What are the Key Takeaways from this Executive Summary?
Quick answer
- Freight billing errors are usually small and individually unremarkable, which is why they survive until the dispute window has closed.
- A manual audit team can only validate so many invoices a day, so most of the invoice file is paid without anyone checking it against the contract.
- What you recover depends entirely on what is actually wrong with your own invoices. No supplier can give you that figure before reading them, and one who offers a recovery percentage in advance is describing somebody else’s ledger.
Why Are Shippers Still Overpaying Carriers by Millions Every Year?
Quick answer
The freight payment problem is not carrier dishonesty. It is complexity at volume. Take a mid-market shipper moving 50,000 shipments a year across FTL, LTL, parcel and intermodal. That can easily produce 200,000 or more invoice line items in a year. Each line carries its own rate logic: base rate, fuel surcharge table, accessorial fees for liftgate, inside delivery, detention or demurrage, and weight or dimensional adjustments that change with every load.
We are not going to tell you what you are overpaying. Published percentages circulate for this, attributed to one research house or another, and we cannot get to a report behind any of them — so quoting one here would be borrowing a number rather than citing one.
The figure is yours and it is cheap to get. Take one month of carrier invoices. Have one person compare every line against the rate table and the accessorial schedule that governed it — the base rate, the fuel surcharge index for that week, each accessorial actually performed, the weight or dimensional adjustment. Total the variances, divide by what you paid that month, and you have your own rate, on your own contracts, for the cost of a few days’ work. Do it on a month chosen at random rather than a month somebody flagged.
The errors are rarely dramatic. A fuel surcharge calculated on last week’s index instead of this week’s. A duplicate invoice submitted under two different PRO numbers. An accessorial charge for a liftgate that was never used. Each one is small. Added up across a year of invoices, they are not.
What Does the Freight Audit Process Actually Look Like?
Quick answer
Any VP of Logistics Finance looking at automation needs the lifecycle first. It breaks into five stages, each with its own workload:
Invoice capture and normalization. Carrier invoices arrive in dozens of formats: EDI 210s, PDFs, spreadsheets, carrier portal exports and paper. Before anything can be validated, each one has to be turned into the same structure. On a manual team, a large part of the working day goes on parsing and re-keying rather than on checking.
Rate validation. This is the audit. Every charge has to be checked against the rate that governs it — the tariff, the routing guide, the negotiated accessorial schedule. That means matching the origin-destination pair, the weight or pallet count, the service level and the applicable surcharges to the correct version of the contract. With hundreds of carrier contracts, each holding thousands of rate records, doing this by hand across the whole invoice file is not realistic.
Duplicate detection. Duplicate invoices are more common than most finance teams expect. Carriers resubmit after corrections, bill separately for accessorials already included in the linehaul charge, or submit under a different reference number. Your own rate is a query rather than a benchmark: group last year’s paid invoices by carrier, amount and date, and look at the collisions.
GL coding and cost allocation. Every freight charge has to land on the right general ledger account, cost center, business unit or customer order. Miscoding does not cause an overpayment by itself, but it ruins spend visibility. Transportation cost per unit shipped, cost-to-serve by customer and modal cost comparisons all depend on the coding being right.
Payment execution. Once validated and coded, the invoice moves to payment. Carrier payment terms, early payment discounts and consolidated remittance across hundreds of carriers add their own work, and it grows with volume.
Why Can’t Manual Audit Teams Keep Up?
Quick answer
The arithmetic is yours to run, and it only needs two numbers you already have. The first is how many invoices one analyst validates in a day when checking each line against the contract — somewhere around 50 to 75 is a reasonable working figure, and your own team will tell you theirs. The second is how many invoices you receive a month.
Put 5,000 invoices a month against 50 to 75 a day, and checking every one needs three to four full-time analysts. That assumes no time at all on exception resolution, carrier disputes or reporting, which is not how the month goes. Turn the same sum round and it gives you your own coverage: one analyst at that rate, against that volume, covers part of the file rather than all of it.
So most teams audit a sample and estimate an error rate from it. Your own coverage figure is a division you can do this week — invoices validated last month over invoices received last month, from the audit log and the AP file. Whatever the share, the remainder was paid unexamined, and what was wrong in it stays wrong quarter after quarter.
Peak season makes it worse. When volumes rise in Q4 or during a promotion, the backlog grows rather than the capacity. Invoices age past their dispute windows, and once a carrier’s payment terms have run, recovery gets difficult.
How Does Automated Freight Audit Change the Equation?
Quick answer
Automation is not the manual process run faster. It changes what gets examined. Reading invoices against the contract that governs them is one of the kinds of work Runink FACE does, and five things distinguish it from a quicker manual review:
Every invoice, not a sample. Each invoice, each line item and each accessorial charge is compared with the contracted rate. There is no sample to draw and no backlog to work down. A discrepancy is raised before payment rather than found in a quarterly reconciliation months later.
Rate validation against the contract. Contracted rates, fuel surcharge tables and accessorial schedules are loaded once. When an invoice arrives with a rate that does not match, the discrepancy is raised with the dollar variance and the contract clause that applies, so the dispute is already half written.
Duplicate detection beyond the PRO number. Matching looks for the same charge across different invoice numbers, different submission dates and different carrier divisions — comparisons a reviewer working through invoices one at a time has no way to make.
Pattern detection. Models trained on your historical freight data pick out billing that sits outside the usual pattern: accessorials appearing more often than the lane would suggest, weight discrepancies that point to a dimensioning error, or rate drift on a lane that indicates the contract is not being applied.
GL coding from shipment attributes. Shipment attributes map to GL codes by configurable rules, so allocation does not depend on anyone re-keying it.
One thing these capabilities deliberately do not do is predict the recovery. What an audit program returns is a function of what is actually wrong with your invoices, and that is unknown until they have been read. Any projected recovery quoted before that point is a claim about another shipper’s contracts, not about yours.
Conclusion
Quick answer
Every freight invoice paid without validation is a charge nobody compared with the agreement behind it. Once one month has been checked by hand, the open question stops being whether some of it is wrong. It becomes which lines, on which invoices, and whether the dispute window is still open.
Moving from a sample to reading every invoice does not produce an estimate. It produces a list: this line, this carrier, this variance, this clause. Rate validation, duplicate detection, pattern flagging and GL coding all run against the whole invoice file rather than the part a team had time for.
Runink FACE reads every invoice line against the contract that governs it and drafts the dispute where the two do not agree — then hands the draft to whoever signs disputes, because a dispute is a commercial communication and not a notification. Start by establishing one figure of your own: what proportion of last year’s freight invoices was checked against the contract by anyone at all. Start a conversation with our team if it would help to work it out.
Sources
- Council of Supply Chain Management Professionals (CSCMP) — Research on duplicate payment frequency, freight payment practice and transportation cost management frameworks
- Gartner — Transportation Management Systems Magic Quadrant — Analysis of TMS platform capabilities, including anomaly detection, freight audit integration and billing validation
