A freight payment service usually consists of one or more levels of combined services. These may include freight bill audit, information reporting and freight bill payment. Your freight bill payment partner should work with a combination of both Electronic Data Interchange, and paper freight bills. They should offer auditing for parcel and all modes of freight.
Freight Bill Payment
CT Logistics' AuditPay®, our freight bill audit and freight bill payment service, is an easy-to-use and intuitive method to help you monitor and control your company's transportation spend.
AuditPay® is ideal for all shippers or consignees and utilizes a comprehensive rates database, along with our FreitRater® pricing engine, to support your companies' shipment activity. With AuditPay®, our team of professionals works closely with you and uses your freight invoices and bills of lading, incorporating your company's specific requirements to ensure proper audit and payment processing.
This freight payment service delivers management information for effective cost containment and planning, as well as a 24/7, real-time client WebTools service. Paired with the resources of FreitRater®, AuditPay® can provide your company with an average ROI of more than 10 times your service fees.
CT AuditPay® freight payment system provides:
- Cost Savings
In addition to saving on freight bill auditing, this billing service eliminates the need for extensive, often inaccurate, internal accounts payable processing, as well as the associated overhead
- Improved Carrier Relations
Maintains relations with carriers by issuing them checks in a timely fashion. The remittance statement that accompanies all your payments itemizes each invoice number and shows proper tariff or contract authority for all reductions in payment
Freight Bill Audit and Freight Bill Payment History
The freight payment industry was actually formed by a series of banks when the transportation marketplace was heavily regulated. Motor carrier bills had to be paid within 7 days and rail bills needed to be paid within 5 days. To meet this requirement the banking community, shippers, and carriers formed what was known as The National Association of Freight Payment Banks. At that time the emphasis was on the settlement of carrier bills within the regulated parameters for credit extension. If freight payment was not made to the carrier as required by law, then the shipper was put on a cash basis for all freight payment moving forward. This was not an idle threat and large Fortune 500 companies would often have their freight held because freight bills were not paid on time according to the freight payment guidelines established by the I.C.C.
With deregulation of the transportation industry in 1980, things began to change. Credit terms could be negotiated between shippers and carriers for more reasonable periods of time. The process has become much more robust with bills being audited by companies like CT Logistics in 1923. Read more about the history of freight bill audit and freight bill payment here: History of Freight Bill Auditing
How Freight Payment Works
The model typically consists of the client redirecting their carrier's submission of freight bills and invoices to the Freight Payment provider. This can be done by mailing paper invoices or using an electronic means of submission such as: flat files, CSV, Excel spreadsheet, EDIFACT, XML, ANSI X 12 EDI or a FB Master file. By outsourcing to a Freight Payment service, the correctness of a freight bill will be assured, due to the audit for freight rates, freight discounts, misapplied accessorial charges, and duplication of payment among other things. The Freight Payment firm then requires that you issue them a check, bank wire or EFT on a schedule for your freight payments. This schedule is referred to as the weekly freight payment process or production run. The Freight Payment firm will then pay your freight bills to the carriers.
Business Intelligent Reporting through your Freight Payment Service
The real thrust of Freight Payment business today is actionable information that shippers receive via the web or create from their Freight Payment provider's website with ad hoc reports. Sophisticated reporting tools now allow clients to easily perform calculations, create graphics, generate pivot tables, and e-mail reports on a scheduled basis. Many Freight Payment providers employ web services in their overall strategy to help their clients streamline the way they exchange information, and obtain management information and reporting.
Freight Payment Providers: What's Important
It is very important to realize that this traditional model has been in place since the 1920's. It is also important to monitor your freight payment and audit service closely, as some companies have misappropriated funds. To avoid this potential pit fall address the below list with your provider.
- Financial security
Does the freight payment provider have audited financial statements, is it ISO certified and does it have an annual SOC II review, and at least a $1 Million Employee Dishonesty Bond?
- Client service
How does the freight payment provider track client service issues to resolution? What types of key performance indicators does the provider maintain?
- Carrier relations management
Does the provider have a committed staff committed maintaining outstanding carrier relations? Do they meet with carriers to communicate, resolve issues, and create efficiencies that benefit all parties? How do your carriers view provider?
- Document imaging
Are all hard-copy bills scanned, with images made available on the provider’s website, and also on DVD or CD?
- Web-based data access
The freight payment provider’s site should include standard and ad-hoc reports, drill-downs, mathematical calculations that result in new fields, client-driven report scheduling and onscreen and email report delivery.
- Coding, editing, and validation
How comprehensive is the freight payment provider’s ability in this area? Can it derive cost centers from other data elements? Rules should be table-based and event-driven to ensure that updates are made quickly and easily.
- Freight liability
How does the provider determine if the bill should be paid? Does it ensure supporting documentation is attached? Can they perform electronic validations to your bill of lading or purchase order file?
- Web-based bill repair
Can freight bills that need client approval be repaired from the provider’s website? Can you easily view images of the freight bill and supporting documentation to resolve bills that are being questioned?
- Parcel shipment capabilities
Does the provider have the ability to meet the integrated carrier’s requirements to obtain refunds for late delivery shipments that are manifested but not moved? Does it provide address correction and break down all miscellaneous charges?
Does the freight payment provider have a code of ethics? Does it tell you what’s good about its service rather than denigrating its competition?
For many companies, outsourcing is the most economical way to properly audit and process freight invoices. Outsourcing freight bill audit and freight payment can recover 3% to 7% percent of your overall freight spend.