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A good freight audit and payment process is an integral part of the transportation and finance operations because it may help avoid costly invoicing mistakes and guarantee that the data one collects from the providers is complete, normalized, and ready to use for analytics.
FREMONT, CA: What knowledge can a business extract from the Freight Audit and Payment (FAP) program, and how thorough is the freight audit process are two crucial questions firms should ask themselves? It is vital to have a FAP partner because of the intricacy of transportation invoicing and the valuable insights gained from the data captured. Carriers have all of the power in today's market, and they are using it to impose rate increases, peak surcharges, and capacity restrictions on shippers of all sizes.
A good FAP process is an integral part of the transportation and finance operations because it may help avoid costly invoicing mistakes and guarantee that the data one collects from the providers is complete, normalized, and ready to use for analytics. A FAP system works in tandem with the existing Transportation Management System (TMS), streamlining back-end procedures and lowering controllable costs.
Why is Freight Audit Important?
Transportation is normally one of the most expensive aspects of running a business. The transportation market is highly volatile, and carriers continue to add complexity and rate changes to their pricing agreements. There will be overpayments and missed cost-cutting possibilities if there is no visibility into carrier performance and no controls in place to govern the activity. While carrier invoicing is generally accurate, one to three percent of spend is billed incorrectly.
Depending on the size of the shipper, this can amount to millions of dollars in annual costs. The process automation enabled by a complete FAP system also results in significant soft savings. The payment and support processes will improve carrier partnerships while also ensuring proactive cash management. By assisting carriers with their own billing difficulties, FAP solutions can increase visibility and strengthen working relationships. Carriers can get paid more precisely and on time by using self-service carrier portals and process automation.
FAP is a comprehensive, granular source of transportation and financial data. Shippers gain more visibility and actionable data by combining an automated audit and payment process with business information. Additionally, a solid business intelligence platform will give enterprises proactive insights into cost drivers, network issues, and optimization opportunities. The savings realized due to data analytics are frequently bigger than those recognized due to the audit process. The business intelligence gathered from an audit's data might significantly reveal significant cost-cutting and efficiency potential.
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