Cass’ 6 Principles for Freight Audit and Payment

In a survey of American shippers and Logistics practitioners, almost half of respondents gave their current method/system a grade of ‘fair’ or lower. The same survey revealed that almost half of largest companies and almost one third of medium-sized companies reported plans for new solution within the next five years. Many of these companies also intend to outsource the freight audit and payment process.

According to Cass Information Systems, This is the result of two trends occurring with in-house solutions. Like many types of systems that are not the best of breed, TMS/ERP systems can rarely handle the complexity that companies are requiring of them. These types of freight audit & payment systems were quite possibly insufficient from the moment of implementation, or companies have outgrown the capabilities that once met their needs.

Secondly, few companies with in-house systems are dedicating the resources necessary to keep up with their evolving operations. Too often, the longer an in-house audit-payment system is in place, the more it weakens, and the more companies are realizing that a committed third party expert can provide up-to-date solutions, ongoing development resources, and scalability.

Cass continues that getting to best practices may require devoting additional resources to system improvement or may necessitate the implementation of an entirely new solution. Whatever path you take to get there, your new practices will need to mimic those of North America’s leading shipping organizations and propel your logistics organization to a new level of efficiency and performance.

In a very brief summary, Cass’ Best Practices include:

1. Maximizing the use of electronic invoicing: In addition to achieving immediate process improvements, automated invoice receipt also sets the stage for improved outcomes throughout the rest of the process and beyond.



2. Investing in a highly developed and integrated matchpay system: As shippers gain unprecedented control over their supply chains and transportation expense, they are building matchpay solutions to handle more than just outbound shipments.



3. Actively managing your freight rating system: Rating shipment records serves two main functions: enabling the audit of carrier invoices and generating freight accruals.



4. Use of advanced duplicate protection controls: The average freight auditing system includes controls to flag an invoice if the system finds an identical combination of carrier, pro number, and possibly dollar amount. The problem with this approach is that it’s only partially successful.



5. Taking full advantage of payment terms: Carrier payments need to be made according to the terms for each individual carrier and sometimes even according to the needs of one particular invoice. Also, note that before payment scheduling can take place, a system must be able to differentiate on when the clock starts ticking – invoice date, receipt date or ship date.



6. Maximizing the value of the data: If many of the previously defined best practices are in place, you are in a position to yield excellent data for analytics. You will have more accurate and greater amounts of data from increased EDI, matchpay processes, and accurate paid amounts.

This data is the raw material for highly valuable business intelligence.

You can do this!

By K.B. Elliott

K. B. Elliott is a freelance writer for LogisticsJobSite.com. Working various logistical positions in the Detroit area for over 30 years gives him a unique perspective on the process. More of his blogs are at LogisticsJobSiteblog.com, and be sure to check out the postings for jobs in nearly any industry at Nexxt.
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