Freight audit and payment market: Trends for efficiency and cost savings

Learn how to optimize your logistics operations with emerging trends in freight auditing and payment processes. 

Businesses in today's complicated global supply chain are continuously juggling several factors to guarantee profitability and seamless operations. Every freight invoice, though, contains a hidden danger: overcharges and errors. 

Do you know that 1 out of 4 invoices are rejected due to some error? For big companies, this amounts to a considerable sum and results in yearly losses of billions of dollars. These hidden expenses can seriously affect the bottom line of a business. 

To combat this issue, businesses must prioritize freight audit and payment (FAP).

What is freight audit and payment?

As a business owner or supply chain leader, you know that every penny counts. Furthermore, in the field of logistics, hidden expenses such as demurrage charges, accessorial charges, etc, can soon mount up. The expense incurred for transporting goods from one place to another is known as freight costs. It includes a range of transportation methods, including trucks, trains, ships, and airplanes. 

Freight Audit is a meticulous process that ensures the accuracy of freight invoices through thorough scrutiny and verification before payment. It guarantees that businesses are billed solely for the services they have genuinely utilized, eliminating overcharges and enhancing transportation cost efficiency.

Why do freight audits and payments matter for your business?

A new analysis indicates that businesses overpay by 5%–10% on their freight invoices. Though it sounds little over time, it can add up to substantial savings, particularly for companies with heavy shipment volume. Reviewing and confirming freight invoices guarantees correctness and helps spot possible overcharges in the freight auditing and payment processes. It ensures that every dollar used for shipping has justification. That said, from correcting overcharges to increasing invoicing accuracy, this system is vital in helping to control logistics expenses. 

Advanced technologies such as AI/ML, and data analytics have supported FAP platforms to become faster, more accurate, and more intelligent. It analyzes data, understands patterns, and cross-checks documents to provide quick insights about the errors.

Top trends influencing the freight audit and payment market

Driven by changing company needs and technology improvements, the freight audit and payment (FAP) sector is undergoing a notable transition. Let us explore the main developments influencing this sector:

Technology inclusion:

• Automation: The primary objective in the modern era is to boost automation in FAP to eliminate errors, increase the speed of operations, and ultimately boost productivity. Many human-intensive activities, including data entry, invoice management, or freight contracts, are being automated by advanced software solutions. 
• Artificial intelligence (AI): AI-driven tools are transforming the FAP sector. These instruments can spot trends, abnormalities, and possible mistakes in freight invoices that human auditors would overlook. Faster paying cycles and more accurate audits follow from this.
• Machine learning (ML): From past data, machine learning (ML) algorithms can learn to forecast future patterns, maximize cargo costs, and spot possible cost-cutting prospects. By examining past shipping data, for example, ML can forecast future shipment quantities and negotiate better pricing with carriers.

FAP solutions, like Pando, perform 4-way matching of documents. With advanced analytics and verification processes powered by AI/ML it looks for contracted rates, purchase orders, shipment data, and invoices. This not only improves efficiency but also reduces human error, leading to more accurate audits and faster payment cycles.

The growing importance of data analytics

For the FAP sector, data-driven insights have become imperative. For instance, technologies like advanced analytics and BI solutions offer a closer understanding of performance measures and delivery costs. Leveraging these technologies enables you to:

• Identify cost-saving opportunities: Analyzing vast amounts of shipping data helps your company spot overcharges, disparities, and possible cost-saving opportunities through historical analysis. 
• Carrier performance evaluation: Leverage negotiating strength and negotiate reasonable pricing using data-driven insights. This analysis can be helpful during freight procurement and contract renewal and supports identifying carriers with poor performance. You can then decide on contract termination based on the data analytics.
• Optimize logistics operations: Examining shipping data helps maximize logistics operations by spotting areas of inefficiencies, bottlenecks, and improvement possibilities.

The shift towards in-house freight audit and payment

To stay competitive and meet customer demands, companies need a solid plan, reliable carriers, and efficient modes for 100% visibility into their freight spend. In the past, businesses often relied on third-party vendors to manage their freight audit and payment (FAP) systems. But that’s changing. Organizations are now recognizing how strategically important FAP processes are to their supply chain. As a result, they’re ditching outsourced methods and shifting to tech-driven, in-house solutions to stay agile and ahead of the game. 

