In 2024, global shipping delivery reliability plummeted to a dismal 51.4%. This means that more than half of all parcels encountered delays or other issues.
Carriers aren’t perfect, and sometimes, they make mistakes that cost you money and leave you with frustrated customers and a damaged reputation. However, when carriers slip up, you’re entitled to compensation!
That’s where parcel audits come in. They help you with detective work to identify hidden charges, missed discounts, and late delivery fees, for which you can then claim refunds.
Let’s explore everything you need to know about parcel auditing, its types, how it works, and key best practices.
What is Parcel Auditing?
Parcel auditing is a process through which you can identify errors and discrepancies in your shipping invoices. These errors can be anything from simple typos to more complex issues like incorrect rates or surcharges. It involves a thorough review of invoices to ensure accuracy in billing, adherence to contracts, and identification of areas for improvement.
Parcel auditing is important because it can save you a lot of money that you are entitled to. Even small errors can add up over time, especially if you’re shipping a high volume of packages. It also makes sure you’re getting the services you’re paying for and that your carriers are meeting their delivery promises.
For example, if a parcel you sent to a customer was delivered late, your carrier owes you an entire refund of the shipping cost, given you selected a guaranteed delivery service. A parcel audit would help you identify this and multiple other carrier errors and ensure you receive the refund you’re entitled to.
Why Should You Conduct Parcel Audits?
Parcel audits must be a routine practice, especially if you send a high volume of parcels every month. If not, you are missing out on
Save on Shipping Costs
Parcel audits are primarily conducted to identify and rectify billing errors, which can lead to huge cost savings. A large number of shipping invoices contain discrepancies, resulting in overcharges and unnecessary expenses. When you start reviewing these invoices meticulously, you can identify errors and claim refunds for them.
Better Contract Negotiations
Parcel audits can give you valuable data that you can use to negotiate future contracts with carriers. Audits help you identify patterns in your shipping process that show any signs of discrepancies in the service-level agreements (SLAs) with the shipping carrier. For instance, if your current contract isn’t being adhered to. You can then bring this to your carrier’s attention and ensure that you receive the benefits outlined in the contract. In short, parcel audits give you data backing to leverage better rates and discounts from carriers.
Improved Operational Efficiency
Beyond identifying errors, parcel auditing improves your operational efficiency by directing your attention towards areas that can function better. For instance, you may find out that your packages are constantly lost due to poor labelling. In this case, you can implement a new labelling system with clear and accurate information.
Types of Parcel Auditing
There are three main ways in which you can handle parcel auditing:
Manual Parcel Auditing
This is the old-school way of doing things. Someone in your company has to go through each invoice line by line, check for errors, and compare them to your contracts. If you ship a lot of packages, this could be a potentially time-consuming and error-prone process as shipping invoices are often information-heavy documents and it’s easy to miss errors when handling heavy volumes.
Outsourced Parcel Auditing
If you don’t have the time or resources to do your own audits, you can hire a third-party company to do it for you. This can be a good option if you want to free up your team to focus on other tasks. However, it can also be expensive, and you might not have as much control over the process.
Software-Assisted Parcel Auditing
Another option for parcel auditing is using software to do the heavy lifting. Parcel audit software can automate a lot of the manual work involved in auditing. It can scan your invoices, identify errors, and even file claims on your behalf. This can save you a ton of time and money, and it can also help you improve the accuracy of your audits.
Which Type of Parcel Audit Should I Use?
The type of parcel auditing you choose should depend entirely on your unique situation and organizational needs. Let’s see when each type of parcel audit process works best.
When Does Manual Parcel Auditing Work?
Manual parcel invoice audits work best if your business’s shipping volume is relatively low and you have simpler shipping needs. For example, if you ship a limited number of packages each month or use standard shopping services with few variations, manual audits may be a good cost-effective option. However, for this method to work you should also have a meticulous record-keeping system and dedicated auditors to take up the task.
If you opt for manual parcel auditing, you must ensure that the cost of conducting these audits, in terms of time and cost of human resources can be offset by the benefits of taking this process up. If not, you will end up spending more than what you save.
When Does Outsourced Parcel Auditing Work?
If you lack the in-house expertise and the time necessary to conduct manual parcel audits, outsourced parcel audits would work. You can opt for third-party auditors regardless of the size of your firm, and in most cases, you only pay if they actually recover refunds.
However, if you have concerns about sharing sensitive data with third parties or prefer complete control over the process, this might not be the best choice for your business.
When Does Software-Assisted Parcel Auditing Work?
