Every AP manager in the steel business has a freight story—and none of them are short. Reconciling freight charges is the one part of the accounts payable process that refuses to get simpler. Even with digitized POs and scanned invoices, freight remains an unstructured, semi-transparent line item that seems to multiply inconsistencies and drain AP resources.
Whether you’re dealing with FOB terms, third-party logistics providers, or embedded surcharges from the mills, freight is where the details slip—and the dollars disappear. In an industry where truckload freight can cost $1,000 to $3,000 per shipment, mistakes aren’t minor.
Why Freight Is So Complicated in Steel AP
Steel isn’t delivered in neat boxes. It arrives as 20-ton coils, 40-foot plate bundles, or custom-cut rebar shipments. That scale brings complexity:
Freight may be mill-arranged, third-party, or customer-arranged
BOLs often lack rate or carrier details
Invoices show freight charges that don’t match PO expectations
Accessorials like fuel surcharges or liftgate fees show up post-shipment
Unlike material costs, freight is dynamic, opaque, and handled by multiple stakeholders. AP is often left holding the bag, trying to confirm if a $1,200 line item is legitimate or not—while the discount clock ticks down.
The Four Main Freight Pain Points for Steel AP
1. Freight Inclusion Isn’t Standardized
One shipment from a mill might include freight in the unit price; another might list it separately. Without consistent freight coding, AP can’t verify what they’re paying.
2. BOLs and Invoices Don’t Sync
Often, the bill of lading doesn’t specify freight terms, or lists “freight prepaid” while the invoice shows “freight collect.” This inconsistency forces AP to track down POs, vendor terms, and receiving records just to verify legitimacy.
3. Freight Costs Vary Unpredictably
A 500-mile shipment might cost $900 one week, $1,300 the next, depending on fuel surcharges or carrier capacity. Without historical benchmarks or carrier agreements logged in the system, AP has no way to spot overcharges.
4. Freight Disputes Delay Everything
When freight charges look wrong, AP hits pause. But verifying takes time. Carrier responses can take days, and internal teams may not recall who booked the truck. That delay can mean lost discounts or vendor friction.
How to Reconcile Freight Charges Without Losing Your Mind
Step 1: Log Freight Instructions at the PO Level
Don’t leave freight assumptions to the invoice stage. Capture this detail when the PO is issued:
Freight terms: FOB origin or destination
Carrier designation: mill-arranged, buyer-arranged, or third party
Expected rate: fixed amount, rate-per-mile, or TBD
By front-loading freight detail, AP has a benchmark when the invoice hits—no guesswork.
Step 2: Break Freight Into a Separate GL Code
Always code freight as a separate GL line—not bundled into steel costs. This creates traceability and lets you report freight-to-material ratios.
Bonus: this also allows finance to isolate freight spend for cost-control initiatives later.
Step 3: Integrate Freight Receipts Into BOL Workflow
Ask your warehouse or logistics team to log:
Actual carrier name
Delivery date/time
Any accessorial services used (detention, liftgate, etc.)
Confirmed delivery weight/volume
This real-world data helps AP challenge inflated invoices with confidence.
Step 4: Build a Freight Charge Repository
Track historical freight rates by:
Origin/destination pair
Carrier
Material type (plate, coil, bar)
This allows AP to flag any invoice that’s more than 10–15% above historical averages. A smart freight variance report can become your early warning system.
Step 5: Use Tolerance Matching Rules for Freight
Not all discrepancies are fraud—some are just variance. Build rules into your AP system like:
Auto-approve freight if within ±10% of PO estimate
Require buyer escalation if above 15%
Auto-route to logistics if carrier details are missing or mismatched
This removes noise from the system and focuses AP attention where it matters.
Freight’s Ripple Effect on Discount Capture
Every time freight reconciliation delays payment, early-pay discounts are lost. A $1,200 invoice that’s eligible for 2% off becomes $1,224 if not processed in time. Multiply that across hundreds of shipments a month, and it’s a six-figure problem.
Some AP teams are turning to early-pay platforms that hold freight disputes separately—allowing the material cost to be paid early while the freight portion remains under investigation. This hybrid model helps capture discounts without overpaying on unresolved charges.
When Freight Becomes a Vendor Management Issue
It’s not always your AP process—sometimes it’s the vendor’s inconsistency that causes problems. If one mill repeatedly:
Sends invoices with freight charges not listed on the PO
Uses non-contracted carriers
Delivers shipments without BOLs
—it’s time to have a conversation. Consider:
Requiring freight invoice pre-approval for repeat offenders
Adjusting payment terms for vendors with poor documentation
Including penalty clauses in contracts for repeated freight mismatch violations
Vendors respect boundaries. When freight reconciliation hits their bottom line, they’ll clean it up.
Smart Freight Tools: AP’s Next Frontier
Forward-thinking AP teams are investing in tools like:
Freight audit software that compares invoice charges to contract terms and shipment data
Carrier rate databases that flag outliers in real time
AI-based OCR that reads freight details from BOLs and matches to invoice fields
AP dashboards that show open freight mismatches by vendor, value, and aging
These tools don’t eliminate freight issues—but they make them manageable, measurable, and less manual.
Final Word
In steel AP, freight isn’t just another line item—it’s a wildcard that can wreck payment schedules, vendor relationships, and cash flow. But with structured processes, proactive vendor management, and the right technology, freight reconciliation doesn’t have to be a recurring migraine.
AP teams that get freight right don’t just pay invoices—they control one of the biggest cost levers in the business. And in a market as volatile and margin-sensitive as steel, that makes all the difference.
