I'm always surprised when I speak to a small parcel shipper of any size and am told that they either aren't satisfied with the results of their current auditing process or, worse yet, aren't auditing at all. When asked why they aren't auditing or changing their process or auditor, you'll often get answers like these: "We don't have enough help," "It's just too complicated" or my favorite, "The carrier says that its on time performance for our account is 99.9% so there isn't any need to."
If you're agreeing with one or more of these answers then perhaps you need to take another look at what you're doing. Transportation costs are high up on everybody's watch list these days, second only to labor. With what might turn out to be the largest increase in small parcel rates ever scheduled for January 2009, there is no better time than the present to review your processes or to get started auditing if you're not.
Credits that you receive from the carriers are similar to rebates that you get from manufacturers. Through experience they know that only a small percentage of you will actually claim what you're entitled to. To make things worse, the carriers have made reconciling and auditing their invoices virtually impossible to do without the proper electronic tools.
So here are some of the dos and don'ts of small parcel auditing, beginning with the most important one.
Do Audit
Carriers almost always make mistakes in their favor. To help identify them, any auditing would be better than no auditing, but an audit will not be complete unless each and every package is being tracked. This is where traditional freight auditing companies often fall short.
Initial audits should be free. There shouldn't be any setup costs, and other than getting the carriers to provide you with electronic invoices, there should be little or no up front or ongoing work on your part.
Do Benchmark the Competition
There are hundreds of auditing companies to choose from. Look for the ones that have proprietary software that can identify other things besides GSRs (ground service refunds). Without specialized software/programs, dozens of other invoicing errors could be missed, especially when auditing thousands of shipments a week.
Don't be afraid to shop your business around to find the right auditing service for you. Once you start receiving your invoices electronically, getting them reviewed by another auditing company is as simple as forwarding the file or link to your invoice. This makes it easy for a competing auditing company to show you what they could have had credited in addition to what was already claimed by your current process. Remember that there should never be a charge for an initial or comparison audit.
Many companies fail to include in-house auditing in their benchmarking. Without specialized in house programs it would be difficult to get the same results as an auditor whose livelihood depends on their results.
Don't Do It Yourself
Unless you're in the small parcel transportation business, have unlimited IT resources, a staff member or two whose sole responsibilities are keeping up with the changes the carriers make and have a support staff that is dedicated to bringing in the refunds and credits, farm the process out. This is where third party auditing is most cost-effective. An auditor doesn't get paid until after the claim has been refunded to the shipper. That's why you can be sure that they are looking to maximize your refunds and savings.
Make sure that your internal auditing investment in time and money is at least covered by the credits that you have recovered. Anyone who has internally audited before knows that the initial submission of any claim to a carrier is only the beginning of the process. If you thought that there were a lot of reasons why shippers aren't auditing, wait until you hear the reasons why your late package claim was denied by the carrier. You're going to have to be committed to the process and expect to have to resubmit claims denial after denial to ensure that you are getting all of the refunds that you are entitled to. The carriers know that if they deny a claim there is a good chance that you won't have the time or resources to continue to pursue it.
Don't Sign Away your Rightsto Late Package Refunds• 
or any other auditable charge for that matter. Carriers will often try to offer you a flat percentage discount in lieu of having to deal with your late package refund claims. You can be sure that they aren't giving you more than you deserve or could claim on your own. They know exactly how many packages were delivered late and so should you! Your auditing process should also include detailed reporting. The information provided will help you to better manage your freight and will help to level the playing field the next time you are negotiating your contracts. Remember the carriers already have this information.
All shipments are guaranteed. There are still shippers out there that either don't know this, or that an extra day on the delivery side isn't an issue to them or their customers. You're paying for the guaranteed service whether you're using it or not so if you're not auditing it you are paying more for your shipments than you have to.
Don't Sign an Auditing Contract
You don't need to. Most third party auditors will audit your shipments for a split of the credits that they were able to have refunded AFTER the credit was posted to your invoice. Carrier programs are constantly changing. If your auditor doesn't have the resources to keep up with these changes, you'll want to make sure that you will be able to painlessly move to another. An auditor that makes the process easy for you to use and brings in the credits knows that you'll continue to send them your files.
Do Know Your Shipment Profile
As part of the auditing process, your auditor should also provide detailed reporting at no additional cost. They will usually have a web site that you can log into to generate historical reports and in most cases can provide customized reports and information that can be emailed directly to you.
Hopefully this information helps you to realize that even though small parcel shipping has gotten more complicated with large percentages of your actual cost going to an ever increasing number of accessorial charges that there is a fairly easy way for you to get a handle on the process without adding staff or costs. Partner with an auditor that you are comfortable with. The only thing that you have to lose is the money that is rightfully yours.
Stephen Misovic is the President of COSE Services providing transportation, operational, and telecommunication consulting services. He has more than 30 years of experience in distribution and operations and can be reached at smisovic@cose-sbcs.com or 201-906-3272.