You can opt for parcel auditing software if your shipping volume is moderate to high. This way you can save time while also gaining important insights into your shipping data. Moreover, unclaimed refunds are like money left on the table and relying on manual audits can be time-consuming and costly, making a software solution worth considering.
Steps Involved in Conducting a Parcel Audit
Parcel shipping auditing, regardless of which type you choose, has a few core steps that go into it. The Parcel auditing process involves collecting shopping invoices and collating their data, reviewing the invoices for errors, and negotiating with carriers to recover refunds. Let’s look at this process step by step:
Step 1: Collect all the Necessary Information
The first step in conducting a parcel audit is to gather all the necessary information. This includes:
- Shipping invoices: These invoices provide detailed information about each shipment, such as the origin, destination, weight, dimensions, and shipping service used.
- Shipment details: This includes information such as the tracking number, date of shipment, and delivery date.
- Carrier contract: This document outlines the terms of service and pricing agreement between the shipper and the carrier.
The Big 4 carriers (USPS, UPS, FedEx, DHL) store data in an Electronic Data Interchange (EDI) feed that you can either pull directly or download from the carrier portal. Smaller regional carriers likely use PDFs, spreadsheets, or physical paperwork.
Step 2: Conduct an Audit
Once you have gathered all the necessary information, you can begin the audit process. In the audit, you would begin by reviewing the invoices and shipment details for any discrepancies. The goal of this process is to check for billing discrepancies. For a comprehensive audit process, check these areas:
- Rates: Verify that your invoice has the correct rates. Here, you audit the invoice EDI feed against the rate contract. Shippers check their internal list of tracking numbers against the carrier invoice to ensure they match.
- Duplicate charges: Check if any of your shipments were wrongly invoiced multiple times.
- Services and service level: Make sure that your invoice has the correct services and associated discounts mentioned on it. Also verify if the right service level, as in, next day delivery, ground delivery, etc, is mentioned. Cross-check the service level information with the actual published transit data.
- Late deliveries: If a shipment was delivered past its set delivery date and time, you can claim a refund. Check for such instances in the invoices.
- Lost or damaged shipments: Look for cases where you were billed for a parcel shipment, but the goods were lost or damaged due to errors by the carrier.
- Accessorials: Ensure that your invoice has the correct accessorials and associated discounts. It’s also important to validate accessorial charges. Sometimes, your shipping carrier might add extra fees to your bill if they had to perform services outside the scope of what you paid for, such as transporting hazardous materials or an oversized load. Check that any additional fees you were charged are valid.
- Parcel information: Ensure your packages are weighed and measured correctly to avoid being charged for larger or heavier packages.
- Shipping charges: Make sure you’re being charged the correct rates according to your carrier agreement.
Document any invoice discrepancies and raise the issue with your carrier. Most carriers have a deadline by which you should have submitted your refund claims. Failing to do so may result in a rejected refund.
Step 3: Resolve Issues and Implement Improvements
After the audit is completed, you need to reach out to your logistics partners to resolve identified issues, negotiate favourable terms and recover refunds. You can also use the insights from this auditing process to understand where your parcel shipping is falling short. This can help you offer customers a better experience with your brand.
Best Practices for Effective Parcel Auditing
When done right, you can save up to 20% of your overall shipping expenses through parcel auditing. Here are six best practices to make your parcel auditing really effective:
1. Know What You’re Looking For
Before you start auditing, you need to have a clear plan. What exactly are you trying to achieve? Are you focused on making sure invoices are accurate, checking service levels, or ensuring your carriers are sticking to your contracts? Start by establishing these goals so that you can stay focused and make sure you’re checking everything important.
2. Keep Your Data Organized
Shipping invoices are complex documents, with a wealth of information and intricate details. These can be quite difficult to go through manually. This is why you need a system for organizing all of your shipping information, including invoices, contracts, tracking details, and even the negotiated rates. A good system makes it easy to find what you need, speeds up the auditing process, and reduces the chance of making mistakes.
3. Use the Right Tools
Parcel audit software can be a game-changer. These tools take care of a lot of the manual work involved in checking your invoices, like pulling out important data, matching invoices to contracts, and spotting errors. They can also give you valuable insights into your shipping patterns, what’s driving your costs, and where you can save money.
4. Double-Check the Details
When you’re auditing an invoice, make sure all the information about the parcel is correct. This includes the weight, dimensions, and shipping address. Any discrepancies here can lead to overcharges.
For example, if the weight on the invoice is higher than the actual weight of the package, you could be paying more than you should. Or, if the dimensions are off, the package might be placed in a higher-priced shipping category. Always double-check that the information on the invoice matches what you actually shipped.
