Transportation Accounting and Cerasis

Transcription

1 C TRANSPORTATION ACCOUNTING 4/10/2015 Transportation Accounting Transportation Accounting and Cerasis WHO IS CERASIS? The way that your company manages its freight accounting can have a tremendous impact on your bottom line. According to Inbound Logistics and recent studies, a shipper could reduce the cost of their freight invoice to as little as 5 to 10 percent of the average $11 price. And thanks to the freight accounting services offered by Cerasis, it's possible to save an additional 2 to 5 percent just due to the reduction in errors, inaccurate charges, and duplicate payments. There is of course a lot to manage when it comes to transportation and freight accounting, and as such it's important to have a professional on your side. Its' even more important when your company relies on daily shipments, and when you're ready for assistance there are plenty of different ways we can help you. We offer a variety of freight accounting services including: Freight payment Freight auditing Freight invoice consolidation Taking a closer look at our transportation accounting services can help you get the most from your business. IN THIS WHITEPAPER Freight Audit Benefits of Freight Audit Page 2 Page 3 Freight Bills versus Bills of Lading Page 4 Bills of Lading Page 5 Making Your Freight Invoice Work For you Page 7 What Are Accessorials Page 9 Freight Bill Pre Audit or Post Audit Page 10 Using Transportation Strategies For Smarter Accounting Page 11

2 TRANSPORTATION ACCOUNTING 2 Freight Audit Technology is making a big change in virtually every sector of the industry, and using a goodtransportation management software system allows shippers to carefully review and control freight costs. But there are still plenty of reasons to utilize manual freight audit techniques as well, and for most businesses the best solution is to combine the two together. There are numerous challenges that come into play, and plenty of reasons that keeping a close eye on freight shipments is important. These include: Combined Less than a Load Shipments Changing oil prices Transit times and the impact on profit Constantly shifting quotes Mistakes in billing Simply put, there's a lot to it and while automated systems can help, there's still a lot of work that needs to be done. It's important to understand that automation is important without it, the personnel costs of managing every single invoice becomes too great. The same applies to large- scale audits. And with audits that are too small, not enough information is even gathered to make the process worth the cost. As a result, the best way to save in your shipping costs is to utilize existing performance data in order to develop future procurements of freight, future carrier strategies, and future shipping processes. In short, since the freight audit takes place after you've already spent your money on the shipment, you are really looking at the future, not the past. Combining Manual and Automated Freight Management The key is to combine the use of freight auditing software with a manual freight audit on a periodic basis. This helps eliminate issues. For example: Is software information being entered properly? Are all settings still accurate? Is the software working properly with the transportation management system? One simple mistake in data entry can change months of data, and as a result it's important that you trust in professionals to periodically examine your situation and your system, making sure that any variances are accounted for in order to mitigate any future issues. Outsourcing works, and about 36% of companies avoid using software at all due to expense or complexities. When you outsource your freight audit processes, you'll be able to let your team continue focusing on their efforts while the professionals handle the audit. It's a solid idea that's worth considering.

3 TRANSPORTATION ACCOUNTING 3 Benefits of Freight Auditing Companies are beginning to understand that controlling freight costs means taking a new interest in their freight audit process, and outsourcing the process has led to big changes for companies. Benefits include: More productivity in house as your team is freed up to focus on other areas of their jobs Recent data shows that freight costs can make up about 10% of a company's expenses. But carefully monitoring freight can gradually lead to reductions in costs by locating better freight prices Removal of discrepancies discrepancies in freight can be as much as 8.8% of the total invoices, and those differences can lead to serious costs and numerous problems. Companies have found that outsourcing can lead to lower expenses it can actually reach as low as 5 to 10 percent of the total cost of handling things internally. Our Freight Audit Process Cerasis takes a very serious approach to the freight audit process, and we follow a basic set of procedures to ensure that you get the best results possible. Our process includes the following steps. The customer begins the process by using our program to create a shipping order, and Cerasis delivers an estimate for the expected charges based on information in the shipping rate database. Cerasis receives an electronic invoice from the carrier and matches the invoice to the freight data invoice record for validation Cerasis compares the price invoiced with the expected price created from previous data If there is a difference between pricing, an audit is initiated to determine why that is Once per week, a freight invoice consolidation process is completed that includes running a number of audit checks to determine whether or not the freight invoices are correct Information is maintained in our system, and the customer is given access to those reports, including things like which character is the lowest cost, tracking informant, shipment compliance, and more.

