4 best freight audit companies to streamline logistics costs

Managing invoices and shipping documents from carriers and reconciling invoiced costs with purchase orders is an enormous undertaking. Whether you use five carriers or 500, it turns into reconciliation hell.

That’s why so many companies outsource their audits to legacy freight audit providers (FAPs). They outsource hard work that isn’t a core competency but times are changing. The supply chains of 2024 are demanding more financial rigor to improve performance and forecasting.

Invoice auditing companies have been around for decades as service based business driven by BPOs. The latest “innovations” are flashy dashboards, but when you look under the hood  their audits with people. Manual audits mean shippers don’t have access to the financial data they need to succeed in our current supply chain.

Before we jump into leading practices, let’s take a closer look at the different types of freight audit companies, the essential freight audit capabilities, and a few leading providers for your consideration.

What are the different types of freight audit companies?

There are three main categories of freight audit companies: bank-based, service-based, and software-based.

Most companies specialize in one category, but some dip into all three.

Picture the landscape of freight audit companies as a two-axis graph with multi-product to single product on the y-axis and service-based to software-driven on the x-axis. Each company lands somewhere on the graph based on the sophistication of their technology and their product offerings

Here’s a breakdown.

Service-based

Service-based freight auditing companies focus on outsourcing the entire manual audit workflow by delivering audit results.

They often rely on people and legacy technology like OCR (optical character recognition) to handle their audits. Even with nice dashboards to share audit results, the majority of service companies conduct manual audits with business process outsourcing companies (BPOs).

These companies often focus on a specific shipping mode or region. They pull a subset of shipment data like freight invoice dates, invoice numbers, line-haul, and other high-level information to only compare core areas of the invoice.

Typically they will have a process to match the invoiced amount vs. the contracted amount. The "contracted" amount is what takes the freight data into account to understand the correct costs from the contract. These rate calculations by hand, in excel, or in their internal software.

Then they have a threshold percent that if there is a discrepancy above X%, then their people will then go manually audit the invoice line by line and document by document to identify the invoice discrepancy and then work to resolve it. More often than not, they have to ping their customer to get the context to understand the discrepancy.

When you work with service companies, you're often looking for their expertise and recommendations on how you can improve your network. For example, a service provider might advise on how to negotiate a more favorable carrier contract based on their past experience. They might also help coordinate an RFP process to receive bids from new carriers. Some companies will offer contract negotiations on behalf of their clients as a service.

The service-based business model typically charges a per invoice transaction fee and then often has a gain share model. A gain share model is where a servicer will take a percentage of the savings they identify. These gain shares can range from 5% upwards of 50% depending on the type of recovery model.

Bank-based

There are two different kinds of bank-based freight auditing: services with a bank, like Cass, or banks with a service, like US Bank/Syncada. The nature of these two depends on how the company got into freight audit and pay, and the incentives around their offerings.

US Bank wanted to provide audit and pay services to its customers. It bought Syncada to offer FAP and then unlock revenue-driving financial tools for them. Cass began as a service-based company that spun up its own bank to be able to insert itself into the flow of funds.

They often offer a typical financial services model based on transactions. They charge a fee per-invoice with different costs for formats (i.e. EDI feeds are cheaper than PDFs), for handling payments (domestic and international, ACH, credit cards, etc.), and for providing related services like fraud prevention and reconciliation.

In addition, they have other models, including:

• Services fee(s): Implementation, access to their platform, data analytics, optimization recommendations, and contract negotiations.
• Financing options: Shippers can leverage early payment discounts while carriers receive faster payments and pay for the service via a % of the transaction amount. Both generate fees for the bank.
• Data and analytics: Value-added services like data analysis and reporting generate additional revenue, providing insights to clients.

Software-as-a-service

As the name suggests, software companies use technology, not people, to run audits.

Software as a Service (SaaS) has been around for a while, but its solutions are boosting 10x the benefits with the emergence of artificial intelligence (AI). Now shippers don’t have to outsource, with the right solution, they can control their data and have it drive workflow automation.

Freight auditing software eliminates the need for operational teams (in-house or outsourced) who would otherwise have to touch every document during each step. Software can automate up to 99% audit and pay, so people only have to address invoices with discrepancies. Plus, the software reliably collects all your shipment and spend data, not just a few data points.

Platforms with logistics-AI unlock premium data by extracting every data point from invoices and shipment documents, regardless of their format. You can access self-service analytics with high-quality insights, which are used to unlock profits trapped in your supply chain.

