What is a Shipping Audit & How Does it Work?

Unpacking The Concept: What is a Shipping Audit?

A shipping audit, also known as a freight audit, is a comprehensive examination of your shipping invoices and contracts with third-party providers. This audit aims to identify billing inaccuracies, service failures, or potential areas for cost-savings. In essence, a shipping audit serves as a financial and operational health-check for your shipping processes.

The Mechanics: How Does a Shipping Audit Work?

A shipping audit is not a one-size-fits-all process. It can range from a thorough review of carrier invoices to an end-to-end evaluation of your shipping operations; but often involves the expertise of an experienced fulfillment consultant. Here’s a quick overview of how this complicated procedure works in real-time: 

1. Invoice Collection: This first step involves gathering all relevant shipping invoices. This paper trail provides a record of transactions between you and your carrier.
2. Expense Categorization: Invoices are grouped by type, date, or carrier to streamline the analysis process.
3. Error Identification: The audit team scrutinizes the invoices to spot billing errors, duplicate charges, incorrect rates, or service failures.
4. Rate Review: The auditor verifies that the invoiced rates align with the agreed-upon rates in your shipping contract.
5. Dispute Resolution: If discrepancies are found, the auditor communicates with the carrier to address the issues and rectify the billing errors.
6. Data Analysis and Reporting: The audit culminates with a comprehensive analysis of the data, which is then presented in a detailed report. Using the data from this report, you can better identify the efficiency of the carriers you are using, cost, wasteful spending and logistical oversights that can be improved to fine-tune your shipping strategy.

Why You Should Conduct a Shipping Audit

A shipping audit can offer a plethora of benefits to e-commerce businesses. What follows are the most important reasons to consider conducting an audit of your shipping logistics: 

1. Cost Savings: By identifying billing errors and service failures, a shipping audit can help you reclaim overcharges and reduce your overall shipping costs.
2. Billing Accuracy: The audit ensures that your invoices accurately reflect the services provided by the carrier. This transparency can improve your relationship with your carrier and streamline future transactions.
3. Data-Driven Decisions: Using the data that’s collected during the shipping audit, a fulfillment consultant can apply their experience and expertise to help make improvements to your strategy across the board, including cost savings, efficiency and accuracy in your method. All contribute to an enhanced and improved customer service model that facilitates increased loyalty and long term retention. 
4. Regulatory Compliance: The audit process ensures that your shipping practices comply with industry standards and regulatory requirements that can help you prevent any unforeseeable complications, like costly legal issues. 

The Benefits of Shipping Audits

Conducting a shipping audit can provide several benefits to businesses, including:

1. Cost Savings: By identifying overcharges and billing errors, businesses can receive refunds and lower their shipping costs.
2. Improved Shipping Processes: Through the audit process, businesses can gain insights into their shipping processes and identify areas for improvement that can help increase the efficiency of your shipping strategy now and well into the future. 
3. Better Carrier Negotiations: The data gathered during a shipping audit can be used in negotiations with carriers. By demonstrating a thorough understanding of their shipping costs and processes, businesses can negotiate more favorable rates and terms.
4. Increased Visibility: Shipping audits provide businesses with a detailed view of their shipping operations. This increased visibility can help businesses make more informed decisions and improve their overall logistics strategy.

The Role of a Fulfillment Consultant in Shipping Audits

A fulfillment consultant can play a pivotal role in conducting a shipping audit. With their expertise in logistics and shipping processes, they can effectively evaluate your shipping operations, identify inefficiencies, and propose solutions. An experienced shipping consultant can also use their years of experience, industry connections and know-how to reduce your shipping cost across the board. 

The Potential Savings: How Much Can Businesses Save During a Shipping Audit?

The savings from a shipping audit can be substantial. Research shows that up to 15% of total freight costs can be saved if the audit is handled by firms specializing in freight audit and payment services. Even if only a small percentage of your invoices contain errors, those mistakes can quickly add up, especially if you’re shipping a high volume of packages, an experience freight consultancy can help with negotiating better shipping rates that have an immediate impact on your bottom line. 

Steps to Take When Auditing Your Freight

Here are some essential steps to follow when auditing your freight:

1. Collect Invoices: Accumulate all relevant invoices, bills, and shipping documents.
2. Review Contracts: Check your contracts and agreements with carriers to understand the agreed-upon rates and terms.
3. Identify Errors: Scrutinize invoices to spot any billing errors, incorrect rates, or service failures.
4. Verify Rates: Make sure that the rates charged align with the rates stipulated in your shipping contracts.
5. Resolve Discrepancies: If any discrepancies are found, communicate with the carrier to address the issues.
6. Analyze Data: Use the data collected during the audit to identify trends and potential areas for cost savings.

Why Businesses Benefit from Shipping Audits

Shipping audits offer numerous benefits to businesses. They provide an opportunity to recoup overcharges, ensure accurate billing, gain insights into shipping practices, and improve operational efficiency. In essence, shipping audits can serve as a catalyst for growth and optimization, enabling businesses to streamline their logistics operations and realize significant cost savings.

The Potential Savings From A Shipping Audit

The potential savings from a shipping audit can be significant. According to industry estimates, businesses can save up to 5-15% of their shipping costs through a successful shipping audit. This is due to a combination of refunds for overcharges and improvements in shipping processes that lead to cost efficiencies.

Moreover, these savings can have a big impact on a business’s bottom line. For small and medium-sized businesses, in particular, these savings can make a significant difference, freeing up funds that can be reinvested back into the business.

To wrap things up, conducting a shipping audit is something that all growing ecommerce businesses should consider. It provides a clear picture of your shipping processes, uncovers billing inaccuracies, and identifies opportunities for cost savings. By investing in a shipping audit, you can streamline your operations, reduce costs, and ultimately, drive your business towards greater success.

Parcel Consulting Can Help You Audit Your Shipping

Parcel Consulting offers a comprehensive suite of shipping audit services. We leverage state-of-the-art technology to conduct thorough audits, uncover billing errors, and identify cost-saving opportunities. Our services also include rate negotiation and access to free software and tools to save you time and money. With our assistance, your e-commerce business can optimize its shipping processes, reduce costs, and enhance customer satisfaction.

Parcel Consulting is a leading provider of parcel audit services. They use advanced technology and a team of experienced auditors to conduct comprehensive parcel audits for businesses of all sizes.

By partnering with Parcel Consulting, businesses can save time and money on their shipping costs. They can also gain valuable insights into their shipping operations, enabling them to improve efficiency and make more informed decisions.

Parcel Consulting’s services include identifying billing errors, requesting refunds from carriers, and providing detailed reports on shipping costs and trends. They also offer free software and tools to help businesses streamline their shipping processes and achieve greater cost savings.

Start now by requesting your FREE NO OBLIGATION SHIPPING AUDIT

Got questions? Reach out to us at: 833-PARCEL-1.

Or email us at: info@parcelconsulting.com.