Calculate Your Cost to Pay a Freight Invoice
At many companies, the freight audit and payment debate continues – whether to keep the process internal or outsource it.
Is it cheaper to do it yourself, or would outsourcing cost less? In addition to cost, the other big factor is quality. For example, are you operating internally as a best practice and able to catch duplicate payments and errors? Do you capture enough spend detail to be able to accurately analyze costs? If not, how much would you have to invest to achieve higher quality process outputs?
Understanding your current costs is often the starting point in the internal vs. outsource debate.
To help you determine the cost of your internal process, we’ve developed a detailed, yet simple to use calculator, that takes into account the many hands that touch the process, the costs of technology and a variety of other cost factors that are often overlooked or difficult to determine.
Can your cost to process freight invoices ever be too low? Yes, if the low cost results in low quality.
Think about it. If you spend very little on the process (no audits, no real data capture), you might seem to be operating efficiently until you consider that you aren’t catching overcharges and duplicate invoices (often as much as 5% of spend). And if your process doesn’t generate usable data about carrier performance and actual transportation costs - including accessorial costs - that could be another expensive problem.
Many Cass clients combine the technologies of their Cass freight audit and payment solution with their transportation management system (TMS). This can be a best practice for a match pay process, whereby the TMS generates records of the shipment tender (order) that can be matched with the invoice. In this case, the TMS houses carrier rates and can generate an authentic record of the “planned” shipment cost. However, the Cass FAP system goes an important step further and audits all associated unplanned costs of the shipment – which are very often significant. Unplanned accessorial costs can include tolls, detention, re-weigh, gate lift, re-delivery and other charges. In practice, a TMS alone will not usually deliver the level of detailed information needed to capture the actual cost of each shipment or allow you to make the best, most informed decisions about carrier selection, modes and lanes.