fastlane
8. Make sure the provider has a fidelity bond that would
cover possible embezzlement of client funds by employees. And
check to see that the coverage is adequate.
9. Be sure the contractor thoroughly vets its employees. It
should be running detailed background checks on all new
employees as a matter of policy as well as credit checks on
anyone who would have access to funds and/or cash management. Credit checks are common in banks and other
institutions dealing in liquid assets. Unfortunately, a person
who is deeply in debt should be considered a risk.
10. Confirm that the contractor maintains a separation of
duties in accounting and cash management functions. This is
to ensure that a single employee (or group of employees)
cannot manipulate funds or bypass controls.
11. Verify carriers. Make sure the funds are being paid to
carriers that actually exist.
12. Finally, and most importantly, manage the relationship.
Since one of the primary reasons for outsourcing is to ease
the client firm’s workload, too often these firms put the
relationship on automatic pilot once the contract is signed.
But it simply is not sound business practice to outsource an
important financial activity like FBAP and then ignore it.
Make it a practice to conduct periodic audits. Also, appoint
a relationship manager who will be available at all times in
the event the provider needs information or guidance.
If the client firm is large or the amount of freight charges
involved is particularly significant, there are two other controls to consider:
13. Explore the possibility of establishing minimum limits
on financial assets. Stated another way, be sure the FBAP
firm is large enough to handle your account.
14. Consider establishing a policy of awarding contracts
only if the value of the contract is below a certain percentage
of the provider’s total revenue. A freight bill audit and payment firm should not be too reliant on one or two
accounts.
Bottom line: The outsourcing of freight bill audit and
payment is an important financial step for a shipper and
should be treated as such. Because these arrangements are
often complex and require the client to relinquish control
of large amounts of money, financial due diligence must be
at the top of the list when qualifying potential providers.
While no outsourcing arrangement is absolutely risk free,
the client should ensure that its funds are as safe as they
would be under its own management and control. ;
Clifford F. Lynch is principal of C.F. Lynch & Associates, a provider of logistics management advisory services, and author of Logistics Outsourcing – A Management
Guide and co-author of The Role of Transportation in the Supply Chain. He can be
reached at cliff@cflynch.com.
S TORING et the most out of your space
LIFTING
Move inventory
with ease
GUARDING
Protect your facility
HIGH VALUE.
LOW COST.
Versatility and Value.
That’s the V-Lift™ difference.
Add material handling efficiency to your operation with a V-Lift™
from Wildeck – the industry leader in space optimization. The
dual cylinder hydraulic system eliminates all moving hoses, cable
and chains. Fewer components means easy installation, reduced
maintenance and longer service life. Move your material up while
keeping costs down. It’s a level of quality and craftsmanship you
won’t find anywhere else.
800-325-6939 | WWW.WILDECK.COM
Guarding and gates required by code
have been removed for clarity.
©Wildeck, Inc. 2013 WVL 1305 AD
