A logistics business audits every freight invoice before it pays
Thousands of carrier invoices a month were checked by hand, a few at a time. Checking every one against rates, routes and proof of delivery found overcharges that had been paid for years.
An illustrative scenario. The company is fictional and the figures show how the method works; they are not a client result.
The situation
A third-party logistics provider works with hundreds of transport carriers. Each month it receives thousands of freight invoices, each with its own base rate, fuel surcharge, detention and loading charges. The payables team checked a handful by hand. The rest were paid as billed.
What we looked at
- Carrier rate cards and contract terms
- Trip data: origin, destination, vehicle type and distance
- Proof of delivery and loading records
- Two years of freight invoices and payments
What we found
| Finding | How it happened |
|---|---|
| Rates above the contracted rate card | Old or wrong rates applied |
| Fuel surcharge on the wrong base | Surcharge calculated on the total, not the base freight |
| Detention charged without supporting times | No record of the vehicle waiting |
| The same trip billed twice | Re-submitted invoices with new numbers |
| Charges for a larger vehicle than was used | Vehicle type on the invoice did not match the trip |
What changed
- Recovery. Carriers were sent statements of overcharges with the trip evidence. Most were settled against future invoices.
- Audit before payment. Every invoice is now checked automatically against the rate card and the trip before it is approved.
- Better contracts. Rate cards were cleaned up and surcharge rules written down clearly, so there is less to dispute.
How it ran
| Week | Step |
|---|---|
| 1 to 2 | Rate cards digitised, trip and invoice data joined |
| 3 to 4 | Look-back over two years, findings valued |
| 5 to 6 | Pre-payment checks switched on for new invoices |
See freight and logistics for how the checks work, and Duplicate payments for the wider payments picture.