Have you ever been to a restaurant with a large group, paid up and realized later that you are not sure if you had ordered some of the items on the bill? On a larger scale, this is what happens in the Logistics sector. A few years back, Maersk Line CEO Soren Skou had revealed that bills of lading are rarely accurate with 12% of their container industry invoices showing errors. Translated into dollars this is a loss in millions for the logistics giant. Smaller companies can see errors in freight bills up to a staggering 25%. If you find your company is spending too much time with freight billing issues then it may be time to change the system.
Challenges in Freight Billing
Let’s look at some of the common freight billing challenges that logistic companies face and how a data outsourcing partner could get those freight billing inaccuracies down.
1. No Standardization in Bills of Lading
The bill of lading is the most important document in the logistics trade as it is a contract between the exporter, the shipper and the importing company. Every carrier has its own BOl template and carriers like UPS and FedEx can even have multiple. In International shipping, logistics might be a combination of shipping, road, and rail connectivity and the challenges of non-standardization of bills can just pile up. Compound this with the fact that bills of lading in some cases still remain highly paper or email dependant. Not surprising then that many logistics companies are spending more time dealing with freight bill issues that could be optimally focused elsewhere.
Studies have shown that companies can spend more than $10 on processing each invoice. Streamlining operational costs has made most companies look outwards for invoicing services. Savings come in by getting a full-service team of trained billers and quality control personnel. It also comes with the cost-saving of not needing to invest in technology tools. Businesses though must also realize that reliable services come at a price and a low-price provider might be detrimental in the long run.
2. International Shipments Might be Confusing
Every country has different practices when it comes to the shipping process. Rules and regulations also differ from country to country and this impacts distribution and logistics. Changes can affect the distribution flow and keeping up with these fluctuations can be difficult. The Value Added Tax (VAT) or Goods & Services Tax (GST) in different countries can be incredibly complex. Accuracy on rates is vital to keep customer and logistic partner relations thriving.
Outsourcing compliance to your data partner can decrease your exposure to possible VAT fines and penalties. The freight billing vendor will validate each invoice for different data sets such as service codes by shipper and consignee and calculate costs by location currency. They will also audit invoices to make sure it has not already been billed, cross-check bills against contracted rates and include proper supporting documentation as required. This level of quality is assured because of industry-trained staff that maintains a high level of accuracy in the bill entry process.
3. Business Intelligence
Freight billing is complicated and the numerous factors that it is dependant on can cause unnoticed errors that can lead to a loss in revenue. Clients can have different data capture needs and multiple logistics partners in various geographical locations will bring along different hurdles that will need to be addressed.
Freight billing solution providers will give you access to online reporting tools that ensures better insight and help you plug any leaks. Since every shipment is detailed with the invoice number, date, vendor, location, cost, etc. querying becomes easy. The billing partner usually consolidates billing and freight invoices each week into one electronic invoice making it much easier to track. Such data access makes it easier for internal analysis and audit processes to improve vendor efficiency.
If you are feeling overwhelmed by your current freight billing process then we encourage you to talk to our account executives at ITech Data Services. As a qualified outsourcing provider, we can put together a custom plan that will meet your needs. Reach out to me, Jason Dodge at 972 456 9479 to schedule a consultation.