4 TRANSPORTATION ACCOUNTING 4 Freight Bills versus Bills of Lading There are a lot of different terms within the shipping and logistics industries, and it's important for customers to have a clear understanding about those terms it's enough on its own to help you understand a lot of what's happening with your shipments. One of the single most important terms to understand is the difference between a bill of lading and a freight bill. They're very similar at first glance, but they have some differences worth paying attention to. Bills of Lading A bill of lading is an official document that gives a precise name and number to each item being shipped. They're admissible in a court of law if needed, and include information like value, weight, and more. They essentially represent the agreement between the shipper and the carrier since they detail what is being shipped, where it's going, and more. It's a kind of service level agreement, and as such it is vital to ensure that they're accurate. Freight Bill A freight bill isn't admissible as evidence in a dispute. They're essentially invoices that include the price of the shipment, additional charges, and other information. It's important to maintain them for your records not because of any legal situation, but for your own records and review. While knowing the difference between the two is the first step, taking a closer look at them is important.

5 TRANSPORTATION ACCOUNTING 5 Bills of Lading As mentioned above, the bill of lading is a vital piece of documentation since it serves as a legally binding document between the shipper and the carrier. Some of the things you'll find listed on the bill of lading includes: Shipper and receiver's names Special instructions to the carrier PO or account numbers used for order tracking Date of the shipment Number of units in the shipment Type of packaging A note if any hazardous materials are included A description of items NMFC freight classification Exact weight of the shipment Declared value of the goods within the shipment Essentially, the bill of lading serves three key purposes, each one of which deserves closer attention as well. Evidence of Contract of Carriage It's important to note that the contract between a buyer and seller exists as soon as the buyer places the order, and the contract between the shipper and the carrier exists once the booking for the shipment is made. While the bill of lading isn't the actual contract, it serves instead as evidence of the contract between the shipper and the carrier. That's why its accuracy is so vital. Receipt of Goods The bill of lading is issued by the carrier or their logistics provider, and is issued in exchange for receipt of the freight. This means that it serves as proof that the carrier has received the goods in good condition. Document of Title At its most basic, this means that whomever holds the bill of lading essentially has the legal right to claim the goods. But different terminologies and different consignments within the lading will have an impact on the way this title claim works. Types of Bills of Lading There are two primary types of bills of lading, and each one will have a different impact on the document of title aspect of its existence. These two types of bills of lading are: Straight Bill of Lading This is a bill of lading that is simple and straightforward. The goods are consigned to a designated party. Order Bill This is a type of bill in which the goods are consigned over to the order of a named party. The biggest difference is that straight bills of lading are generally not negotiable, while an order bill is.

6 TRANSPORTATION ACCOUNTING 6 Inaccuracies In A Bill Of Lading There are numerous potential problems that can arise when you fail to use an accurate bill of lading. These include: Loss of the right to limit your liability The loss of P&I coverage Loss of the right of indemnity from the charter Potential criminal prosecution Exposure to claim For instance, if your bill of lading states that the goods are loaded in good condition but they arrive damaged, the receiving party will have the right to make a claim against the carrier. But if there is no information or it is inaccurate, the receiver won't have that right and it will be difficult to get your claim made or paid. Ensuring Accuracy in a Bill Of Lading There are a few tips that you can keep in mind to help ensure your bill of lading is as accurate as possible. They're well worth keeping in mind, and include the following. Triple check all informant on the bill of lading before you sign Set up a consistent bill of lading template that you can use each time Utilize the services of a third party logistics provider and a transportation management system.

