-operators, and shippers while they rely on each other. In brief, freight audits ensure that employees get paid correctly for the work they perform.
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Freight audits commonly find the following mistakes:
• Delivery rate discrepancies
• Error in the total cost charged
• Wrong application of tariffs, taxes, or customs duties
• Inaccurate weights or quantities in the shipment information
• Inaccurate recording of detention hours and layovers
A freight audit can be performed by any company, but third-party logistics (3PL) companies, commonly employed by shippers, usually conduct freight audits as part of their freight payment processing services.
What are Freight Payments?
The freight payment is the financial collection process that ensures invoices are received, audited, processed, and paid between carriers and shippers. In the shipping and logistics industry, they are common practice and companies increasingly outsource these services to specialists and third-party logistics companies (3PLs) provide these accounting services.
In this freight payment index, national and regional freight shipping volumes and expenditures are measured quarterly. This is a valuable indicator of the health of the trucking industry and an important early indicator of a changing economic climate.
Why do Shippers Use 3PL?
It is more efficient and cost-effective for shippers to use 3PLs to make freight audits and payments than to support an in-house accounting department. As a result, 96% of Fortune 100 companies utilize 3PLs in some capacity to perform these functions.
By providing freight payment and audit services, 3PL companies are able to lower their costs per payment and audit. Moreover, their level of specialization ensures their information is more accurate, saving shippers money by rooting out overbilling issues. Shippers can focus on their core area of expertise, shipping, by outsourcing freight audit and payment processes to a 3PL company.
Do Owner Operators Need a 3PL?
Freight audits and freight payment processes take a long time, so you might have to wait up to 90 days to be paid. As an independent truck driver or owner-operator, that's too long to wait when you have weekly and monthly business expenses and bills to pay. Using a truck factoring company for invoices and payments is an option. It's possible to get the money faster, but it's more expensive. There are a variety of hidden fees that factoring companies charge for invoices, including fees for minimum volumes, ACH deposits, money wires, advance rates, and termination fees.
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