Optimizing the LTL Billing Disputes Process

What CFOs Need to Know to Streamline High-Volume Shipping

Between 5% to 10% of the freight bills you receive from carriers are inaccurate.

Think about that for a moment. If you’re spending $5 million on freight each year, that’s a quarter to a half million dollars of billing that’s not quite right.

To make matters worse, carriers are now paying closer attention to finding additional fees they can tack on—yet they’re slow to actually correct invoices. Reweighs and inspections are more common, and sometimes, you’re charged for services or accessorials not price negotiated—or sometimes not even required.  

Unfortunately, too many bills are simply wrong or slip through the cracks. And, every little slip is costing you money.

Even when you do find an error and report it, the typical response from carriers these days is to deny, deny, deny. You have to keep hammering them with information and provide the documentation to get anywhere.

Efficient logistics is key to maintaining profitability in high-volume shipping, and that includes managing LTL billing disputes. An intense focus on accuracy in every bill — and disputing every inaccuracy — can produce significant savings of as much as 10% to 30%.

So, it’s worth asking the questions in your organization: How many of these errors are you preventing or catching? How much time are you spending tracking it all down? And how many dollars are you losing that you could recover?

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Understanding the LTL Billing Dispute Process

Discrepancies between expected and actual charges often stem from incorrect freight classification, reweighs, unexpected accessorials, and clerical errors. Today, we’re also seeing more examples of billing errors due to the dynamics in the supply chain market. Contract prices, spot rates, and shifting capacity are causing significant volatility in pricing. Carriers are seeing their costs rise — labor, fuel, equipment — and they’re being more aggressive to compensate.

Honestly, it can be challenging for most businesses, especially for high-volume shippers such as eCommerce companies, to keep up with the dispute process. 

The LTL billing dispute process has become complex, and there’s often some back-and-forth and negotiations to resolve disputes. Even when you get a favorable result, you’ve tied up considerable financial and human resources to accomplish it.

The Most Common Freight Bill Discrepancies 

Besides simple human error, a wide range of billing discrepancies can occur, often due to the variation and complexity of shipping methods. Implementing strategies like zone skipping and hub injection can help lower costs but increase complexity and the opportunity for billing errors. 

As carriers manage multiple shippers, contracts, terms, and last-mile delivery, errors are becoming more common. Over the past few years, carriers have also been consolidated, but some of the companies absorbed have yet to be fully integrated into a seamless and standardized billing system, making it easier for errors to go unnoticed when sending out invoices.

So, shippers need to be vigilant in looking for billing discrepancies to avoid overpaying. Here is our top 10 list for some of the most common reasons for LTL billing disputes:

1. Incorrect discount rates: Agreed-upon discount rates in contracts are sometimes missed or applied incorrectly.
2. Accessorial charges and fees: We've seen fluctuating surcharges over the past few years, leading to discrepancies that fail to match contractual obligations. With rising diesel rates, it has become challenging to monitor fuel surcharges accurately.
3. Weight accuracy: There can be a discrepancy between what was listed on the Bill of Lading (BOL) and the actual weights and dimensions of shipments. Often, a reweigh leads to an invalid class, as a carrier is not likely to lower a density-based class in a weight increase. It is on the customer to recognize that only half of this reweigh/inspection was completed and to dispute the class with the carrier if the reweigh is deemed accurate.
4. Reclassification: Incorrect freight class listing can result in a reclass and additional charges.
5. Duplicate invoices/Balance due invoices: Duplicate invoices can easily be overlooked, especially for eCommerce shippers who ship the same items regularly. Balance due invoices can be difficult to determine validity on and require reviewing the original invoice along with the balance due invoice and any potential reweigh/inspection/detention documents.
6. Rate variances: Every shipment is unique, even among similar shipments on similar routes.
7. Service failure refunds: It’s easy to overlook opportunities to recapture fees when delivery guarantees are missed.
8. Human error: Mistakes happen. Clerical errors, typos, and system glitches can create mistakes.
9. Late payment fees: It’s not uncommon to see different late payment fees tacked on that differ from contract agreements, especially for invoices in dispute.
10. Detention and diversion fees: Charges can increase when carriers face delays outside allotted time ranges at pickup or delivery. Similarly, changes to deliveries when en route can also add to fees. In both cases, these additional fees can trigger disputes.
    