7 TRANSPORTATION ACCOUNTING 7 Making Your Fright Invoice Work For You Your freight invoice is essentially a bill that is created by a carrier that contains the information about the freight. It includes information like: Name of consignor and consignee Date of shipment Origin and destination Description of the freight Number of packages shipped Weight or other measurement unit Route of movement Name of each carrier involved in the shipment Total charges due Exact shipping rate charged Transfer points Address of bill There is obviously a lot of information involved, and the key thing to remember is that you need to make the freight invoices you receive work for you, not against you. This can sound difficult, but it's not impossible to do and there are several different things you'll want to keep in mind. Freight Audit/Payment Simply put, utilizing a freight audit is something that is worth considering. Already, freight costs can potentially make up about 10% of a company's total expenses, and rising freight costs are a growing concern. Overpaying for a shipment can impact your bottom line, and as such you should consider completing regular freight audits in order to ensure that you aren't paying too much. The process is fairly simple a third party logistics company will receive freight bills, and they are entered into the system. Then, an audit is done looking at validity, duplicate payments, tariff application, mileage, and more. Once the audit is complete, bills are paid out and the data is stored to help the business make a determination about upcoming costs and potentially develop new strategies related to the shipping process. For most companies, outsourcing is the most economical way to handle an audit. This reduces costs and provides better results, and as such most companies today outsource their audits in order to get those better overall results. Freight Payment Service Another way to expedite the process, a freight payment service is a combination of multiple processes to streamline the process of managing freight payments. It could include a number of services and features including: Electronic Data Interchange Services Logistics and Freight Data Analysis Freight Auditing Services Paper Freight Bill Management And more Essentially, the goal is to turn over most of the freight management process to this third party organization. There's a lot to it, including things like matching up bills of lading with invoice data, comparing shipment details, and more.

8 TRANSPORTATION ACCOUNTING 8 Freight Invoice Consolidation Freight invoice consolidation is just what it sounds like instead of receiving a dozen or even a hundred freight invoices in a given week, you receive just one. This is a key feature offered by a third party provider of freight payment management, and it's a big one. Consider the benefits it offers: Lower changes of fraud Easier document retrieval That final point is important. Being able to effectively analyze your freight information is a major part of success in any business. Looking at things like freight costs, classification, and pricing from different carriers can all help you save money in the long run by giving you the information needed to make better strategies and plans for your company. Reduction in paperwork Improved productivity Easier to review shipping data and information 24/7 access to weekly freight invoices Better overall freight analysis

9 TRANSPORTATION ACCOUNTING 9 What are Accessorials? A company that ships physical gods has to be able to reduce costs and modify their expenses in effective ways. With 10% of a business' expenses often tied to shipping costs, it's important to understand what can be done to reduce those costs. Accessorials are one thing that deserve a closer look, and that could help impact your bottom line. Accessorials are just what their name suggests extra charges added to freight bills that are there due to additional services the carrier handled. This could include things like: Packing Unpacking Extra pick ups Fuel increases Trailer detention Re- delivery Long haul fees Hazardous materials fees Residential adjustments Weight adjustments Additional handling fees And more In some cases, they're necessary. But the big issue with accessorials is that they're assessed and applied to a shipment after it's been completed. In fact, carriers often leave entire accessorial data fields blank and shippers are barely able to understand just why certain accessorials were even assessed at all. As a result, it's often difficult to plan for them or to factor them into a supply chain budget. Another issue related to the growing use of accessorials is that they actually make up around half of a carrier's total annual revenue. They have no incentive to reduce them or to give specific details since they're bringing in so much income. That means that it's up to you, the shipper, to try to reduce these costs. Audits might seem like the answer, but it's not always the case. While you do need to run regular audits, the problem is that when you run too many audits, you actually end up spending more money due to the effort it takes to run them. And with carriers offering less and less in the way of credits, it becomes clear that a different approach is needed. Proactivity Can Help Being proactive is the key here. There's no way that you can change the way that carriers manage their accessorials, especially since they make so much off of them. Instead, you need to take steps to reduce your accessorial spending. This comes down to a few key steps. Analyze your company's shipping history and what kind of accessorial charges are dragging down your profits the most. A good third party auditing provider will help by giving you clear data that explains most of your expenses to you. Use scanning equipment to help automate data entry for shipments. Options include scanners that measure and record weight, dimension, and more. Be more efficient when you create the shipment, and pay special attention to factors that often lead to additional charges. If you can reduce volume or weight, for instance, do so, but at the very least be sure to keep track of it. Trust in a third party logistics provider. This way, every freight invoice can be audited and you'll have someone there to help interface with carriers to give you the refunds that you deserve when inaccurate charges are present.

