With the ever increasing rate of international trade, it is alarming to learn that as many as 10% of ocean freight invoices may contain significant errors caused by the complexity of calculating the correct shipping costs for goods in transit. A proportion of these mistakes are picked up by the importers? logistics departments, but a significant percentage slip through the accounting and auditing processes and end up as undetected errors in their P&L accounts.
Aside from the bottom line forecasting errors caused by these hidden overheads, companies can obtain significant cash benefits by tracking down these overcharges. By correctly identifying them they can in effect generate ?free? money for themselves as the checks are done post audit, for accounts that have already been filed. Any funds returned are therefore an additional un-budgeted source of income which goes directly to the bottom line.
Take a look at any ocean freight price matrix and you will quickly realise how mistakes can occur so frequently. Rate agreements between freight companies and purchaser are constantly under negotiation and maybe changed as many as ten times per year; each new agreement level maybe subject to a different set of rules; rates change depending on country of origin and shipping routes used; each price modification also has an ?effective from? date when the new rules come into force; by default several ocean carrier offices, in different locations, have to deal with the shipments and to compound the issue importers tend to use several different shipping companies, each with their own charges, paperwork systems and company procedures.
Companies cannot justify the additional staff overheads or time to track down these errors and are left with the choice of either accepting them or employing freight auditors to work through their invoice history. Some auditors will work by applying software algorithms to the companies ERP and accounting packages which can be expensive and often has limited success; others will be general auditors who may have expertise in areas such as air or domestic freight costs but the best option is a specialist company that works solely on international ocean freight transactions.
Steve Ferreira of Ocean Freight Refunds develops bespoke solutions for each of his clients and works with their finance and logistics departments to ensure that the tools he implements during the investigation, remain in place to help improve the clients? future internal audit operations. Ocean Freight Refunds has helped return in excess of ?10 million to customers in the last 3 years alone and they are so confident in their expertise and methodology that they work on a commission only basis. They agree in advance, a fee based on a fixed percentage of the funds returned and if they don?t identify any overcharges, there is no charge for their service.
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