Software-as-a-service platforms are subscription-based, so you pay a fee for access to a cloud-based product. Sometimes companies will have consumption-based models, where your cost changes by a variable, like total documents processed or total payment volume.

Pro tip: To boost accuracy, look for software that can centralize and standardize all your supply chain and spend data. This requires flexible ingestion, detailed extraction, data cleaning, organization, and linking.  Logistics-AI is the most accurate data management solution because it is trained on the languages of the supply chain.

Software like Loop unlocks complete supply chain and spend visibility so teams can confidently and accurately allocate their transportation budgets. Loop’s high quality enables 99% of invoices to be audited and paid with no touch. When there is an exception, its root-cause analysis streamlines resolution. Best of all the data collected surfaces insights across shippers’ invoices, contracts, and network.

9 key factors a payer requires with their freight audit

There are a ton of freight auditors out there – each with its own strengths and weaknesses. When you’re looking for the right one, keep in mind the basics of what an auditor should be able to do.

To save you some time, we created this checklist:

1. Access centralized supply chain and spend data. Look for an audit service or software that provides high-quality data and can easily handle new data sources/formats as your network changes.
2. Allocate costs accurately. An audit should be able to assign costs across GL codes, product/SKUS,lanes, carriers, shipments, and accessorials.
3. Streamline document collection. In order to accurately audit an invoice, auditors need all the required shipment documents. Whether it’s bills of lading (BOL), shipment packets, proof of delivery (PODs), receipts, etc. Auditors need to handle documents in several formats (photos, PDFs, and spreadsheets) from different sources (email, text, EDIs, APIs, etc.). Great document management systems detect duplicate invoices and facilitate seamless invoice adjustments.
4. Link invoices and shipment documents. Invoices and shipment documents often come from different sources and often don’t have unique identifiers. To ensure that the invoice is valid and billed correctly, auditors must be able to link all documents related to a shipment together. Without this, auditors cannot validate every line-item on an invoice.
5. Conduct an accurate rate, services, and accessorial audits. Invoices have three categories of line-item charges: rates, services, and accessorials. Auditors must verify costs by comparing contracts and shipment documents to ensure accurate discounts, SMC3 tariffs, and accessorial charges.
6. Attain correct SMC3 tariffs. Great auditing software automatically connects with SMC3 to ensure you have the right LTL tariff. Most service-based companies rely on manual rate tables or checks assessments, which leave room for human error.
7. Detect discrepancies down to the penny. Here’s where manual audits sometimes fall short, they cannot catch every invoice issue. It’s critical to spot discrepancies quickly to ensure you’re not unnecessarily overpaying.
8. Explain “why” invoices are inaccurate. It’s not enough to simply highlight errors when disputing invoice discrepancies – you have to show why issues arise to streamline resolution. Explainability ensures the results of your audit are understandable so carriers can quickly fix their invoice issues.
9. Fix the root cause. Exceptions always occur, even if you perfect your master data, something will break in the future. Freight audit software must be prescriptive on how to fix the root cause.

4 top freight audit companies

1. Loop

Loop, founded in 2021, is a software-as-a-service offering. Its logistics-AI platform provides complete supply chain and spend visibility so teams can automate audit and pay, and uncover insights that optimizes their transportation spend.

Loop’s logistics-AI extracts data that is trapped in documents to boost supply chain and spend visibility. Standardizing, cleaning, and centralizing data into a unified system is crucial to unlock accurate and usable data. When you have high-quality data that anyone can access, it powers workflow automation, streamlines results, and unlocks insights across your invoices, contracts, and network.

Solutions:

• Improve spend visibility: Unify all supply chain and spend data from any document or source to accurately allocate costs, monitor performance, and uncover spend anomalies.
• Automate audit and pay: Logistics-AI improves audit accuracy with configurable exception thresholds so teams can approve and pay up to 99% of invoices with no touch. Loop’s platform also streamlines exception management with root-cause analysis for each discrepancy.
• Optimize transportation spend: High-quality data and self-serve analytics empower you to boost team and carrier performance. Complete visibility means you can now access savings insights that were previously unattainable

Pros:

• Loop unlocks high-quality data with logistics-AI extraction from any document (CSV, JSON, JPG, JPEG, PDF, PNG) and any source (EDI, API, email, etc).
• Loop enriches the data from your enterprise resource planning tools (ERP) and transportation management systems (TMS), and validates rates against SMC3 tariffs.
• Loop creates custom rate engines that calculate the correct costs per contract.
• Loop handles cost allocation to get granular cost analysis across GL code, shipment, lanes, carriers, accessorials, and products.
• Loop’s 100% financially compliant audits (that are conducted in hours) enables shippers to offer quick pay discounts to their carriers.
• Loop runs scenario planning to ensure you have the right carriers and discounts for your product, lane, mode, volume, and service type.
• Loop’s easy to use platform and self-serve analytics is available to your entire team anytime, anywhere.