    

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Freight Bill Dispute Guidelines

Freight billing errors are a growing problem. According to Supply & Demand Chain Executive, nearly one in four invoices is either rejected or requires remediation. Since carriers typically want a rejection rate in the 2-4% range, that’s a big gap.

When a dispute arises, it often delays payment. While carriers should have financial incentives to resolve disputes quickly to secure payment and maintain a good relationship, the reality is quite different. Carriers tend to take extensive time to address invoice disputes, often requiring multiple follow-ups before even acknowledging your request. 

Having a dedicated dispute contact on the carrier’s end is essential to expedite the process. Relying on customer service is typically ineffective. By following best practices and establishing the right point of contact, you can streamline the LTL billing dispute process and see faster resolutions.

Best Practices in the Audit Process

You need to respond promptly when you see a bill higher than the quote. You’ll want to immediately contact carriers about the discrepancy. An email itemizing the nature of your dispute puts carriers on notice. Do this ASAP, preferably within a 7-business day window. Get your dispute documentation in order and submit it within seven business days.

This can be extremely challenging if you’re still handling AP manually, even with a dedicated team. You need a system that automatically alerts you to discrepancies or a 4PL partner who can manage LTL billing disputes on your behalf.

A standardized dispute form makes it easier for your team to capture the right information and streamline the process. Filling out the details carriers need to review will increase your odds of success in an LTL billing dispute.

It’s also a good idea to create a centralized repository for all of your disputes, implementing a logical naming convention to make it easier to find and track.

Reweigh/Inspection Requirements

When challenging reweighs and inspections, you need to ensure your team uses the right documentation, including:

• Manufacturer spec sheet: This provides official product dimensions and weight and helps validate your claimed freight classification. It should have a listed product number (to tie to the packing list) along with the product's weight and dimensions.

• Packing list: Details the exact contents of the shipment (including a product #) and helps identify any discrepancies

• Customer invoice: Confirms the exact items shipped and declared value, supporting your claims about freight classification

We recommend you provide two additional pieces of evidence to eliminate arguments carriers may make in response: Scale Calibration Certificates and visual evidence:

Scale Calibration Certificates

A scale calibration certificate demonstrates the accuracy of your equipment to help with discrepancies over shipping weight. It also shows how well you manage the entire supply chain process, making it harder for carriers to dispute weight. The scale calibration needs to have been done within the past year for a carrier to consider validity on.

Visual Evidence

We also recommend capturing images of shipments as a standard practice. For high-volume shippers, investing in a dimensioner that uses 3D scanners, cameras, and scales to capture images from multiple angles provides additional evidence for high-volume shippers. These devices can be quite pricey, however.

An alternative is setting up a dedicated station to take images, ensuring pallet labels are legible. Showing units next to a measuring tape helps verify dimensions as well.

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Accessorials

Accessorials are surcharges for additional equipment, labor, time, or fuel that may be required for a particular shipment. Although services like lift gates or white-glove delivery may be used to fulfill orders, they are often not requested or mandatory, but shippers are billed for them anyway. Or they may be billed at an inaccurate rate to contracted rates.  

To help avoid LTL billing disputes here, make sure your staff understands shipping parameters for clients/customers and clearly indicate requirements to carriers to prevent unwanted accessorials. This requires doing your due diligence with address research prior to quoting to ensure the accessorials you are charged are valid.

The proof of delivery (POD) will be important in case of a dispute to indicate what actually occurred. Once a shipment is signed for and an accessorial is marked on the POD, it becomes difficult to dispute the charge. Accessorials can add up, especially if your customers are not billed for these extra fees.