Inhouse FAP offers several advantages, such as:

• Enhanced control: With in-house FAP, you have greater control over the auditing process, ensuring it aligns perfectly with your company’s policies and practices. 
• Higher efficiency: Your team can customize processes to match your business’s unique needs, making operations more efficient. 
• Improved security: Freight documents, pricing, and strategies are sensitive and could harm your market competitiveness if leaked. That’s why data security is so crucial in freight audit and payment. By managing FAP on-site with a unified transport management system (TMS), businesses can safeguard private financial information more effectively. 
• Faster dispute resolution: In-house software empowers companies to manage their freight bills and dispute resolution with unmatched precision and speed, avoiding the inefficiencies and loss of control often associated with outsourcing. 
• Better carrier relationship: With the help of the in-house FAP tool, it is easy to reduce the payment cycle, resolve issues with carriers, and address any challenges quickly. Prompt actions of criticality always enhance relationships with carriers and freight forwarders. 
• Customized processes: Whether you need to generate specific reports or integrate with your existing ERP system, an in-house setup gives you the flexibility to design solutions that fit your exact requirements—something outsourced systems often can’t deliver. 
• Seamless integration: In-house FAP isn’t a standalone system—it weaves right into your company’s operations. From procurement to finance, every department can access consistent, accurate data. According to a Gartner study, businesses with well-integrated systems see up to a 20% boost in operational efficiency because their teams are all on the same page. 

Best practices for navigating the freight audit and payment market

To get the most out of your freight audit and payment processes, it’s important to follow these best practices:

• Advanced data analysis: Analyze your shipping data with analytics tools to uncover trends, understand your logistics, and spot opportunities to save money. For example, Pando offers powerful analytics tools that can help you make the most of your freight budget. 
• Strong partner collaboration: Foster strong relationships with your carriers and partners to improve collaboration and streamline operations. Open communication and mutual trust make it easier to resolve disputes quickly. A centralized communication network is especially helpful, ensuring that both your internal teams and carriers have access to the right information to speed up resolution times. 
• Apply cutting-edge technologies and automation: Manually reviewing freight invoices is time-consuming and error-prone, especially if you’re managing thousands of shipments daily. Automated systems can flag issues like duplicate charges or overbilling in real time. By adopting automation, you can reduce manual errors, accelerate invoice processing, and boost cost accuracy—all of which protect your bottom line. Using Pando's technology platforms can help you automate your freight auditing procedures, increase accuracy, and give real-time access to your logistics operations. 
• Setting up the right KPIs: Define and track key performance indicators (KPIs) like discrepancy rates, cost savings, invoice accuracy, and cycle times. These metrics help you measure the effectiveness of your auditing processes and pinpoint areas that need improvement. 

By following these practices, you can ensure your freight audit and payment system runs efficiently while driving cost savings and better collaboration. 

Digital revolution: Technologies in the freight audit and payment market 

The digital revolution in logistics has completely transformed the freight audit and payment process. New technologies are helping companies streamline operations, cut costs, and reduce errors, offering capabilities that can change how you manage freight payments.

Real-time anomaly detection: Gone are the days of manual invoice checks riddled with errors. AI-driven systems now catch discrepancies and process invoices in real time. Studies show that automated systems and electronic invoicing are 60% to 80% faster and more accurate than manual methods. By spotting issues instantly, businesses can prevent costly mistakes before they spiral out of control. 

Improved dispute settlement: Billing disputes often drag on for weeks, tying up resources and delaying processes. Automation changes the game by organizing data, verifying information, and enabling quick communication with carriers. For instance, Pando’s automated dispute resolution tool achieves a 98% first-match rate, significantly reducing resolution times and delivering up to 4% savings in procurement. 

Integration with existing systems: One of the biggest advancements in freight auditing is how easily these technologies integrate with existing unified freight management systems and Transportation Management Systems (TMS). This integration provides a unified view of freight operations, supports real-time tracking, and empowers smarter, data-driven decisions. 

By leveraging these digital tools, companies can unlock greater efficiency, accuracy, and cost savings, all while staying ahead in today’s fast-paced logistics environment.

Charting the course: Future trends in freight audit and payment market

Looking ahead, several new trends will help to define the direction of the freight audit and payment market, such as: 

• Regulatory changes and economic aspects: Logistic operations will still be influenced by economic situations and legal constraints. Keeping updated about these developments will enable you to modify your plans and keep compliant. The best way to keep yourself updated is to develop a strong carrier relationship, as they can share insights in advance for seamless operations.
• Opportunities for innovation: Technological developments will keep inspiring creativity in freight auditing. Accepting new technologies and methods can help you remain competitive and increase your operational effectiveness. Collaborative platforms like advanced transport management systems (TMS) are changing the scenario of logistics operations, and FAP is bringing higher transparency, real-time updates, and automation.
• Market growth projections: As more businesses understand the need for effective logistics management, the markets for freight audit and payment are likely to expand. Success depends on using new technologies and following top standards. 

The way ahead 

Incorporating best practices and new trends into your freight audit and payment systems will greatly increase effectiveness and help to lower expenses. By leveraging advanced technologies and data-driven insights, you can boost efficiency, cut costs, and set your business up for greater success. 

Are you all set to change your payment and freight audit procedures? Check out Pando's advanced solutions and success stories to learn how to improve efficiency, freight audit, and payment processing time and accuracy. 

Book a demo today.