Cons:

• Loop supports parcel, LTL, and TL currently within North America.
• Ocean and air refinement of the logistics-AI models is in progress.
• International expansion coming in 2025.

2. Cass

Cass Information Systems, founded in 1906, is a bank-based provider. They focus on getting information across telecom, utilities, waste, and freight bills.  They provide an expense management consultant to understand each client’s freight data and provide recommendations for optimizing the spending. Cass Information Systems owns Cass Bank to execute payments on their customers’ behalf.

Solutions:

• Freight claim services: Cass will interface with carriers to dispute claims on behalf of their clients.
• CassPay: Cass inserts themselves in the flow of funds and pays customers’ bills after the audit.
• Cass Benchmark Data Services: Shippers can compare their spending on specific modes and lanes to others in the industry.

Pros:

• Cass’s consultant team builds out a customized solution for every shipper
• Cass payment services include payments to all continents and in 14 currencies.
• Cass helps customers leverage industry benchmarking to help with waste management and negotiating for more favorable contracts.

Cons:

• Cass’s offering is a consultancy that is built for waste management, telecom, utility billing, and freight audits. Their solution is not tailored to the supply chain.
• Cass markets “hand-rolled reconfigurability,” not automated freight auditing. It’s reliant on manual processes and can take years to integrate.
• Cass doesn't provide easy to interpret analytics to their customers. This puts the burden on their customer to take the raw data and transform it into meaningful actions.
• Cass inserts themselves into customers' flow of funds, which diminishes their working capital.

3. Intelligent Audit

Intelligent Audit (IA), founded in 1996, is a software-as-a-service offering with a price per invoice model. It caters to shippers and 3PLs but only executes audits, it does not have a payment product.

AI and machine learning (ML) were added on as enhancements in recent years, but IA still requires human auditors to run freight bill audits and interpret the data. In most cases, it can take days, or even weeks, to hear back about an expense report from an in-house auditor. Since IA is a services model that has instituted tech later, there is little to no explainability for audit results beyond the insights provided by the IA team.

Solutions:

• Accounting tools: Customers can outsource auditing and carrier payments to streamline the accounting process.
• Integrations: Intelligent Audit integrates with SAP Concur, leading software for expense and payment management, and integrates with other tools.
• Dashboard-driven UI: Each account can have customized dashboards based on types of freight and spending.

Pros:

• IA uses SAP Concur UI for seamless accounting across an org.
• IA offers payment through TriumphPay, so both quick pay and factoring services are available.
• IA can handle parcel and freight audits

Cons:

• IA’s process is very manual, which requires time and is error-prone.
• IA doesn’t explain the audit results, so clients must rely on humans to decipher inaccuracies, which delays resolution.
• IA requires a very hands-on approach to configurations, so shippers must meet with a consultant once per month or weekly to manage automations.

4. Blume Global

Blume Global, founded in 1994, is a service-based offering. It’s primarily a TMS provider with FAP services added on. Its focus is finding the paper trail to track invoice charges, providing what they consider “end-to-end” visibility into network spend. Blume Global uses AI in its operations.

Solutions:

• Agreement management: Contract parsing and change management, rate and tariff repository.
• Auditing: Proof of work history and delivery validation, accessorial evaluation.
• Payment: Blockchain ledger, automated payment upon proof of delivery, spend analytics.

Pros:

• Blume Globals bundled TMS and FAP capabilities means you only need to integrate one software.
• Blume Global uses machine learning and AI in its platform.
• Blume global has features for accessorial evaluation, so users can spot which accessorials are costing them the most.

Cons:

• Blume Global’s freight auditing is an add-on, not their primary offering.
• Blue Global doesn’t have managed services, so they can’t provide a consultative partnership.
• Blume leans on blockchain to support their operations.

Loop is has re-invented the audit game and allows payers to control their outcomes

Freight audits need to manage a lot of documents and data to provide great results. Loop uplevels the entire invoice and shipment document process to provide high-quality data, audits, and insights.

Loop ensures real-time freight data is at your fingertips. It captures all your freight data, not just a handful of data points, so you know your audit results are comprehensive and accurate. By automatically running audits for every invoice received, you’re alerted instantly to potentially costly invoice mistakes. It’s self-serve and powered by logisticsAI.

Contact Loop today and improve spend visibility to control costs and power profit.