Reclaiming Your Freight Overspend
This article appears in our Q2 2022 issue of Finance Transformation Magazine. To download the issue, click here
Bastiaan de Vries, General Manager of EM6 Worldwide and a global Freight Audit specialist, talks to Finance Transformation’s Mark Saywell about a service offering that should be of interest to all companies with a significant freight overhead.
What is freight audit? How does it differ from Outsourcing Accounts Payable?
Freight Audit is similar to Accounts Payables outsourcing but focuses solely on Freight bills. This is a specialised field that none of the global Accounts Payable outsourcing providers can perform. Freight payables tend to be highly complex due to the complicated nature of freight tariffs. This complexity leads to frequent overcharges and billing miscalculations by freight carriers.
It is a tailored service that requires a highly complex and customised process from capturing the detailed line items of the freight tariffs, contesting overcharges, facilitating payment to the carrier, and posting the service charges to the client’s financial ledgers.
Typically, the average credit notes from identified overcharges are higher value than the fees paid for EM6 service provision, making us a cost neutral, high value add supply chain service.
So who are EM6?
EM6 was initially founded as Europe Management in Brussels in 2004 offering worldwide freight audit and payment services. It extended its reach and footprint in 2019 with the purchase of IPS Worldwide.
EM6 boasts an enviable pool of senior management talent including former heads of third-party logistics, IT and industry companies, consolidating their knowledge, experience and freight services remediation wish lists to provide a market leading Freight Audit service.
What sort of clients would utilise a freight audit service?
We process for clients with annual turnovers from $100m up to multiple billions of dollars. Typical clients have sizable primary and secondary freight commonly seen in manufacturing, distribution, and retail sectors. With so many shipments, and complex, multi-charge bills, there is significant propensity for overcharges and duplicate billings.
Why do freight carriers produce so many overcharges with the presence of dedicated Audit services?
In our 20 years+ experience we can say that no carrier knowingly overcharges. Invoicing errors come from ambiguity in rates, distances travelled, dimensional weight and changes in tariffs entered incorrectly on billing platforms. There can be several months of accurate invoicing by a carrier and then a proliferation of overcharges due to the reasons stated above or from challenges with their billing systems.
So the higher volume and value of overcharges, the more value a Freight Audit provider can add?
True, however EM6’s role is not simply to show higher ‘savings’ to the client but to help their carriers rectify their programs and bill accurately. Errors are not intentional but are a reality of complex invoicing across all modes of global freight transport.
EM6’s objective is to make the bill payment process efficient, compliant and to enable carrier payments in a timely fashion.
Freight Audit seems to be big business in North America, why does it seem so comparatively under used in Europe?
Over 200 providers have been serving the US market for decades, but the concept and benefits are not so well-known in Europe. With only 4 or 5 service providers on the continent there’s less marketing and social media presence.
Freight billing in Europe is complex for a multitude of reasons, not least the decentralised nature of carriers leading to multiple contracts managed on a federated basis. Intangible Freight Audit benefits are potentially even higher for European clients given the significant opportunity for error.
Audit processing costs per bill have historically been prohibitive in Europe. Since 2016, EM6 has brought European processing costs down to the same level as the US without compromising on compliance and quality, making the service a more attractive prospect.
What services do EM6 provide?
EM6’s primary focus is on ‘pre-Audit’, managing the receipt, audit, and payment of bills to freight carriers. We also provide ‘post-Audit’ services, reviewing historic freight bills that clients have already paid to their suppliers. We have helped our clients reclaim significant overpayments with our services paid on a gain share basis.
Alongside providing these services directly to our clients, we have also provided our services as ‘white label’ offerings through global advisory businesses and as a value adding extension to Accounts Payable outsource providers.
EM6 can provide benchmarking services to our clients including comparing their rates across the industry, within the legal limits of benchmarking. Except for a minor fee for specific benchmark assignments, we provide these services free of charge to our clients.
What would be the unique key strength of EM6 in the Freight Audit Payables industry?
EM6 do not profess to provide the cheapest rates in the market but we do consider ourselves to be the most competitive. Our audit catches more overcharges than our competitors and facilitates more cash back to the client’s bottom-line. This has been confirmed in Post-Audit exercises.
EM6 responsiveness to frequently changing business rules without compromising prompt payment to carriers is our real unique selling point. This strength is highlighted in our ability to deliver a client on-boarding in 6-15 weeks, the shortest in the industry.
EM6’s experience managing the complexities of tax regulation and compliance in EMEA and APAC is also a distinct competitive advantage in these regions.
About the interviewee: Bastiaan de Vries
Baastian de Vries rose through the ranks from Auditor to Account Manager at US Bank managing their largest clients, before transitioning to General Manager at EM6 covering Freight Audit clients across EMEA & APAC. Fluent in French, German, English and Dutch, Baastian plays a key role building and maintaining EM6 Worldwide relationships for UK and European clients and prospects.