We specialize in the post-audit of freight bills and freight payment records. Post-auditing is an integral link in your company's freight-payment process.

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Auditing Freight Bills

 

Post Audit Freight Bills - tcs-auditAre post-audits still necessary?

Ever since the Trucking Industry Regulatory Reform Act (TIRRA) was passed we have been hearing about the death of post-payment auditing services. We don't think so. Life has undoubtedly been made more difficult but read on. We think you will see why both pre- and post-payment audits should be part of a shipper's good business practices.

Recently, one NAFTC member did a study of overcharges it identified in post-payment audits of freight bills conducted on behalf of its clients in 1994. (see Traffic Control Service Study). They report that the average overcharge per freight bill in their experience was $1.90. This means that a company paying 10,000 freight bills a year overpaid by $19,000. If the company pays 25,000 freight bills per year, the overpayment was $47,500. All of their post-payment audits were performed after initial pre-payment audits. The post-payment audits covered contract as well as tariff rates and occurred in a world where some sophisticated software does a lot of the billing and checking work.

Misapplied and incorrect rates, duplicate billings, miscredited payments, non-application of various allowances, wrong weights and densities, incorrect descriptions, misapplied accessorial charges, misapplied discounts, incorrect routings, wrong mileages, bills sent to the wrong customers -- these are just some of the errors that regularly and consistently occur in motor carrier freight bills.

Complicated tariffs and price lists and unacceptable billing performance on the part of carriers are the root cause of overcharges. ICC credit rules that mandate the freight bills be paid within unrealistic time frames and allow assessment of draconian penalties if they are not, pressure shippers. Whether via a third-party service or in-house, they must try to accurately audit their freight bills prior to paying them. It can't be done with 100% accuracy.

Pre-audit and pay services

have become a force in the industry in the last 10 years. Industry pioneers developed their own software at considerable expense and marketed their new service filling a shipper need. Imagine what the average overcharge per freight bill would be without their services and the computerization they fostered. While there are no hard statistics available, we would surmise that with no pre-audit the average would be three to five times the $1.90 reported.

Post-payment auditing services

have been around for a long time -- as long as any of us in the business can remember. The continuing need for post-payment audits of freight bills remains apparent. Few companies should or would consider letting the sums of money involved be unrecovered.

The real value of these services to the shipper can best be defined by the attitude of some of the less professional motor carriers in the industry -- they despise them because they do a good job.

The best advice to shippers is use both services if you can and if you can't, use a least one of them. If you can only use one which should you use? We suggest you talk with providers for each type of service to get a better understanding of what is involved and what each can produce. That way you will be able to make the best choice for your requirements.

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The NAFTC REPORT is published by the NATIONAL ASSOCIATION OF FREIGHT TRANSPORTATION CONSULTANTS INCORPORATED. It is distributed exclusively by NAFTC members in good standing to their clients.