Streamline Your Logistics: Choosing the Best Freight Payment Software

Eliminate invoice errors with freight payment software.

J.P. Morgan Payments Innovation found that 80% of invoices today are still on paper and manually keyed into financial systems. It’s a shocking data point in 2024, and there’s more where that came from.

Research also shows that it takes 50 days to clear a payment, and that 12% of employees have a hand in AR and AP processes.

As the logistics industry grows and shifts, though, shippers have no choice but to be more flexible and efficient. Paper invoices and slow, manual operations just won’t cut if you’re dealing with more than a handful of shipments.

So, how can you keep up?

Cue freight payment software—specifically software that’s built with artificial intelligence (AI) as its foundation. AI is agile, and can help you navigate the many peaks and valleys of the global supply chain.

With the right AI solution, you can eliminate the paper problem, enjoy the benefits of automation, and get real control of your freight costs. To understand why using software is so much more valuable than traditional processes, you need to see where those processes fall short.

What do typical freight payment processes look like?

A routine freight invoicing and payment process typically looks like this:

1. Document receipt: After delivery of your load, the carrier sends you an invoice along with any related shipping documents.
2. Duplicate detection: Accounting identifies any duplicate freight bills to avoid double payments.
3. Document audit: You check to make sure you have all the necessary documents for invoice reconciliation.
4. Rate audit: Next, you look at rate sheets to ensure the rate for your linehaul, fuel surcharge, and accessorials match your contract rates.
5. Invoice approval: Based on the results of the rate and document audits, you either approve the invoice or flag it for adjustment.
6. Payment: If an invoice is correct, it will be processed according to the net terms in your contract.

If there are invoice errors, the following steps apply:

1. Exception research: You do root cause analysis to understand the issue and gather data from the documentation to support an adjustment claim.
2. Error resolution: After research and documentation, you file a claim with the carrier. Until they resolve the issue, the invoice payment is on hold.
3. Corrected invoice payment: Once the carrier corrects the error(s), you submit payment for their services.

Now, imagine doing it for the hundreds of loads you manage every week. Even for small shippers, thorough and consistent manual auditing is impossible in the long term. That’s why many shippers skip auditing or only look at invoices over a certain dollar value.

However, spot-checking means all sorts of errors and overcharges go undetected. By not verifying an invoice at the line-item level, you leave profit trapped in your supply chain. Luckily, freight payment software solves this and several other challenges you face as a shipper.  

Freight payment challenges and how they cost you.

If you’re not careful, many things can sap your cash flow and drive your logistics costs up.

Look out for these issues when auditing freight invoices:

• Missing documentation: Supporting documents such as bills of lading, shipping manifests, and proof of delivery (POD) are essential. Without them, verifying that invoice charges match the agreed-upon load specs is impossible. The bad news is that these documents are difficult to wrangle into one place because they’re spread across physical documents, email threads, and online platforms.
• Incorrect invoices: Many freight bills present incorrect accessorial or linehaul rates. Checking them all for accuracy is essential to preserve your profit margins—it’s also a full-time job. This is especially true for less-than-truckload (LTL) shipping that relies on SMC3 tariff rates.
• Rate card issues: Rate cards outline freight costs based on weight, volume, parcel dimensions, routing, and other details you agree to with your carrier. The trouble is: You may spend hours negotiating a great rate only to realize that the carrier forgot to update it in the new contract.
• Manual mistakes: Errors happen for a million reasons. You might get caught in a “stare and compare” moment trying to reconcile two docs, or accidentally key the wrong rate into your TMS. Not to mention that it can be a struggle to manage hundreds of different payment terms and timelines to avoid racking up late payment fees.

Thankfully, you can overcome these obstacles. Let’s discuss how.

4 freight audit and payment (FA&P) best practices to swear by.

FA&P workflows are filled with elements that have the potential to shrink your margin. This is one reason to look for software that streamlines these workflows, helping you improve your payment process and manage your cash better.

