Paper throws a wrench in accounts receivable processes for many companies. Logistics, however, often faces a few extra challenges when companies like warehouses and trucking firms accept payments. Those transactions often occur on the fly, placing the burden of real-time invoicing and payment on businesses that lack the systems to support such real-time transactions.
Robin Gregg, chief executive officer of logistics payments company RoadSync, said this challenge has led businesses — often small and medium-sized businesses (SMBs) — to rely on paper checks, cash, and hand-written invoices and receipts. Adding to the complexity of the issue is the fact that many of these players are billing and accepting payments in remote locations.
"Companies in the logistics ecosystem are often trying to invoice and collect payments in real time, and they're all mobile," Gregg told PYMNTS in a recent interview. "If you're a repair shop, you might be trying to collect payment alongside the interstate. If you're a small carrier, you might be literally on the road trying to collect payment."
These companies need mobile, flexible and digital solutions to invoice and accept electronic payments, even when professionals are outside of the back office. That's the market gap RoadSync aims to fill — and it recently reached the $100 million mark in payment processing for this space.
However, there is a long way to go, Gregg explained, considering that companies in the logistics arena continue to rely on clunky and risky transaction methods.
Continued reliance on paper checks, cash and fleet checks is creating bottlenecks in the supply chain. Fleet checks, for instance, have historically filled a need for players in the industry as a "companion product" to fleet cards, she said, allowing drivers to make payments where fleet cards aren't accepted. Yet, they must be pre-verified before warehouses and other firms can accept them, leaving significant room for employee error.
Cash, meanwhile, is often accompanied by handwritten invoices and receipts when organizations lack the digital platforms necessary to invoice and accept payment electronically. This, Gregg said, opens the door to all sorts of problems — fraud, in particular.
"A lot of these folks are accepting cash, so there is a lot of leakage," she said. "Because they don't have systems for tracking payments and creating invoices electronically, you're relying on handwritten invoices and receipts, in some instances. So, it's not uncommon for a truck driver to make a cash payment, receive a handwritten receipt for that payment, but then what's logged at their company may be something less — and the employee pockets it."
Even the act of accepting a cash or check payments disrupts operations, according to Gregg. For example, a warehouse that cannot accept cards means a driver may have to travel to take out cash, or a driver who pays in cash — forcing a warehouse professional to take the time to find change — means a slowdown of operations, causing workers to spend more time on the transaction than on more tactical and strategic initiatives.
These issues stem from the need for many logistics players to transact in real time for work that is often unforeseen. Connecting these firms with digital, mobile-friendly invoicing and payment acceptance solutions boosts security, accelerates processes for both payer and payee, and drives a broader shift toward electronic payments that can enable efficiencies down supply chains, Gregg said.
"A lot of businesses that are in the logistics industry are fairly small, and they're cash poor," she said. "If you are relying on paper payments and invoicing, and you don't have visibility into how you're managing cash for [your] business, you really have trouble making decisions. 'Do I accept the next load? Do I accept the next repair job?' The industry is really congested by the fact that cash flow is a challenge, and people can't run their business as efficiently as they'd like."