10 TRANSPORTATION ACCOUNTING 10 Freight Bill Pre Audit or Post Audit By now you understand just how important it is to run regular audits on your freight bills. But it's worth understanding that there are two types of audits you can use the pre- audit or the post- audit. Both have similarities the bills are received and entered into the system, and then are audited for accuracy in things like validity, mileage, etc. But when the audit occurs can have a role in how it impacts a company, too. Pre Audit Running an audit on a freight bill before it is paired lets you identify various areas that you could save money in. It also helps you ensure that you meet all of the various requirements for a shipment with a carrier and that all contractual obligations are being met rates, taxes, and other issues are all reviewed before the fright bill is paid. Post Audit While the pre- audit lets you get a clear picture on what to expect, it's the post- audit that helps you identify whether or not your account has been overcharged, if errors exist, and more. It's the more common of the two, and its' vital that you run post audits on a regular basis in order to ensure that everything is accurate on your bill. By using audits properly, you should be able to determine whether or not you should attempt to recover money. By submitting a post audit and a copy of the freight bill you can usually prove that overcharging occurred, and as such it's important to pay attention to this aspect of the freight world.

11 TRANSPORTATION ACCOUNTING 11 Using Transportation Accounting for Smarter Strategies You already know that the way you strategize has a direct impact on your company's bottom line. After all, paying attention to details means that you should be able to get better results from your resulting efforts. At the moment, transportation and shipping costs are steadily growing. And as your company grows, your freight costs will as well. But it's vital that you pay attention to freight spending in order to keep it as low as possible and your profits high. In order to do so, you need information. Information related to shipping comes from a variety of sources, in particular things like shipping invoices, bills of lading, and more. But in order to put all of the information together, you need to utilize a good accounting system and run regular audits. These audits look for a number of things related to a bill, including: Mileage Accessorial charges Tariffs Duplicate payments Overall validity And more The key things that is being looked for are discrepancies and costs. A good audit will help highlight issues like overcharges or when a particular carrier's rates have increased beyond that of other potential carriers. But it's a tremendous amount of work for a company to handle regular audits, which is why most businesses today outsource the process of transportation accounting. By doing so, you eliminate the need to comb through dozens or hundreds of freight information and instead get accurate consolidated invoices. These consolidated invoices let you see what's going on, but eliminate the busy work of managing the process.

