It’s no secret that the transportation and logistics industry continues to face a myriad of challenges, some attributable to the impact Covid-19 had on business operations. With increased gas prices, staffing shortages, and ongoing global supply chain issues, many freight organizations are struggling to operate efficiently.
One of the biggest impacts resulting from these challenges is an organizations’ ability to maintain a healthy cash flow. Adopting a digital first payments process can help transportation companies achieve what’s become an increasingly sought after need for speed when it comes to getting paid in today’s environment. Below are three recommended strategies for driving digital payment automation.
Streamlining the Proliferation of AP Portals
Anyone in your accounts receivables department can tell you that more of their buyers are requesting payment through an increasing variety of online accounts payables portals. This means an increased strain on teams in the form of manual processes. Think of it this way: If you had to manually pay every household bill you receive via a different website, it would be far more time-consuming and a much greater strain than just setting up autopay. For this reason, it’s unsurprising that in a 2021 study commissioned by Billtrust, over 350 accounting and finance senior leaders reported, “dealing with increasing numbers of customer portals” (38%) as a top concern. Meanwhile, the majority of respondents stated that their teams interact with an average of 11-20 AP portals, suggesting it’s not looking to slow anytime soon.
Gartner, over 50% of the global midmarket and large enterprises will deploy procure-to-pay suites by 2025, meaning AR teams will be required to integrate with an even greater amount of AP portals to retrieve invoices and remittance data. This equates to an enormous impact on bandwidth for AR teams forced to navigate a different AP portal for each customer account and takes time away from other critical areas that contribute to the financial health of their organization.
As such, if they haven’t already, transportation AR teams should identify a solution that can automate these processes in a flexible and scalable way. Akin to a router or dispatcher guiding a fleet of vehicles from one location to another, these solutions can ensure that invoices and payments get to where they need to go -- on time -- and all from behind the scenes. Perhaps it’s a solution built by a third-party or even an investment in robotic process automation (RPA). No matter the case, these solutions not only help organizations to achieve their ultimate goal of receiving payments faster, but they create a win-win situation where buyers can utilize their AP portal of choice and suppliers can get paid without having to exert an unnecessary amount of resources.
Avoiding Traffic Jams Caused By Disputes
Disputed invoices are inevitable within transportation. Most freight organizations can relate to receiving a dispute due to incorrect information relating to weight, class, and dimension and slight variances in any of these details can lead to significantly different final cost. This is especially true when a shipment is reweighed and placed in a different density class.
Dealing with invoice disputes can cause excessive payment delays and ultimately impact an organization’s cash flow. It’s a tedious and manual process, with over half (55%) of surveyed B2B financial professionals saying that managing disputes is “one of the most challenging tasks for their AR team”. Even more alarming is the fact that 99% of those surveyed said that disputes contribute to late payments. Furthermore, strenuous invoice dispute processes can add unnecessary friction to the supplier-buyer relationship.
With the right automated solutions, AR teams can centralize account history, track dispute details and automate the collections process. With all invoices accessible to both the supplier and buyer, and automatic updates regularly communicated to both portals, the friction that currently surrounds invoice disputes dissolves. As a result, payments are more likely to be paid on time and relationships between buyers and suppliers are more likely to flourish.
Injecting Predictability into Cash Flow
If one thing is certain about the year ahead it’s the uncertainty that will persist in the supply chain. And while freight organizations can’t know exactly how the supply chain may impact them financially through delays and other factors, they can inject some much welcome predictability in the financial health of their business by embracing digitization and automating their payments processes.
studies have shown that one of the biggest impacts on cash flow is getting paid on time. And while days sales outstanding (DSO) is an important factor in ordinary times, in today’s landscape, predictable and timely cash flow is absolutely crucial. Adopting automated AR processes is a great first. In fact, a recent study found that 62% of surveyed firms that have adopted automated accounts receivable (AR) processes report reduced DSO. By adopting electronic invoices and payments, suppliers will benefit from increased invoice accuracy, payment timeliness and the reduction of time and resources needed for their teams to do their jobs.
And there’s plenty of benefits for buyers too, including the ability to offer a variety of payment methods and terms, which enable on-time payments from customers with more complex orders. Depending on the organization, it may be beneficial to accept payment by credit card, or offer customers a payment plan. By offering flexible payment options, you’ll provide your customers a smooth and seamless customer service experience in the process. Doing so will not only decrease DSO and increase cash flow, but will also lighten the load on your AR team.
In Summary
As the transportation industry continues to face challenges affecting their business and operations, getting paid on time and maximizing cash flow will become more important than it’s ever been. AR teams today are faced with an abundance of complexities and inconveniences that make it hard to do their job. But by adopting digital solutions and processes, organizations can speed up payments, allow teams to focus on important areas for the organization and provide an elevated customer experience -- ultimately paving the way towards future success, no matter what the road ahead looks like.
