The idea of freight payment is not difficult to understand, however doing it in a way that saves the company money and optimizes other business goals, is much more challenging. Don’t think of freight payment as one action. Think of it as a freight payment process, with actions ranging from carrier invoice receipt to compiling business intelligence based on that information. Freight payment can be done directly by the shipper, or outsourced to a freight payment provider company with expertise in carrier invoicing using freight audit software. Freight payment is part of a comprehensive freight payment services program for a supply chain.

How Freight Payment Works

The entire freight payment process includes these steps, whether done by an individual shipper or a freight payment company.

Receive freight bill

The carrier sends the invoice to you or the freight payment company. The freight bill can be sent by snail mail, electronically via EDI, or by email.

Validate the invoices 

Before paying the freight charges, there are several steps to verify the invoice has not yet been paid, and that you have the right information to analyze it thoroughly. That includes checking the customer invoice number, learning how to read the bill of lading for shipment information, purchase orders, and cross-checking all of this against your own records.

Conduct the freight audit 

The invoice is audited to ensure the following:

  • All applicable discounts are given
  • Freight rates and accessorial freight charges are accurate 
  • On-time delivery
  • The invoice number matches the customer or shipper data 
  • The shipment point of origin and destination are correct 
  • Weight and freight classification are proper 
  • The actual freight shipment is identified 

Shipware’s audit checks for multi-point audit of failure in each invoice. Additionally, your freight audit process can be done manually or automatically using software. Manual audits are time-consuming and error prone, as there’s a lot to remember and to search for in verifying each invoice. In comparison, software can quickly scan the invoice, compare the various elements, and move the invoice into exception management if needed.

Exception management

If the audit process finds potentially incorrect billing information like inaccurate freight costs or freight forwarding information, that carrier invoice would go into exception management. These issues should be addressed before the company agrees to pay the freight invoice and promptly to avoid a UPS late payment fee, for example, and so that the same errors are not made going forward.


The company, or freight bill payment company, pays the transportation invoice with the agreed-upon method, often credit card, electronic payments or check. When using a freight payment services company, it’s easy to improve cash flow by consolidating invoices and negotiating payment terms to meet your needs.

Cost accounting

While making the carrier payment, the proper cost allocation is made in the company’s general ledger. This ensures the freight invoice is tracked internally according to the business rules and also has the coding needed for logistics analysis. 

Capture data and business intelligence

Carrier invoices contain a plethora of useful information for business intelligence. When outsourcing to a freight bill payment company, that information multiplies because they can access many other customer’s invoices and compare data points. This freight payment step brings richer data elements into the reporting structure, allowing the company to run reports. The tools can analyze the freight forwarder or carrier’s efficiency, and determine if the discounts or other negotiated charges align with what companies with a similar shipping volume are getting. It can provide KPI reporting as well.

If your company is not going through all these steps for the freight payment process, you may be missing out on the benefits. Some shippers go through the steps, but not in depth, so they miss out on cost savings opportunities and business intelligence information. Using a service provider can make a big difference in these cases. 

Follow the preceding link to learn more about carrier invoice reconciliation

Advantages of the Freight Auditing and Parcel Pay Process

The freight industry is complex, and not all shippers understand the billing well enough to strengthen their supply chain and enjoy the cost savings they deserve.

Companies like Shipware can analyze data to improve strategic decision making. This task includes benchmarking carriers and service levels. When analyzing your own data, you can glean some helpful information. But by adding your data to others, you get better insights into how your services and costs compare, enabling your company to make supply chain logistics changes resulting in cost savings. 

When Shipware works with a client, the client usually saves money. That’s because it costs money to employ an expert in the freight payment process, and often the person who handles the payments is not an expert in this area. It’s easy to miss the nuances involved in ensuring an accurate freight bill audit, exceptions are managed, all data points are captured appropriately, the reporting is timely, and the business intelligence gleaned is comprehensive. 

Shipware’s freight bill audit services and the freight payment process can reduce your company’s transportation and logistics costs, decreasing time spent handling invoicing and payments, and improving cash flow. On-time payment increases lead to your company receiving actionable information in a timely manner. Shipware’s proprietary parcel pay program and invoice audit recovery program saves our client base 1% to 9% on total invoice costs. The audit recovery program runs in the background, requires no software download, and credits are applied to your account automatically. The programs together make a comprehensive freight payment process solution that saves your company money, improves the carrier relationship, and is easy to run. 

To learn more about how Shipware can make your freight payment process easier and more cost-efficient, contact us online.