transportation accounting and...

TRANSPORTATION ACCOUNTING 4/10/2015

Transportation Accounting

WHO IS CERASIS? C IN THIS WHITEPAPER

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.

Freight Audit

Page 2

Benefits of Freight Audit

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

0

Using Transportation Strategies For Smarter Accounting

Page 11

Transportation Accounting and Cerasis

TRANSPORTATION ACCOUNTING 2

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.

Freight Audit


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.

Benefits of Freight Auditing


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.

Freight Bills versus 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.

Bills of Lading


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.


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.

Making Your Freight Invoice Work For You


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

• Reduction in paperwork

• Improved productivity

• Easier to review shipping data and information

• 24/7 access to weekly freight invoices

• Better overall freight analysis

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.


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.

What are Accessorials?


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 freight 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.

Freight Bill Pre Audit or Post Audit


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.

Using Transportation Accounting

for Smarter Strategies


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.

Accounting for Freight Costs


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 freight 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.

Benefits of Consolidated Freight Invoice Services


Call Us Today at 1-800-734-5351 or [email protected]

CERASIS: YOUR TRANSPORTATION MANAGEMENT

THIRD PARTY LOGISTICS SOLUTIONS PROVIDER

Cerasis Team

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Transit Issues

Claims Specialist

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Rate and Rules Negotiations

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Oversees New Account Setup and Account Specific Bid Process

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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

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