12 TRANSPORTATION ACCOUNTING 12 Accounting for Freight Costs Companies spend far more than they realize on freight costs, and as a result it's important to take steps to account for those costs on a regular basis. The key is to run basic audits in order to gain a clear understanding of your expenses and where you could save. Some tips worth keeping in mind to help include: Know the freight cost as it relates to the assets. In other words, if the freight is an actual part of the asset cost, you can consider that freight to be an extension of the overall value of the asset. This is important for recordkeeping purposes. Also, know the cost of your sales- freight account. You can't mingle your freight costs with similar expenses, or you'll end up with inaccurate information. Be sure that you trust in a good logistics solutions provide to ensure that every aspect of your transportation accounting is handled properly including accounting for freight. Consolidated Freight Invoicing As you can tell, freight invoicing involves a tremendous amount of data and information, and it's very common for that information to create challenges among those who are managing the information. After all, keeping track of invoices, costs, fees, payments, and auditing can easily become a full time job. A consolidated freight invoices program helps streamline this. These programs help by giving businesses the chance to scan or key in the information from each invoice. Information that is entered into each shipment entry includes: Date Cost center Vendor Invoice number Cost Weight Service level And much more Once it's entered into the system it can be sorted, cross- referenced, and archived for easy access later. It simplifies the entire process by removing the huge mountains of paperwork, which in turn leads to numerous benefits.

13 TRANSPORTATION ACCOUNTING 13 Benefits of Consolidated Freight Invoice Services The use of consolidated freight invoice services includes the following: Detailed data entries and information for each shipment Faster, easier document retrieval Reduction in paperwork Reduction in fraud Reduction in inaccuracies, mistakes, and overcharges Improved productivity within your company Ability to easily compare freight costs to develop new strategies Saves time and money Ability to access supporting documents for any system Cloud storage with the best programs and outsourcing solutions In short, consolidating gives you much more control over how your company operates and what kind of results you get from it. If you're serious about lowering your overall freight costs and you should be it's worth looking into this feature offered by our outsourcing services. Understanding Freight Bill Automation With all of the obvious challenges involved in managing transportation accounting, it isn't hard to understand just why automation is so important. Freight information is already highly complex, and the chance for mistakes is far too common. Automation possibilities are numerous, and the right software program can let you automate a wide range of things. Possibilities include: Digitization of all paper invoices Access to invoices 24/7 Interface with carriers to help resolve disputes quickly Allocate all expenses Pay freight electronically Audit options for contract compliance, duplicate identification, cost review, and more In short, it lets you manage each step of the process and automate everything involved. This offers numerous benefits to companies including: Elimination of paper files Easier to review information and develop freight strategies Long term archival of invoices with easy access Improve productivity in the workplace Maximize cash flow Eliminate mistakes Offload disputes of fright bills to the third party logistics manager Real time invoice visibility And more Essentially, automation means that your freight bills become data that you can use to improve your company's bottom line significantly. You'll be able to review the information to make better decisions, target cost control measures, and much more. In doing so, you'll be taking steps towards a better overall shipping department. Here at Cerasis, we take pride in being able to provide transportation accounting and auditing solutions for any company, regardless of size or business area. Your company deserves better transportation accounting, and we're here to help make it a reality.

14 TRANSPORTATION ACCOUNTING 14 Cerasis Team An Exceptional Group of Experienced Freight Professionals Striving to Exceed Your Expectations Dedicated Customer Service Representative Freight Desk - Volume/Spot Quotes - Truckload Quotes - Routing of Inbound Shipments - Hotshot, International, and Guaranteed Shipments - Assistance with Freight in Transit Issues Claims Specialist Carrier Relations Group Implementation Team - Oversees New Account Setup and Account Specific Bid Process - Conducts Commodity Review - Works with Your Management Team to Implement your Custom Solution - Provides Training Cerasis Technology In- House IT Department Integration - Working with your IT Staff, we can help design a solution that will pull order information from your ERP system and write fulfillment and accounting information back to your system. XML Web Servicesour TMS System to perform most of the common tasks related to shipping. This allows you to rate/ship from a custom built application, retrieve shipping - Rate and Rules Negotiations - Carrier Contract and Relationship Management - Carrier Performance Monitoring CERASIS: YOUR TRANSPORTATION MANAGEMENT THIRD PARTY LOGISTICS SOLUTIONS PROVIDER Call Us Today at or info@cerasis.com