For several reasons, working capital management and freight auditing remain vital for achieving growth and success in the modern supply chain. Margins are tight for shippers, especially in light of the current economic recovery and ongoing disruptions within many areas of the supply chain network. With the growing focus on and demand for two-day and even same-day shipping, consumers want fast and reliable shipping services, which always come at a price. Freight audit and payment management can help highlight and address these expenses.
As shippers and logistics managers know all too well, speed-to-market services impact overall costs. To compete in growing markets and improving local and global economies, companies must look for every way they can to improve efficiency and better manage their finances. Working capital and auditing services will set the standards for efficiency in throughput when it comes to financial planning.
The Causes of Limited Working Capital and Cash Flow in Transportation Management
At the heart of the growing need for innovative freight auditing services is the problem of limited working capital and cash flow disruption that plagues the supply chain network. Poor financial management with transportation spend management can cause issues in the following ways:
- Poor visibility throughout the supply chain and between vendors and 3PLs.
- Poor analysis and distribution of data leads to limited actionability.
- Delays in payment due to manual reviews and outdated processing procedures.
- Disparate systems that cause inaccurate data findings and increased errors.
- Increased throughput without equal capacity and supply to meet demands.
- Anomalies that result in delays in settlements, payments, and invoicing.
- Inability to match invoices to shipment documentation, including POD, quickly.
How Freight Auditing and Payment Boosts Working Capital and Cash Flow
Freight auditing services can help them use their assets more effectively to reinvest in their business. According to Aberdeen Strategy & Research, “over 80% of the Best-in-Class companies (top 20%) outsource their freight. The real surprise is the high percentage of All Others (remaining 80% of the companies) who choose not to outsource their freight audit – less than 50%. Of that percentage, even fewer use a third party for the settlement process, which is where the trade finance solution option can solve so many problems for the shipper.”
With numbers like that and current trends, understanding the causes of this cash flow and capital dilemma is vital for finding viable and practical solutions. Having a clear picture and a better understanding of financial standings and regular updates makes it easier for transportation service providers to manage their finances. Furthermore, increased use of shipping and transportation data in auditing will naturally lead to improved performance management of carriers, helping your team identify where new opportunities lie. That may include knowing when to leverage zone skipping across individual carriers on a lane-by-lane basis and even using hub injection. The opportunities to improve are vast and can be traced back to the ability to ingest, normalize, and apply data through actionable insights to find the low-hanging fruit in your network and turn it into action. That’s ultimately how auditing processes open the door to more significant financial backing and improved investment opportunities. It also boosts returns throughout the network with the best audit and payment data at your fingertips.
The Benefits of Improving Working Capital and Cash Flow using Freight Spend
With transportation and shipping costs accounting for a large percentage of a shipper’s overall expenses, it is no wonder why such attention falls on freight spend utilization and management. Leveraging freight spend to improve working capital through trade finance offers an excellent opportunity to improve working capital and cash flow access throughout the supply chain. Improving capital and cash flow levels through advanced freight auditing services can bring about several benefits for shippers and transportation management team members:
- Automatic anomaly detection and correction to mitigate disruption.
- Analysis of shipments to identify the cost and expense average zone.
- Increased cost savings through zone skipping and streamlined shipping services.
- Tracking cost by mode, lane, and cargo type for better metrics comparison.
- Utilizing a bank who offers secure payments through a federally regulated banking institution to ensure easier invoicing and faster payments.
- Data-driven, actionable insights help shippers identify and address weaknesses.
- On-demand reports to keep everyone tightly aligned and informed.
- An easy-to-use dashboard to review data and make informed day-to-day decisions.
Increase Access to Working Capital by Working With a Freight Auditing and Payment Provider
Profit margins usually stay tight for shippers and transpiration service providers, all the more so in the current market. To compete within a fast-paced economy, supply chain managers and logistics directors must maximize every penny. Improving cash flow and maintaining good working capital levels enables shippers to monitor their budgets and balance profits and expenses efficiently. By partnering with a professional freight auditing and payment provider, financial planning and management become more straightforward and more accessible across the entire supply chain network. Contact Intelligent Audit today to learn more and to get started.