One way to qualify good parcel audit

This article helps you understand the parcel auditing service provider landscape, and one way to tell if your small parcel auditor is doing a good job auditing your shipping accounts.

Introduction

Speed is important when it comes to parcel auditing. For all shippers, there’s a limited window of time immediately following an invoice being posted to your account where claims and disputes can be filed against billing mistakes. During this time, each refund must be captured, else lost forever, and with that, the quality of the audit is in-part dependent on the speed in which that audit occurs.

One way to tell how good your parcel auditing company is at auditing each and every single one of your shipments is to look at how they are getting refunds delivered back to you. To understand this point better, it’s important to mention first the different ways in which refunds can be paid by the carriers. There are three options:

  1. Credits that are applied to shipping invoices,
  2. Credits applied to your credit card on file, or
  3. Refunds via checks sent in the mail.

That said, Credits applied to shipping invoices is indicative of a fast, and thus better audit, should be the method of refunding for the majority of refunds that your auditor is securing, and I’ll explain why. 

Credits are provided to invoices that are unpaid. And for most shippers, there’s a few days gap between when shipping invoices are posted to the shipping account and payment is transacted on that invoice. Filing claims during this period is better for a few reasons.

  • The credits lower the total amount of the invoice.
  • We’ve scientifically concluded that filing the claims quickly increases the success rate of the refunds delivered. Which makes sense.

If you’ve ever had to make adjustments on your own invoices, you’ve found it much easier to update the balance due by applying a credit than issuing a refund on a paid invoice. The same is true here. Credits to open invoices is easier.

Now, an explanation of the other two methods of refunded are included here for completeness, and both are indicative of a slower audit. Credits applied to your credit card on file implies that you pay via credit card stored with the carriers and that payment has already been transacted on the open invoice. Typically a sign of the request for refund in the form of a dispute or a credit that was filed as a few days later than the ideal timeline. Similarly, the refund via check is indicative of a slow audit and claim filing service. So if you’re getting your refunds via check or via credit card refund, it’s likely a sign that a slow audit. 

Now, it’s important to mention a few points here.

  • The first one is that accounts payable may be overpaying a carrier invoice, simply because they are working from a paper copy of the original invoice, rather than the updated amount, wherein credits were refunded on that invoice. In this case, the refunds will indeed come back in the form of a check refund.
  • Another point to make is that there’s variance in the way that carriers handle refunds, so consider the aggregate. For example, if all of your refunds are coming in the form of refunds to your credit card, then that means you’re auditor is late in filing disputes and claims.

The point here is to evaluate the quality of audit that is being performed based on how the majority of the refunds paid out to you by the carriers. And of course, getting no refunds at all, simply because disputes claims aren’t being filed is a sign of the worst type of audit, and since auditors aren’t forthright on letting you know of the refunds they missed,

we created a free report that shows the prospective refunds available in your account and the refund capture rate that you’re getting currently. TRY IT NOW   to get free report for your company.

Reporting

A few closing points related to speed. The first one is reporting. Carriers bill on weekly cycles and reports are available there on weekly cycles. Parcel auditing companies that reporting monthly probably operate using a system incapable of processing invoices audit and file claims in the same week that shipping invoices are posted to your carrier accounts. So it follows that if they can’t report findings within the same week, then they’re not getting the audit done within the week, which means that they’re missing refunds along the way, simply because the system can process fast enough. Again here, this suggests a slower, and thus less qualified audit, and ultimately less savings for you. 

Minimums

Another way to assess the speed capabilities of an auditing system is to consider minimums. Some parcel auditing companies won’t do business with any company that spends under a certain amount with the carriers each year, say $1M. This isn’t about being choosey, it’s more about a limited amount of bandwidth, which speaks to the lack of sophistication in automation, and limitations in throughput. Just think peak season around the holidays. Would all the shipments be properly audited and claims filed if there’s a limit to how many shipments an auditor is willing to evaluate? Probably not. Generally speaking, companies that require minimums are not the same companies that excel at scale or speed, and most likely not the best auditor for your business. 

That’s it on the tips to qualify a parcel audit based on speed. The key takeaways here are that speed is important in shipment auditing to maximize refunds, and how your refund are being credited, how the credits are being reported and the application of minimums are all telling as to how speedy a shipment auditing company is in it’s process.

Updated on June 5, 2020

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