Detailed below are just some of the risks all trucking companies face in their billing process. Not having an established set of control to mitigate and manage this risk can result in significant financial losses.
- Not accurately accounting the potential extra charges it may charge its customer for the delays caused by the customer ie detention time and billing the customers for these charges. Many trucking companies do not have an established set of process to correctly justify and issue detention charges on its freight invoices.
- Not issuing the invoice on a timely basis as well as not providing all the needed documentation in the manner required for fast processing. Invoices that should take less than 3 days to process for payments may sometime take up to 7 days, due to errors or unclear scanned copies being attached in the freight invoice.
On an individual invoice basis, this error may appear insignificant but if aggregated and reviewed on annual basis, there can be an incremental loss of working capital funds that maybe unnecessarily tied up in receivables.
Assuming a company has sales of $5 million a year, a delay of 5 days may result in the company having an additional $70,000 tied up in receivables at any one time. - Additional items needed to be included in the freight invoice such as fuel surcharge, lumper fee or last-minute changes from customers are not properly and accurately accounted for in the freight invoice. Lack of review on oversight on the additional charges needed to be included in the freight invoice will more often than not lead to these items not being billed to the customer.
- Not correctly reconciling receipts to invoices issued do also increase the risk of trucking companies failing to identify brokers or shippers who may have deducted their freight invoices unfairly for reasons that was not agreed in the contract or aligned with industry practices. Establishing a process to follow up on freight invoices with issues, is extremely important to ensure trucking companies are fairly treated for loads that had unplanned complexities. The aggregate value of loads such as this can be significant when evaluated on a yearly basis.
How your assigned Freight Analytics Associate can help you manage this process better:
- Maintain close communication with dispatch team, to identify loads, that will incur additional charges, ie detention time or lumper fees and secure the additional documents needed to ensure these charges are correctly invoiced. This can be achieved by maintaining a master record of loads that had delays and developing a reporting system to track these delays with assigned Sales Order number.
- Develop controls within the freight billing process to ensure each incremental billable item is assigned a Sales Order number and that each of this additional charge is invoiced accordingly.
- Increase the efficiency and effectiveness of the freight billing process by ensuring invoices are issued correctly with clear supporting documents especially when additional charges such as detention time is included in and that this process is completed in a timely manner.
- Perform analytical analysis on a weekly basis to provide management an insight as to how many invoices were processed smoothly and how many had its specific issues and how those issues were followed up and resolved.
- Develop KPIs based on the individual business setup and define goals this specific process should strive to achieve. Losses from unclaimed or unpaid detention time should be accounted and reviewed along with any other losses related to the freight invoice process, so that incremental improvements can be planned and setup to further reduce the risk of errors within this process
