Freight Audit and Payment: So Much More Than Paying Bills

In a September 2014 episode of Talking Logistics, we discussed how the news of freight audit and payment’s death has been greatly exaggerated – and how, in fact, demand for this service continues to grow. Last month, I spoke with David Wedekind and Chas Kocks from enVista on the keys to a successful freight audit and payment implementation. Before we dove into the topic, however, I asked David to give us an update on the market. Is demand for freight audit and payment services still growing, and if so, what factors are driving it?

“The freight audit and payment market is alive and it’s definitely growing,” said David, and as he discusses in the episode, what’s driving demand goes beyond finding a partner who can audit and pay bills.

“There are a lot of [service providers] that can audit freight bills, that can pay carriers on time, that can allocate freight expenses. But what we’re seeing now is companies looking for enhanced visibility to their transportation spend across all modes, which might involve integrating disparate transportation management systems together, as well bringing in data related to omni-channel and direct-to consumer shipments, and having the tools to present all of that information in an actionable way to customers.”

In many ways, his comment validates one of my predictions for 2016: that the 3PL value proposition is starting to get flipped; that instead of logistics services enabled by technology, it’s becoming outsourced IT and business intelligence services powered by logistics.

In others words, what customers want is not just a provider who can audit and pay freight bills effectively, but a partner who can also provide them with visibility and business intelligence tools to help them better understand their total freight spend (across modes, geographies, and fulfillment channels) and enable them to make smarter decisions faster.

Once you’ve selected such a freight audit and payment partner and it’s time to kick-off the implementation, where do you start? Who should be involved in the process?

Chas addressed those two questions, and as he discusses in episode, there are other important stakeholders in the implementation process beyond the transportation manager or director.

“The key stakeholders have evolved. A few years ago, who should be involved in the implementation was an easy answer: the transportation manager or director. You have to connect with carriers and you have to get the freight bills and get them audited and paid. But these days, I would say a major stakeholder in an implementation is Finance. I find that I’m working a lot more closely with finance managers and directors these days than I am with folks from transportation. If there’s general ledger coding and complicated allocation reporting requirements, then there better be someone from finance involved because it’s unlikely that the folks from transportation are going to be able to help in that area.

“In short, the scope and needs of the client are going to drive who is involved in the implementation, and it typically includes someone from transportation who’s going to help get the carriers on board, someone from finance who’s going to define their reporting, accrual, and allocation requirements, someone from IT to help with system integration, and ideally, you’ll also have a dedicated project manager. In my experience, the implementation is going to proceed much smoother when there’s someone on the client side who is going to help drive the project plan and hold the folks at their end accountable.”

I encourage you to watch the rest of my conversation with David and Chas for additional insights and advice on this topic, including some common implementation challenges and how to overcome them, how to measure the progress of an implementation, and how to ensure ongoing success. Then post a question or comment and keep the conversation going!