Don’t be silly when sourcing freight audit and payment
I was looking at articles about choosing a freight audit and payment company recently and noticed that a few important factors are often overlooked. Here are some simple mistakes to avoid:
Sharing parcel audit savings
Many organizations seek a split on parcel savings findings. This is an issue because they won’t have the motivation to identify and eliminate root cause errors. Leaving these errors in place is sillier than putting Halloween costumes on pets. Then again, in the spirit of the season, maybe dressing up pets is ok -- but incentivizing your freight audit and payment partner to not solve the root causes of problems never makes sense!
A better approach for clients is to only pay for parcel processing and reporting fees, and retain 100% of audit credits for themselves. We identify root causes of billing or service errors and establish reports clients can use to illustrate the errors to the carrier in order for them to correct the problem. Our reason for doing this is simple: over time, with these fixes in place, audit errors decrease. That’s the objective!
Allowing the floating of funds
We have several clients who formerly used freight payment firms that offered lowball fees and played the float game to try to offset the impact of these fees. Combined, these customers lost millions of dollars when the float game failed. This is something to watch out for and make sure you ask a potential provider about.
We’ve found this to be such a critical issue that from the time TranzAct started doing business in 1984, we’ve maintained a business model that does not rely on the float of a clients’ money to support our operations. TranzAct also offers cash management options that allow our customers to retain 100% control of their freight funds. It just makes sense.
Neglecting the impact on carriers
Why does this matter? Carrier relationships are key to getting the best pricing and service for your company. If you’re involving a third party in that relationship, it’s important to know they’re going to treat your carriers as well as you would. If a company isn’t explicit about valuing these relationships, there’s a good chance they don’t! Look for how a company values carriers both in their language and in the tools or systems they’ve created with carriers in mind.
Also, look at the number of carriers they work with – do they have a limited number of carriers and will that limit their ability to serve them or to move your freight?
These are some basics to beware of when you’re looking for the right freight audit and payment provider. If you’re looking for more advice, take a look at 10 Considerations in Choosing a Freight Audit and Payment Provider. And if you have any thoughts you’d like to share or any questions, please comment below.