Freight Invoice Audit: How to Check Every Bill

How do you audit a freight invoice?

You compare each freight bill with three documents, the rate agreement you signed with the carrier, the bill of lading for the shipment and the fuel surcharge table in that agreement, and you calculate what the shipment should have cost before comparing it with what the carrier billed. If you run procurement or operations, your responsibility is to hold carriers to the rates you negotiated, and freight is where small discrepancies hide most easily, because every bill is different and each individual charge seems too small to question.

Is a freight bill audit the same as a freight invoice audit?

Yes, the two names describe the same work, since a freight bill is the carrier’s invoice for one shipment, and many carriers send a monthly statement that lists several of them together. Federal regulations for motor carriers specify what that bill must show: 49 CFR Part 373 requires the shipment date, the origin and destination, the number of packages, a description of the freight, the weight when it determines the rate, the exact rates charged and the total, including any special service charges. Those are precisely the details you verify, so a bill that leaves one of them out is the first thing to return to the carrier.

What documents do you need before you start?

You need the rate agreement, every amendment to it, and the bill of lading for each shipment on the invoice. The rate agreement sets the rate for each lane, meaning the route between two locations, together with any discount, the minimum charge for a small shipment, the fees for additional services and the fuel surcharge table. The bill of lading is the document the carrier signs when it collects your goods, and the same regulation, 49 CFR Part 373, requires it to identify the shipper, the receiver, the number of packages, the freight and its weight whenever weight affects the rate. If your receiving team signs a delivery receipt, keep that as well, because it records what actually arrived, which is the receiving step of the procure-to-pay process.

What do you check on each freight bill?

You check five things on every shipment, each one against the document that determines it.

• Rate: the rate per hundredweight (100 pounds), per pallet or per mile, against the agreement’s rate for that lane on the shipping date, after any amendment, and never the minimum charge unless the shipment really was that small.
• Weight: the billed weight against the weight on the bill of lading, and if the carrier weighed the freight again and billed more, the reweigh certificate that supports the corrected weight.
• Fuel surcharge: the percentage against the agreement’s table for the correct week, applied only to the charges the agreement says it covers.
• Additional fees: every charge for an extra service, such as a liftgate, inside delivery, a second delivery attempt or waiting time at the dock, against a fee the agreement lists and a service the shipment genuinely required.
• Duplicates: the shipment’s tracking number, usually called a PRO number, against every bill you have already paid, so that the same shipment is never paid twice.

Then recalculate the bill from its individual lines, exactly as you would for any supplier invoice, and for the broader method see how to check supplier invoices against agreed prices.

How do you check a fuel surcharge?

You identify the fuel price your agreement refers to for the week of the shipment, find the matching row in the surcharge table, and apply that percentage to the charges the table covers. Many tables use a weekly diesel price, such as the average on-highway diesel price that the US Energy Information Administration publishes every week for the country and for each region, and the table then assigns a surcharge to each band of that price, so a higher fuel price produces a higher surcharge.

Three mistakes appear repeatedly. The carrier reads the wrong week, for example the week the bill was printed rather than the week the freight moved; it reads a regional price when your agreement specifies the national average, or the reverse; or it applies the surcharge to additional services when your agreement applies it only to the line haul, the charge for transporting the freight itself. Each mistake adds only a few dollars to a bill, so nobody questions it, and it then repeats on every shipment that follows.

Worked example: a carrier’s statement at Ashcombe

Ashcombe Industrial Supply is an invented company, one of the Demo companies Ressura uses to demonstrate its checks, and its carrier, Ohio Valley Freight, is invented as well, so every figure below, including the diesel prices, is made up for the example. Ashcombe is a wholesale distributor in Columbus that sends less than truckload freight, meaning shipments too small to fill a truck, to its branch in Fort Wayne.

