Carrier charges are a big part of logistics and freight costs, regardless of how frequently you ship. Examining your carrier invoices is critical, as you might be overpaying for logistics and shipping services if you aren’t monitoring the billing statements. Freight reconciliation is the financial management process in an organisation which is an accounting process to verify that the financial records maintained by the organisation match the statements received from the transporters. In addition to being a time-consuming and tedious task, it can be even more challenging to prioritise all the business rules that must be adhered to. Furthermore, it is laborious for the workforce to find every error, especially when the shipment invoice is complex. IntuParcel’s freight reconciliation process detects errors in invoices and helps Shippers maintain audit-compliant records, and prevents them from overpaying transporters.
The process of freight reconciliation is highly error-prone, especially when done manually. With manual reconciliation, preventing reconciliation errors necessitates considerable time and effort. Automation of the reconciliation process enhances its efficiency significantly. It helps ensure:
The accuracy of internal financial records
Detection of discrepancies, unauthorised payments and fraud
Clearing of unpaid and late invoices
Transparency in company spending and cash flow patterns
Assessment of the organisation’s financial health
Challenges in freight reconciliation
The growth of global trade and e-commerce has led to a steep rise in parcel and freight shipments and has compelled businesses to focus on accurate parcel tracking. This has led to additional operational and shipping costs.
Besides choosing the most economical carrier for shipping their products, businesses can save on shipping costs by spotting billing errors made by freight carriers. Companies must audit the invoices they receive and ensure they comply with the received quotes and agreed contracts.
The main challenges that businesses face in freight reconciliation for parcel movements include the following:
Incorrect invoicing: Freight carriers and courier companies often raise invoices with erroneous charges or fail to comply with the contracted terms for service delivery. Recognition of these anomalies can enable companies to claim refunds, save significantly on shipping costs, and ensure accurate parcel tracking.
Laborious manual process: The manual auditing of invoices is a tedious process. Typically, businesses resort to auditing by random sampling, focusing on high-cost shipments and allowing many invoicing errors to slip through, consequently losing money. The manual process requires auditing each invoice against the carrier’s quote, identifying the error(s), undertaking verification and then raising refund claims. Attempting manual freight reconciliation between invoices and quotes using Excel spreadsheets can be cumbersome, labour-intensive, and an inherently error-prone process.
Workforce costs: Undertaking the manual auditing of invoices against quotes for shipments requires a special team of trained freight reconciliation personnel; this will significantly add to the business’s workforce costs.
Weight Mismatch: Cross-verifying the shipped and transporter-provided weight is often tedious. More often than not, drawing a comparison of Actual Weight, Volumetric Weight, and Minimum Chargeable Weight to arrive at the Charged Weight is complex.
Zone Inaccuracy: The contracts between the shippers and parcel transporters mention the standard SLAs and the rate per KG for movements within and across zones. However, the inaccuracy in mapping the pin codes to the correct zones leads to shippers spending more than they are supposed to for shipping a parcel.
The availability of appropriate software tools for freight reconciliation has helped eliminate errors and save workforce costs. Take Intugine’s freight reconciliation module, which records all contract rules in the system and auto-calculates freight rates for each consignment as per the AWB number; this helps save the business save up to 3.5% of Transportation Spend and a tremendous amount of time through near-instant freight reconciliation.
Key features – Intugine’s IntuParcel Freight Reconciliation module
Without freight reconciliation software, businesses are forced to manually match data in invoices, quotations and contracts. The freight reconciliation module serves as the central platform for collating all this data, quickly compares what was promised to what was delivered and points out discrepancies. The key features of a freight reconciliation module include the following:
Auto-calculation of freight based on courier contracts.
An error-free system that eliminates the chance of human errors while auditing invoices and contracts.
Collects data across couriers and helps with vendor selection based on set parameters to get the best deal for the business; businesses use multiple couriers to obtain the lowest possible courier rate for a shipment. However, the more the number of couriers used, the more complex the auditing process, which is why using Intugine’s effortless freight reconciliation module makes so much sense.
The availability of centralised data allows the collation of custom analytics and reports. For example, analytics can be undertaken to assess courier performance against contracted service levels and generate reports on performance history.
The freight reconciliation module provides direct ROI benefits by identifying refund claims and preventing anomaly write-offs by courier companies.
Provision to add any special charges levied on a particular shipment to increase reconciliation accuracy.
Benefits of freight reconciliation software
The benefits of using freight reconciliation software include the following:
Auto-computation of freight: The software automatically calculates the payables following the contractual terms of each transporter. This can then be verified against the invoice received from the transporter.
Identification of billing anomalies: The software enables businesses to upload bills received from contracted transporters and identify billing discrepancies at the level of an AWB.
Eliminates manual efforts: The software centralises all transportation-related data and reduces the manual effort and time required to reconcile payments across multiple worksheets.
Enables validation: The software allows for the quick and accurate verification of accounts to ensure all records are authentic, consistent, and up to date.
ROIs – It can generate 3 – 5% direct ROI just by automating the reconciliation process.
A freight reconciliation solution eliminates the need for businesses to employ a trained workforce to audit and reconcile courier invoices to claim refunds or examine a carrier. It facilitates valuable insights from analysing a business’s transportation data and creates significant cost-saving opportunities for the company. Intugine’s Intuparcel provides this dedicated module to help users reconcile their billings at the end of the month and get insights into the difference between the estimated fare and the actual fare. It makes parcel shipping bill payments easy for our customers and helps them focus on their business better. Get in touch with us to explore and learn more about the module.