How to Find a Trustworthy Freight Audit and Payment Provider
Entrusting your freight audit and bill payment to a third party is a decision that should not be taken lightly. In an industry that has seen fraud, embezzlement, bankruptcy, and lawsuits, it can be a daunting choice to undertake. However, by asking the right questions, you can be sure that you have found a trustworthy provider who will provide you with the all of the desired benefits of outsourced audit and payment, including greater data visibility.
How to Select a Freight Audit Payment Provider
If you’re considering outsourcing your freight invoice audit tasks, there are a few common sense steps you can take to mitigate your risk. Once you have selected your provider, you will have access to well-audited transportation data – an accurate and comprehensive data set that will allow you to improve budget forecasts, optimization and execution, and will provide you with a competitive advantage.
- Gather information on the providers’ financial health Insist on audited financial reports and statements. These reports should be reviewed by a qualified financial analyst or accountant within your organization. Your finance team should be able to provide you with a professional assessment of the financial condition, liquidity and strength of the prospective provider.
- Request references Request at least three client references of similar size and scope to your organization. Also, investigate with the carriers how promptly and accurately they are paid from the provider.
- Insist on a bill payment process that provides checks and balances Key steps include:
- Recognition of authorized carriers – verification of carriers who are to be paid.
- Distinct and secure accounts that prevent commingling of funds.
- Limited access to the account – consider a single person for administrative access and a select few with read-only access.
- Separate individuals involved in receipt and disbursement of funds.
- Include additional terms in your agreement Include language in your audit and payment agreement that covers what will happen with your funds, the timing of those transactions, separate accounts so there is no commingling of your cash with another of the provider’s clients, corresponding transaction and disbursement reports.
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Benefits to Outsourced Audit and Bill Payment
From the Chief Supply Chain Officer to the Vice President, the Divisional Manager and the Transportation Planner, everyone is drowning in a sea of data and in dire need of a lifeboat of information. But before the data can be interpreted, you need to ensure that the data set is clean, accurate and comprehensive. This is where the true value of an audit and payment program comes into play by helping you improve budget forecasts, optimization and execution and providing you with a competitive advantage. Key benefits include:
- General Rate Increase Study No need to rely on announced averages. You will have a comprehensive database with accurate costs at the individual shipment level. You can apply the newly published rates by every zone and weight break to your shipment distribution data and identify exactly what your cost increase going into the next year will be. No averages, no guesses, no random samples.
- Network Design Project Whether you are looking to bring offshore production back to North America or trying to determine where to locate a new distribution center in the United States, the result from your modeling is predicated on the quality of your data. Your transportation costs are baked into your network design.
- “What if…” Analysis Reliable data will help you analyze your potential promotions accurately. If your data is inaccurate, the negative impact of a promotion will be multiplied.
Key Steps to Take When Considering a Potential Provider
Proper due diligence when selecting a freight audit provider cannot be overstated. You can execute a sound sourcing program to identify and mitigate potential risk in order to take advantage of the cost savings potential that exists. Mitigating risk through improved sourcing practices and increasing data quality to efficiently run your supply chain is crucial to your company’s bottom line.
Make sure you:
- Request the provider’s audited financial statements for recent years.
- Obtain the company’s credit report. You can find it by using the company’s Dun & Bradstreet number.
- Verify how long the provider has had its current bank account. Too many banks and short account histories is a sign that the company may not be financially stable.
- Ask for reference letters from the provider’s current clients of similar size and scope to your business.
- Take a tour of the provider’s facility. Everything should be neat and orderly.
- Confirm that the provider maintains insurance or a bond policy that covers any losses arising out of acts of omission.
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