FREIGHT AUDIT & PAY\\\


While great strides have been made in automating and improving the visibility of the physical supply chain, the payment side of the business has until lately been “only semi-automated at best, if it is still not completely manual” says Ajesh Kapoor, vice-president of Transportation Management Solutions at technology company, GT Nexus. Even moves to electronic invoicing have not meant that the actual payment process has become automatic. However, that could be about to change. GT Nexus, which today builds


and delivers end to end multimodal transport solutions, has become increasingly involved in the financial aspects of global supply chains. For instance, it is setting up an invoice finance solution for transportation carriers as an alternative to invoice factoring, which can oſten be prohibitively expensive for these companies. It has now extended its range


of services to provide what Ajesh Kapoor describes as a full visibility approach to financial transactions in the supply chain. While shippers today increasingly expect to know where their goods are, anywhere in the world and at any stage of the logistics process, visibility of the financial part of the transaction has until now lagged behind. A shipper will already know that a shipment will leave this terminal on this date and so on – but could it also be possible to say when the pay cycle will start and provide the same level of detail and accuracy? The holy grail would be for trusted parties involved in freight to operate on a self-invoicing basis, using supply chain milestones as the trigger to create the invoice and execute payment. Up to now, it has been in the ‘too


difficult’ basket – freight payments are more than just the sea or airfreight cost, or even the land transport legs at either end. There will be a whole range of other ancillary charges, such as thermal packing, dry ice for sensitive goods, demurrage, warehousing, freight forwarding fees and so on. What Ajesh Kapoor describes as invoicing “match rates” in the industry have not been high enough up till now. But because GT Nexus has so


much information made available to it from the various parties involved in the transportation cycle, this gives a much greater chance of automating the payment process,” Ajesh Kapoor explains. Poor match rates have in the past


made people wary of introducing too much automation into the payment process, but that is beginning to change. GT Nexus can now capture pretty much any operation or event in the supply chain, so this should not be too much of a worry. For example, a shipping plan might be drawn up on the basis that a trucking company performs four transport legs to fulfil a delivery, but ends up carrying out five for whatever reason – perhaps because a consignee was not ready to receive the goods. That type of event can now be captured and incorporated into the charging information. Predictive analysis can


also


be used to capture an increasing number


of different elements


of the logistics process. For example, the system can detect if demurrage frequently occurs on specific trade lanes and can then start to incorporate it into the cost prediction, or indeed eliminating the cost by finding the cause. There


are still some


complications and inconsistencies to be ironed out. In Europe,


for


example, pre-billing is oſten used with the pre-bill matched against the actual invoice. “But we are doing this for a couple of customers and its not a problem,” says Kapoor. And there’s no need to wait


until everything and everybody is automated, he adds. Hybrid systems are perfectly workable and can still realise significant cost savings. “In fact, I don’t think the manual element will ever entirely go away,” he adds. Automating the process could


bring huge benefits for both shippers and carriers, he believes. Currently, a huge amount of time is expended in phone calls and emails by both parties on ensuring that charge codes are correct and updated; in fact, for a major shipper using several carriers or forwarders, it is a never-ending task. “It’s a lot of work – and for the carrier, it’s work that they don’t get paid for,” he says. But it should be possible for


charge codes and other information to be fed into the GT Nexus system and updated automatically. Another area in which GT Nexus


can help is in helping shippers to figure out total landed costs. Given the many different stages a shipment will go through from origin overseas to final destination, this is no easy task, but again it’s information that GT Nexus has ready access to, and it’s one area where it could shine against traditional freight audit and pay


firms which traditionally have worked only on a carrier by carrier basis, Ajesh Kapoor argues. “We have visibility right down to SKU or line item level, and information from all the carriers, brokers and warehouse operators, from the infrastructure we have built up over the years. We’re managing more complexity in our model, to make things easier for the shipper, and more lucrative for the carrier.”


Issue 6 2015 - Freight Business Journal Making cash count in the supply chain Under GT Nexus’ ‘Procure to Pay’


system, it offers financing options, based on any chosen Incoterms, including early payment plans. Many shippers do in fact prefer to pay early, if it means they can get a discount. Shippers’ standard payment terms are 45, 60 or 75 days aſter they accept a carrier’s invoice. GT Nexus has set up an early payment plan that shippers and carriers can participate in, and


where it also brings in other banks and financial institutions as needed. Carriers need the cash earlier but factoring options available to them today are very expensive. Shippers are oſten willing to pay early if they receive a discount in the process. In other cases, shippers may actually be trying to manage their cash flows and do not want to pay early. GT Nexus’ banking and financial institutions community steps in these situations and provides early financing. Carriers get paid early in either case.


information


21


GT Nexus has accurate on


firms’ actual


payment records, so it can make its own judgements, rather than the formulaic approach taken by factoring agents. While GT Nexus initially started


out working with the largest organisations, a pleasant surprise was the number of small firms that now trade internationally and it is important to nurture them – especially as many of the them have now matured into larger ones, points out Ajesh Kapoor.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40