Though the invoicing problem varies from mode to mode, freight invoices have a long-standing reputation for being inaccurate and inconsistent. As a general rule, billing errors increase as service or price complexity goes up. Conversely, errors tend to drop as IT sophistication increases. Therefore, it is not surprising that ocean freight invoices present a much greater improvement opportunity than air invoices. While ocean carriers are working hard to achieve IT parity with other modes, their penchant for introducing new surcharges with dynamic effective dates and situational applicability ensures that billing will be more art than science into the foreseeable future.
On the balance sheet side of the equation, the problem is cash flow. When a shipper overpays an invoice and only catches the error via post audit, there is a negative cash hit on the balance sheet. The overpay and charge back process increases accounts payable and the logistics provider gets nothing in return for the cost of the money and claim handling.Request Demo
The goal of audit and payment is to reconcile the service/price agreed to in contract rate agreement procurement process with the service/price presented on the invoice. This is challenging even when the service procured matches the service invoiced. When the services vary, the difficulty multiplies.
But before digging into the specifics of an invoicing error, the error must be caught or flagged in the first place. An automated system is required to cost effectively catch these problems in a pre-audit environment. The e-invocing solution must be able to check for duplicates as well as wrong charges. The duplicates can be tricky, especially in international commerce governed by INCO-Terms. The same charge is sometimes presented to both the origin and the destination party. Simply looking for duplicate invoice numbers will not catch these instances.
Service performance can also be difficult to verify. For example, if a charge is contingent upon meeting a specific transit time, the e-invoiving solution must be able to check actual transit time before dispositioning the invoice.Get Started
As daunting as the above sounds, a properly designed e-invoicing solution can perform effective pre-audits of freight invoices. But in order to do so, it must have some specific capabilities, for example:
Integration with a comprehensive and reliable rate management data-base against which to audit, as well as the rating and routing logic to properly rate the invoice according to the INCO-Terms and rules that were in place at the time of shipment.
In order to reap the expected benefits, it is imperative to pre-audit freight invoices — particularly for ocean shipments. An e-invoicing solution with the proper integration and back-end functionality can perform this task admirably — protecting both profitability and cash flow.Get Started
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