The Business Process of Managing Freight Invoices
Cass Focuses on Process Improvement
Freight invoice audit and payment (aka freight audit & payment or transportation expense management) is a business process. Like all business processes, freight audit & payment has process inputs and outputs, requires resources and produces tangible results or business value. Business process managers can achieve compelling results when working to optimize this process.
Apply Six Sigma Methods to Your Freight Audit & Payment Process to Control Cost
Like other business processes, freight audit and payment can be managed to achieve continuous improvement by applying the traditional Lean Sigma steps of define, measure, analyze, improve and control (DMAIC). When professional process management experts are involved in freight payment, they define the business goals of the project; measure process inputs and outputs; analyze the data; improve the process and make sure controls are in place so the improvements “stick.”
Cass works with your logistics team on continuous process improvement that produces measurable results in lowering your transportation costs and achieving other business imperatives.
Freight Payment Process Inputs Include:
- Electronic invoices
- Supporting documents (bills of lading, re-weigh certificates, etc.)
- Shipment records –from ERP or transportation management systems (TMS)
- Carrier contracts / rates on file
- Carrier shipment status records
- General ledger / accounting rules
- Third-party mileage calculators
- Third-party LTL base rate services
- UMLER equipment data
Freight Payment Process Outputs Include:
Business intelligence including global visibility to transportation costs by logistical service supplier, by product type, by mode, by type of expense, etc.
Process metrics including metrics on invoices with errors, invoices in which there is no pre-approved rate on file, EDI vs paper invoices, carrier invoice performance metrics, invoice cycle time, spend with non-contracted carriers
Improved relationships with supply chain partners due to accurate payment , reliable visibility to the payment process and responsiveness to invoice inquiries
Contract management controls / audited invoices due to systematic controls that compare invoices amounts to contract rates
Accurate general ledger files with transportation costs consistently and appropriately allocated to correct cost centers
Paid invoices, with payments made securely via ACH or other electronic means for highly auditable and timely payment
Precisely timed payments made per contract terms, allowing you to maximize cash flow by ensuring that the timing of your payment is optimal
Automated cash application, which streamlines the payment remittance data from an EDI file directly into your logistical service providers’ accounts receivable system.