The Role of Freight Audit in Ensuring Compliance with Regulatory Requirements | Cozentus Technologies

Freight Audit services have become an essential part of logistics management. They are responsible for verifying and reconciling transportation invoices with contractual terms, ensuring compliance with regulatory requirements, and identifying cost-saving opportunities. In this article, we will discuss the role of freight audits in ensuring compliance with regulatory requirements, their benefits, and the best practices for selecting freight auditing companies. 

What is a Freight Audit?

A freight audit verifies and reconciles freight bill audits and invoices with contractual terms to identify errors, overcharges, or duplicate payments. It involves reviewing transportation invoices, bills of lading, and carrier contracts to ensure compliance with regulatory requirements and contract terms. Freight audit services are performed by third-party companies specialising in verifying and processing transportation invoices. 

The Role of Freight Audit in Ensuring Compliance with Regulatory Requirements

Freight audit is crucial in ensuring compliance with regulatory requirements in the transportation industry. Transportation regulations are complex and constantly changing, making it difficult for shippers to keep up with the latest requirements. Freight auditing companies have the expertise and knowledge to identify and address compliance issues, reducing the risk of non-compliance penalties and fines. 

Some of the regulatory requirements that freight audit services can help shippers comply with include the following:

Tariff and Rate Compliance: Freight audit companies can verify that the transportation rates and charges applied to a shipment comply with the applicable tariffs and rate schedules. They can also identify carrier rate discrepancies and negotiate refunds for overcharges. 

According to a survey conducted by Supply Chain Dive, 50% of shippers cited "managing carrier contracts and rates" as their biggest transportation challenge. 

Carrier Safety Compliance: Freight audit services can help shippers ensure their carriers comply with safety regulations such as the Federal Motor Carrier Safety Administration (FMCSA) regulations. They can verify compliance with carrier safety ratings, insurance coverage, and Hours of Service regulations. 

Tax Compliance: Freight audit services can ensure that shippers comply with tax regulations such as state and federal taxes, fuel surcharges, and value-added taxes (VAT). 

Customs Compliance: For international shipments, freight audit companies can help shippers comply with customs regulations, including customs declarations, duties, and taxes. 

Benefits of Freight Audit

Freight audit provides numerous benefits to shippers, including:

Cost Savings: Freight audit companies can identify and recover overcharges and duplicate payments, resulting in cost savings for shippers. 

According to a report by Supply Chain Digest, shippers can save up to 5% of their transportation costs by implementing a freight audit and payment companies or systems. 

Increased Visibility: Freight audit services give shippers visibility into their transportation spend, allowing them to identify cost-saving opportunities and optimise transportation operations. 

Risk Mitigation: Freight audit services can reduce the risk of non-compliance penalties and fines by ensuring compliance with regulatory requirements. 

Improved Data Accuracy: Freight audit companies can help shippers improve data accuracy by identifying and correcting errors in transportation invoices. 

Selecting Freight Auditing Companies

Selecting the right freight auditing company is critical to the success of a shipper's logistics operations. Some of the best practices for selecting freight auditing companies include: 

Expertise: Look for freight auditing companies with expertise in your industry and transportation modes. 

Technology: Choose a freight auditing company that uses advanced technology to automate the audit process and provide real-time visibility into transportation spend. 

Flexibility: Select a freight auditing company that can customise its services to meet your needs and requirements. 

Reputation: Check the reputation of the freight auditing company by reading customer reviews and case studies. 

Bottom Line

Freight audit services are critical in ensuring compliance with regulatory requirements in the transportation industry. By verifying and reconciling transportation invoices with contractual terms, freight audit companies can help shippers reduce the risk of non-compliance penalties and fines, improve data accuracy, and identify cost-saving opportunities. In addition, freight audit services provide increased visibility into transportation spend, allowing shippers to optimise their logistics operations.

Shippers should carefully evaluate freight auditing companies before selecting a provider. The best companies will have industry expertise, advanced technology, and flexibility to meet their clients' needs. By selecting the right freight auditing company, shippers can ensure compliance with regulatory requirements and achieve cost savings in their transportation operations.

If you're looking for reliable and efficient freight audit solutions, Cozentus can help. Contact us today to learn more about our customised solutions!