Blog/AP Automation October 18, 2021

Freight Audit and Payment Market: When to Automate and Outsource


The Freight Audit and Payment (FAP) segment has gained substantial relevance recently as businesses wake up to the complicated reality of processing freight invoices. FAP programs bring in significant cost savings while enhancing synergy within global operations. 

According to Gartner, real-time operations technology, speed to market, and end-to-end visibility are just a few of the reasons that executives will prioritize logistics outsourcing now and in the future. The three main factors driving this are internal requirements, global trends, and digital advancements. 

Outdated systems, inefficiencies, and lack of visibility are disruptive to the flow of the supply chain, the bottom line, and possible business growth. The current task for chief supply chain officers (CSCOs) is to optimize the logistics function to establish resiliency and achieve success. The first step is to identify influences that can impact FAP. 

Increased Transportation Spend: 

As companies grow, transportation costs cause spending surges which can result in billing errors and high-volume invoice processing that requires a cumbersome auditing process. 

Freight Spend Visibility: 

Gaining visibility over freight costs and end-to-end cash flow requires companies to have a comprehensive system that processes substantial volumes of data and offers insights that improve resolute decision-making in a rapidly changing market.

Changes in Trade Agreements: 

Carriers dictate terms in the current freight market. The financial implications of constant shifts have strong authority over invoice validations. FAP systems can help ensure that overpayments are eliminated and allow for more resources to be directed toward issues like rate negotiation. 

Further Globalization: 

Over the last three decades, international trade has boomed, including the rise of cross-border e-commerce. Supply chain leaders need the bandwidth to anticipate and make provisions for several global market changes. A strong FAP program can interpret volatility in freight cost and support invoice flows for multinational companies with complex logistics systems.

The Power of Automation on FAP 

Per Gartner, 80% in supply chain-intensive industries plan to increase investments into digital capabilities, with the expectation that these investments will deliver a noticeable boost to their operating margins. To ensure efficiency, CSCOs, CEOs, and CFOs must partner to continue to reduce manual processes by leveraging automation. For instance, automating a process like invoice auditing can eliminate issues during invoice validation allowing errors to be caught faster and with greater consistency. Leaders in the supply chain network have consistently credited analytics as a key success factor to navigate complexity and forecast market opportunities. An automated FAP solution can offer predictive and prescriptive analytics to improve decision making, cost savings, and an uninterrupted supply chain.

Automation can support many functions within the supply chain, but selecting a FAP service vendor that yields the desired results can be challenging as many traditional FAP companies fail to reduce overall spend. They frequently identify errors within invoices that manual processes miss rather than rectifying the cause of errors or preventing wasted spend. The timeline to recover funds can take anywhere from 30 days to six months and a delay in payments may cause vendors to begin lowering the priority of the shipper. 

When outsourcing the FAP function, you must hunt for a vendor that goes above and beyond the industry standard providing capabilities like end-to-end visibility, immediate improvement in cash flow, tracking capabilities, and error-free audits. 

OpenEnvoy completes a full audit of every invoice before payment to reduce wasted spend and immediately generate cash flow. Connect with an expert today to schedule a demo and learn more about how OpenEnvoy can ensure you never get overcharged again.


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