It’s a tedious process but checking 3PL service provider invoices is an essential part of a logistics managers role.
When checking 3PL service provider invoices forms part of a disciplined third party logistics service provider management process you will be surprised at what you might find.
Industry research suggests that up to 30% of freight invoices are incorrect, although this seems like a high percentage of errors my own experience confirms that there are many opportunities to recover monies that would have otherwise been paid had the invoice not been thoroughly checked.
Given the increased use of auto rating software and invoice processing hubs with staff who are tasked to vet invoices but have no real concept of the actual costs the risks of errors occurring remains high.
The greatest errors seem to occur as a result of incorrect rates loaded into rate schedule databases that are used to calculate the costs of shipments based on weights or cubic measurements. The use of incorrect currencies or rates of exchange are also common issues identified when checking invoices.
There are many freight rate audit companies and software packages available to manage this process but at the end of the day both of these are generally based on a semi-automated process which is potentially subject to the same flaws.
Taking a manual approach, that focuses on the most likely area for errors will not catch every error but will certainly uncover the potential “big ticket” items.
To help manage this process I have have developed a freight forwarder invoice approval checklist
The is a simple but useful checklist you can use as a guide when checking international freight forwarders invoices prior to payment. It can be used it to ensure the correct international freight, service charges, duty and tax amounts that have been charged and are OK to process for payment.