When it comes to LTL shipping, there’s one question that comes up every time a customer inquires about services: How much does it cost?
Shipping costs are complicated, so let’s break down where the costs come from, things to look for on your final freight bill, and how your awareness can save you money on LTL shipping.
Assessing the shipping cost
As a business owner or a CFO, controller, or another team member who’s in charge of shipping and/or finances, it’s your responsibility and duty to build a budget, stick to it, and find ways to streamline your costs and expenses. Naturally, when you oversee shipping for the business, you want to know how much this process will cost you, the breakdown of the shipping charges, and how you can save money while getting the job done well. As you explore your options, the cost is nearly always top of mind.
The bill of lading
As we’ve talked about before, the bill of lading or BOL is a critical document used to determine the shipping cost, particularly when shipping LTL freight. The BOL is the legal document issued by a carrier to a shipper that outlines the shipment — the type of goods, the quantity, and the final destination for delivery. The BOL is also the receipt that’s served to the receiver when the shipment is delivered. The BOL needs to be accurate — all of the details and information it contains is critical for billing, and if it’s inaccurate, it can leave a carrier exposed to claims — a major no-no. One thing to note here is that the BOL is not an accounting document. As mentioned, it’s the legal document… but this influences the final freight invoice.
Freight invoices are accounting documents or bills that describe the freight that was shipped, the shipper’s name, the original destination that the freight was shipped from, the weight of the shipment, and the final amount charged. Though it seems that freight invoices should always be accurate, often, they’re not. This happens because the shipping process is very complex, and there are times when shipments require various modes of transportation. Sometimes details get lost in translation, so it’s important to check and even double-check invoices to ensure accuracy.
Auditing freight invoices
If you’re interested in reducing your freight spend, invoice auditing is a must. There’s quite a bit of room for errors, so business controllers should pay particular attention to:
- Accidental duplicate payments
- Fuel charges
- Accessorial charges
- Unforeseen logistics expenditures
- Cost allocation & coding
If you’re keeping a close eye on the details that may creep onto your bills, you may find ways for cost savings for shipping in your company.
Freight charges are fluid — one of the main reasons for the fluctuation in costs is that they’re reliant on fuel cost, which is ever-changing. When there’s an increase in oil prices, freight costs rise due to rising transportation costs. Because the price of fuel can be somewhat unpredictable, this makes forecasting and planning quite challenging. However, it’s essential to keep in mind this variability and to always pay attention in the audit process to what’s happening in the market when reviewing freight bills.
To best streamline payments by consolidating freight invoices within your company, you’ll be more efficient and accurate when making payments. To properly analyze the numbers and date you receive, an organized consolidation process will save you time — and money — down the road.
Freight invoice challenges
It’s clear now that invoicing is a complicated process — but what other challenges might arise?
- Complicated, tedious processing of information. Working with freight bills is no walk in the park. Mistakes are often made — because humans are in charge of billing, weight, ledgers, and data entry.
- BIlling entry mistakes. There aren’t clear standardized processes or control measures in place that provide oversight to systems integration, missing information, incomplete billable items, variations in formats for bills, or lost information. There are many opportunities where things can get off-course.
- Refund management issues. Again, there are times when things go wrong… and when goods don’t make it safely to their final destination, refunds are often issued. As you can imagine, there are a host of issues that may come up in these instances.
A few points of advice to be successful
The freight billing process will always be challenging, but there are some steps you can take that will increase your chances of being successful.
- Implement systems, processes, and controls.
- Use a proficient auditing system.
- Potentially outsource payment and freight auditing (if it makes sense for your company).
At yourLTL, we’re committed to freight billing transparency. If you have any questions or would like more information about how we determine your LTL shipping invoices, don’t hesitate to contact us at 855.218.7LTL (7585).