Its rate agreement sets $28.50 per hundredweight on that lane, a liftgate fee of $75, and a fuel surcharge table based on the weekly national diesel price for the week of shipment. When that price is between $3.80 and $3.99 a gallon, the surcharge is 25%, and between $4.00 and $4.19 it is 26%, in both cases applied to the line haul only.

The October statement lists four shipments, and the diesel price in each shipment’s week was $3.86, so the surcharge should be 25% on every one of them.

• Shipment 1, the wrong week: 2,400 pounds is 24 hundredweight, so the line haul is $684.00, but the carrier billed 26%, the band for the following week’s price of $4.03, which comes to $177.84 instead of $171.00, or $6.84 too much.
• Shipment 2, the surcharge on a fee: the line haul is correct, but the carrier also charged 25% on the $75 liftgate fee, and because the agreement applies the surcharge to the line haul only, the $18.75 on the liftgate is an overcharge.
• Shipment 3, the weight: the bill of lading records 2,750 pounds, yet the carrier billed 3,150 without a reweigh certificate, so the additional 4 hundredweight cost $114.00 in line haul and $28.50 in surcharge, an overcharge of $142.50.
• Shipment 4, the duplicate: its PRO number was already billed and paid on the September statement at $427.50 for 1,200 pounds, which is $342.00 in line haul and $85.50 in surcharge, so the entire $427.50 is an overcharge.

Together that is $595.59 on a single statement: $6.84, $18.75, $142.50 and $427.50. The duplicate is the largest amount, but the other three deserve more attention, because a wrong week or a surcharge on a fee returns on the next statement unless somebody formally raises it with the carrier.

How do you claim back an overcharge from a carrier?

You file a written claim with the carrier that collected the payment, attaching the freight bill and your calculation. For interstate motor carriers, 49 CFR Part 378 requires an overcharge or duplicate payment claim to be in writing, to state the amount you are claiming when you know it, and to include the freight bill. The same regulation gives the carrier 30 days to acknowledge your claim in writing and 60 days to pay, decline or settle it, unless you both agree in writing to an extension, and a carrier that declines must explain its reasons.

Timing matters as well. Under 49 U.S.C. 14705, a civil action to recover overcharges must begin within 18 months after the claim accrues, and a claim on a shipment accrues when the carrier delivers it. Your contract can change these rules, because 49 U.S.C. 14101 allows a shipper and a carrier to waive rights and remedies in a written contract, so read your agreement’s own claims terms and dispute window before relying on either one.

In the claim, identify the shipment, the PRO number, the amount billed, the amount agreed and the document that establishes it, and request either a credit on the next statement or a refund. Keep the carrier’s reply with the bill, so the next person who reviews it can see that the discrepancy was raised and resolved. If a bill arrives below the agreed rate, record that as a separate figure, and never subtract it from what the carrier owes you on the other bills.

Should you audit freight bills before or after you pay them?

Before, whenever possible, because a discrepancy found before payment costs one email to correct, while one found after payment means a formal claim, a wait for the carrier’s response and a deadline to monitor. Checking every bill, rather than a sample, is also what uncovers a duplicate or a changed weight, since those appear on one shipment out of many. It is what allows you to show the person you report to the agreement, the bill and the difference between them, or to demonstrate that every bill matched. For the signs that a supplier is overcharging in the first place, see how to tell if a supplier is overcharging you.

How can Ressura help with freight invoices?

Ressura’s Procure-to-Pay Module checks every supplier invoice, carrier bills included, against the agreement behind it. It compares each unit price with the price your agreement sets on that date, applies amendments from their start dates, matches each fee or surcharge to one your agreement or a valid notice allows, flags an invoice that repeats another, and recalculates every line. Any discrepancy is shown in dollars with the arithmetic beside it. To try it, add one agreement and one invoice billed against it; there is nothing to connect, and if every line matches, the result says so and lists everything that was checked.

Sources

1. 49 CFR Part 373
2. average on-highway diesel price that the US Energy Information Administration publishes
3. 49 CFR Part 378
4. 49 U.S.C. 14705
5. 49 U.S.C. 14101