1. Centralize your network data.

The first step in taking control of your freight payment process is to get all documentation digitized in one platform. Yet, because they come from many sources and in multiple forms, trying to compile them by hand is no easy feat.

This is where intelligent freight audit and payment tools like Loop can help by extracting data from every source and format. The best freight payment software will have data management capabilities like the ability to resolve duplicates, link documents, and standardize accessorials, lanes, and service levels.  All to give you confidence that your data is accurate and usable.

2. Automate invoice auditing.

As we’ve mentioned, manual audits require time your organization doesn’t have. Audits should start instantly upon receipt of invoices so you’ll know within hours (not weeks or days) if a freight bill is correct. That way, you can either settle the invoice or request adjustments.

Software makes this possible and can execute audit workflows with 100% financial compliance. You can then invest the time you save into higher-impact work.

3. Digitize your carrier payments.

Digital payments create more flexibility. On one hand, you can accurately track where each invoice is in its life cycle. This allows you to pay each one at-term, maximizing the amount of working capital you have on hand.

On the other hand, automated audits and digital payments give you access to finance tools. If you have fast and accurate audits, you can offer quickpay to your carriers. It’s a win-win—they get paid sooner (they’re happy) and you get a small discount on your bill (you’re happy).

Either way, carriers will value your business more if you always pay on-time or early. This may give you leverage when renegotiating shipping rates or contract terms.

4. Build strong carrier relationships.

Everyone wins when you use freight payment tools to manage carrier invoices. Improved transparency means less back-and-forth trying to resolve issues. Plus, better payment control means carriers know when to expect your payments so they can proactively manage their budgets. This boosts trust.

In a nutshell, these tools help shippers and carriers stay on the same page. That way, you can both plan ahead for cash flow.

How to choose the right software to handle freight payment.

The right software will create growth opportunities for you that traditional methods can’t match. Look for a tool with these advanced features:

• Document-agnostic data extraction: Modern freight audit tools compile data from physical and electronic formats such as .DOCX, JPEG, PDF, electronic data interchange (EDI) files, spreadsheets, HTML, and more.
• Data standardization: Organizing and formatting data to ensure consistency and minimize confusion is key after extraction. It allows you to understand your costs in aggregate and in segments.
• Cost allocation: Automatic assignment of costs, orders, SKUs, lanes, carriers, accessorials, cost codes, etc. takes a ton of work off your team’s plate. It also helps you reduce your cost to serve.
• Audit automation: Freight payment software leverages all available data to validate freight bills and flag variances for your team's research. Automating this workflow reduces the invoice approval process from days or weeks to as little as a few hours.
• Payment orchestration: Paying at-term every time lets you maximize your cash position. Look for a tool that allows for flexible, dynamic payment scheduling so you can pay on-time, every time.
• AI-enhanced insights: Looking beyond individual invoices, AI makes in-depth spend analysis easier. Logistics-AI trains on the nuances of your network to identify cost-saving insights specific to your operations.

With a tool that offers all of the above, you can build a stronger, more scalable logistics function.

Use Loop to reduce risk in your freight payments.

Modern logistics technology in general will serve you better than outdated, disjointed, and highly manual processes. But Loop’s freight payment platform in particular beats alternatives with the following features:

1. Streamlined discrepancy resolution: Logistics-AI surfaces where discrepancies occur to take the legwork out of research and resolution.
2. Flexible payment services: Leverage tools like quick pay to monetize your payables and accurately track each invoice in its life cycle. Loop allows you to pay invoices on your terms.
3. General ledger (GL) coding: Tie every transaction back to the ledger without manual entry or research. Automatic coding ensures your finance team always has a clear view of transportation spend and how it impacts cost of goods sold (COGs).
4. Automated payment workflows: Loop’s flexible and customizable workflows maximize capital holding time without risking late payments.

Loop offers a full range of features to ensure frictionless payment and total clarity for every load and carrier. It will set you up for efficient operations and effective cost management—no matter how your shipment volume, network, or other factors change.

Ready to eliminate the invoice errors that are hurting your cash flow? Try Loop today.