Complete guide on managing freight invoices the right way
When you think of ways to reduce your freight costs and drive efficiency and profitability, the cost involved in invoice processing may not be the first thing that comes to your mind. However, it’s one of those expenses that are hard to spot and continue to slowly eat into your bottom line.
While industry studies estimate that the cost of manually reconciling invoices is around $5 to $12 per invoice, the true cost involved goes way beyond it as the process is prone to errors, labour intensive and time-consuming.
From our data, we discovered that up to 60% of invoices do not match the final quotation. Besides, in about 20% of the cases, these discrepancies go unchecked causing overpayment, duplicate payments and lost productivity.
While traditionally, the account payables team has relied on human efforts due to the complex nature of the work, technological advancements of today’s world have made fully automated invoice reconciliation possible.
Here’s a list of problems that are likely to occur due to mismanagement of freight invoices:
Duplicate payments:
There are several instances when a carrier or your freight forwarder accidentally generates invoices for the same shipment twice, creating scope for duplicate payments. In absence of an efficient system that effectively deals with this possibility, you may end up being double-charged for the same shipment.
Discrepancies in delivery address:
You must cross-check the ‘bill-to’ part of the invoice as the fees for commercial, residential and limited access locations tend to vary. If the pickup address is not stated accurately it can cause delayed and at times even missed shipments. Moreover, some freight companies will charge you additional fees for poor classification of delivery locations and incorrect addresses.
Overpayments:
Inconsistencies between the original quotation offered by your vendor and the invoice can often result in an overpayment. If you fail to verify whether all the charges have been stated correctly, then it’s very possible to be charged more than what was promised in the initial quotation.
Incorrect discount rates:
If invoices aren’t matched accurately you may not be able to make sure whether or not the promised discounts were applied. When seeking discounts, it’s always a good idea to keep them on record and audit invoices to ensure that the discounts reflect in the final set of charges.
However, with automation technology to the rescue, you can bid goodbye to all these problems and proactively reduce the cost of invoice processing and drive profitability.
GoComet Automated Invoice Reconciliation
Here’s how it works…
Once your vendor uploads the freight invoice on GoComet’s invoice reconciliation module, the system initiates the auto-verification process. In case of any discrepancies between the original quotation and the invoice uploaded, the system quickly highlights the inconsistencies to your vendors. This allows your vendors to rectify the mistakes or share documents justifying the charges even before the invoices go to your accounts team.
The system eliminates the need for laborious person followups saving you a huge amount of time. It is only after your vendor reuploads the rectified document that the invoice goes to your team for further processing.
Here are some features of the GoComet invoice reconciliation module:
- Optical Character Recognition (OCR) technology:
GoComet’s automated invoice reconciliation is carried out through a combination of Optical Character Recognition (OCR) technology, algorithmic programming and contextual language processing to ensure accuracy between the invoice and your originally agreed quotation.
- Contextual matching:
For more precise matching the system incorporates contextual matching which means that the module can recognise terms such as THC, Terminal Handling charges, and Handling Charges as one. This also facilitates the ability to accommodate multiple formats. The system can be customised as per the format preferred by your company.
- Automated approvals:
In addition to auto-reconciliation, the system also allows you to set a predefined tolerance level for errors and can auto-approve the invoices on your behalf. Moreover, it can be integrated with your finance department’s internal systems to ensure seamless invoice processing.
- Improved audits:
The system makes improved auditing process possible via unprecedented precision in matching and the ability to time-stamp remarks and comments on each invoice. Besides, it furthers a stronger client-vendor relationship with better payment cycles and full transparency.
The way ahead…
With automation technology making it possible to drive cost savings and efficiency, it’s time to turn technology to your advantage and break free from the inefficacies of manual freight invoice matching.
To learn more about how GoComet can help you pay less for your freight procurement, digitally track your shipments and auto-reconcile your freight invoices, reach us here.