You also want to prevent some of the most common surcharges by being proactive in your shipping and quoting process:

• Appointments: Request to be contacted before a shipment is put out for delivery to lock in a specific date and time or time range.
• Notifications: Ensure correct contact information is provided for delivery notifications and request to be notified before delivery (generally a phone call 30 minutes prior to the driver's arrival).
• Single shipments: Consolidate shipments when feasible to avoid single shipment surcharges.
• Limited access: Identify and communicate any access restrictions in advance. Any location without a dock, posted business hours, or security the driver must pass through can be considered limited access and result in additional charges. Other examples of limited access areas include, but are not limited to:
  
  
  • Airports
  • Casinos
  • Construction sites
  • Convention Centers
  • Fairs/Carnivals
  • Funeral homes
  • Hospitals/Animal hospitals
  • Marinas/Piers/Wharfs
  • Military bases/Installations
  • Nursing homes
  • Prisons
  • Schools
  • Treatment plants
  • Utility sites
    
    
• Liftgate: Any location that does not have a dock or a forklift on site should be quoted with a liftgate.
• Inside delivery: This involves delivery beyond curbside (generally inside a garage). Clearly communicate when inside delivery is required and ensure it's included in the original quote.
  
  

Whoever handles your LTL billing disputes should be on the lookout for patterns of unnecessary charges with particular carriers. Some carriers are more aggressive in tacking on charges than others, even if certain services weren’t ordered.

You also need to ensure accessorial charges align with your carrier contacts. Many high-volume shippers bundle common accessorials into contract rates. However, these charges may still show up as a separate additional charge and be missed if not audited for.

Importance of Accurate Auditing

Minimizing LTL billing disputes requires an accurate and detailed audit process. You need to ensure all charges on every bill align with the contract terms you've negotiated.

Eyeball Audit vs. Contract Audit

Too often, we see companies do an eyeball test. Does it look right? 

However, every bill needs to be checked against the contract or quote. Otherwise, you can easily overlook mistakes. For example, you might look at a bill and see that there was an 87% discount. But did that discount also apply to the lift-gate charge? And what does your contract say about that? Also, many carriers have multiple rate bases so an 87% one-off rate base will not be the same as an 87% discount on another rate base - even with the same carrier.

A superficial audit won't uncover all the complexities or identify every LTL billing error. You need detailed contract-based audits on every invoice, ensuring every charge is expected and correct. And, when you find discrepancies, you need your team to go back to carriers with the right documentation. Otherwise, carriers will not accept the dispute even if errors occur.

Role of Detailed Audits

Detailed audits ensure accurate billing and catch errors. You must verify that all charges, discounts, and add-ons are billed according to the contract and comply with negotiated rates.

You’ll also want to cross-verify invoice details against orders, packing lists, and proof of delivery to ensure that everything you requested was provided—and necessary.

This level of detailed audits is overwhelming for high-volume shippers unless you are using automated auditing software to streamline the audit process or engaging a 4PL to manage your shipping and billing disputes.

Steps to Streamline the Dispute Process

Perhaps the biggest tip for preventing overcharges and catching billing errors is to implement regular audits as part of your SOPs.

Implementing Regular Audits

This might sound redundant, but we’ll say it again. Every charge on every invoice must be reviewed and compared to contract terms. Regular audits ensure accuracy and no invoice goes through without a formal review. 

To streamline the dispute process, you should develop a checklist that includes all the necessary items for comparison—rates, discounts, accessorial charges, and any additional services—broken out by carrier and contract.

Leveraging Technology

Automation is definitely your friend here. 

Technology can significantly improve your audit and dispute process. Business Intelligence (BI) tools, like GLI+, provide valuable insights into market trends, pricing accuracy, and data anomalies. 

Of course, the best way to streamline your dispute process is to pre-audit freight bills and then ensure invoices match. When you work with Global Logistics, Inc. (GLI), our GLI+ Parcel Audit conducts real-time, automated pre-audits across a 50-point check. This goes beyond basic rates and includes items such as service guarantees for timely deliveries. When a billing error occurs, the automated GLI+ Parcel Audit software instantly identifies disputable charges and files for a refund. 

GLI+ clients typically recover between 1-3% of their annual parcel spend — charges that most companies do not have the time or resources to recover on their own.

Documentation and Preparedness

Thorough documentation is your best ally in LTL billing disputes. Whenever you are disputing a charge, you will need to provide evidence supporting your claim. A comprehensive set of documents makes it harder for carriers to deny claims.

This might include:

• Digital images to substantiate dimensions and freight condition
• Manufacturer spec sheets can also help validate weight and product dimensions
• Packing lists to verify contents
• Customer invoices, including declared value
  
  

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