For some companies, freight costs are estimated when taking a customer order, and these costs are factored into the price. Underestimating freight results in making less money than intended, and potentially taking losses on sales.
Manufacturing Company
The accrued freight payable liability was consistently found to be under-accrued. This accrual was based on estimated freight from the order system. Freight sheets were revisited multiple times, but the problem persisted.
To isolate the problem orders, estimated freight payments were extracted from the order management software daily along with destination, sales person name and customer. Actual costs paid by the accounting system were extracted daily.
Power BI was used to combine these two datasets in a near real-time dashboard, comparing estimated to actual for each freight item that had been paid. Filtering by sales person, destination and customer revealed several inaccuracies. Correcting these directly added significant profit.