Common Challenges in Parcel Auditing
While parcel auditing helps a great deal when it comes to cost optimization and operational efficiency, the actual process can be challenge-ridden. These challenges are because of the complexities inherent in the shipping process, such as the volume of data involved, the intricacies of carrier contracts, and complex pricing structures. Let’s take a closer look at what some of the challenges you may face are:
1. High Volume of Invoices and Data
Businesses, especially those with high shipping volumes, often grapple with a massive influx of invoices and shipping data. Manually processing this information can be a daunting task as it is time-consuming and tedious. The volume of data can make it challenging to identify errors, track discrepancies, and ensure accurate reconciliation.
2. Complex Rate Structures and Contracts
Carrier pricing models are often complex, with various factors like weight, dimensions, distance, and service levels influencing the final cost. Understanding and applying these rate structures accurately can be challenging, especially when dealing with multiple carriers and contracts. Each carrier may have its own set of rules, discounts, and surcharges, which complicates the entire auditing process.
3. Maintaining Data Accuracy
Accurate data is the foundation of effective parcel auditing. However, maintaining data accuracy throughout the shipping process can be challenging. Errors in data entry, such as incorrect weights, dimensions, or addresses, can lead to billing discrepancies and missed refund opportunities.
4. Time Constraints and Deadlines
Parcel auditing often involves time-sensitive tasks, such as filing claims within specific deadlines. Managing these deadlines effectively can be challenging, especially when dealing with high volumes of invoices and limited staff resources. Failure to meet deadlines can result in missed opportunities for refunds and credits.
Strategies to Overcome These Challenges
So, how can you overcome these challenges and make your parcel auditing process smoother? Here are five strategies:
Parcel Audit Software
As mentioned earlier, parcel audit software can be a huge help. It automates many of the tasks that can be prone to errors when done manually, like checking for duplicate invoices or making sure the rates are correct. This frees up your team to focus on other important tasks.
Parcel audit software can analyze your shipping data to identify areas where you might be overspending. For example, it can help you spot inconsistencies in how your carriers are applying discounts or identify instances where you’re being charged for services you didn’t actually use. This kind of detailed analysis can be incredibly valuable in helping you understand your true shipping costs and find opportunities to save money.
Parcel audit software can also help you track your carrier’s performance over time. This includes things like on-time delivery rates, the frequency of damaged shipments, and how quickly they respond to claims. Having this information is helpful when it comes to negotiating better rates with your carriers or deciding whether to switch to a different provider.
Blue-Box Opportunity
How to Choose the Right Parcel Auditing Software?
To select the right parcel auditing software for your business, consider the following:
- Does the software integrate with all of your current shipping carriers?
- What is the provider’s customer service process like?
- Does the software offer comprehensive reporting and analytics on shipping data?
- What is the pricing structure, and does it align with your budget and shipping volume?
Still wondering which parcel auditing solution to choose? Here’s our list of the best parcel auditing software.
Clear Contracts
Make sure your carrier contracts are clear and easy to understand. This will help avoid billing errors due to misinterpretations. If you’re not sure about something in a contract, don’t hesitate to ask for clarification.
Regular Communication
Keep the lines of communication open with your carriers. This can help you address any issues that arise quickly and efficiently. For example, if you notice a recurring error on your invoices, reach out to your carrier to discuss it and find a solution.
Data-Driven Decisions
Use the data you gather from your audits to make better decisions about your shipping processes. For example, if you notice that a particular carrier is consistently late with deliveries, you might consider switching to a different carrier. Or, if you see that you’re often being charged for address corrections, you might need to improve your address validation process.
Effective Parcel Auditing with LateShipment.com
Parcel auditing is an invaluable process that helps you identify areas where you are overspending on shopping. Manual parcel auditing can be quite tedious and time-consuming. Parcel auditing software, on the other hand, automates this entire process to quickly and accurately identify areas for savings.
When it comes to software solutions, Lateshipment.com offers a comprehensive Parcel Audit and Shipping Refunds tool that delivers all the features you need to effortlessly recover shipping costs for more than 50 service failures and billing errors. LateShipment.com automatically audits your shipping invoices, runs 160+ point checks, automatically submits refund claims, and has a team of experts to help navigate claim redressals.
With LateShipment.com you get a platform that easily integrates with your existing tech stack without necessitating a complete overhaul. It also brings you features like Delivery Experience Management and Returns Experience Management to further elevate the customer experience, foster loyalty and strengthen your brand reputation.
Take control of your shipping costs today! Book a demo to explore the benefits of Lateshipment.com’s parcel auditing solutions.
