10 Apr Household Goods Audits and Their Unintended Consequences
To an international mover, there are few words as dreadful as the phrase “post shipment audit”. Even if the move went perfectly and it was billed exactly according to contract, there is still a queasiness that comes over the mover when a shipment gets reviewed. Audits occur in almost every industry and are probably universally disliked. But audits on household goods shipments are worse than most. And these audits have detrimental effects on your moves and your moving partners.
Complicated pricing isn’t unique to household goods moving. Where pricing is complicated, mistakes will be made, and it can be prudent to use consultants to ensure that you are not being overcharged. From this perspective, the job of the auditor is to act as a conduit for trust and transparency between the customer and supplier. But auditors have motives, and in our industry, they are motivated to sell audits. It is in their best interest to keep pricing complicated as only they are able to understand it, especially when they act as a RFP advisor.
In previous articles, we identify the challenges in procuring and analyzing the pricing of moving services. Purchasing moving services comes with its own set of terminology, regulations, common practices, and a tremendous number of variables. Auditors are often employed to make sure that what is charged aligns with the contract. Even though this seems logical, the end goal is not to provide transparency or even to administer the contract: it is to show the auditor’s value. And that value is typically presented in the form of savings.
So what’s wrong with savings? In a perfect world, nothing. Getting the best price for quality service is important to all of us. But are the savings that household good auditors demonstrate real? If a mover is habitually overcharging according to the contract, fraudulently adding costs or weight-bumping, the auditor’s role is justified. But think for a minute… what if the mover isn’t overcharging? What if they are truly providing quality service at fair prices? The auditor still performs their role, and the auditor’s incentive remains the same: show savings. They conduct the audit with no obligation to the mover who may even have approvals or proof that services were conducted. Because the auditors rarely take into account real-world situations or the assignee’s unique requirements, if they deem a shuttle service or parking permit was not warranted or billed properly, that amount is deducted from the mover’s invoice.
Costs that were rejected go right to the auditor’s savings report at real expense to the honest mover. The auditor’s reported savings does not only affect the mover’s bottom line, it hurts the mover-client relationship. The mover can no longer trust that they will be paid a fair price for the coordination of shipments. When they can’t trust that they will be paid fairly, your business becomes undesirable. In addition, movers have to offset the time and money spent dealing with the auditors. These costs to the mover can have a material impact to their bottom line that encourages them to increase costs wherever possible. The net result – audits cause the moving industry to be more expensive.
There’s a saying, “The hammer sees everything as a nail.” We’ve found that household good auditors see movers as crooks that overcharge. It’s time to stop treating movers like crooks. When movers can provide fair and simple pricing, it lowers their costs. When you can easily see that your pricing is competitive on every move, it reduces your costs. When reporting and benchmarks provide transparency and insight, you no longer need audits. RMCs and Corporations want great moving partners that they trust to provide high quality moves. It’s time to embrace your relationships with movers, trust them more, and audit them less. PricePoint makes this possible. If you would like to learn more, contact me at firstname.lastname@example.org we’ll set up a quick discussion and demo.