Moving Freight Payments at Digital Speed Starts With Data

Freight and shipping have been through the wringer after supply chain snags.

Routable CEO Omri Mor and Flexport Chief Financial Officer Kenny Wagers told Karen Webster that there’s a silver lining of sorts. At a high level, the pain points and snarls of the past few years have changed the willingness on the part of the stakeholders to improve their processes, to make data flows, and therefore, payments, more efficient.

The urgency is there. When payments are held up, cash flow and, by extension, working capital suffer.

As Mor noted, “the pandemic gave everyone the proper kick they needed to say, ‘Hey, if I cannot track this right now, things are not going to move forward.’”

“The human aspect, the manual potion of [data entry and invoicing] has had to be reinvented over the past few years in the freight industry,” Wagers added.

Beyond the Handwritten Invoice

We’re moving beyond the days in which emails, paper and even handwritten invoices have gummed up the works, and ultimately have kept payments (and thus goods) from getting where they needed to go. Many of the vendors and the freight forwarders in the industry have antiquated invoicing and billing systems in place. And as Wagers remarked to Webster: “We cannot depend on the general ledger anymore.”

There are plenty of electronic data interchange (EDI) systems out there, but there is no standard in place for remittances. And so, the devil is in the details — at the unit level, at the shipment level, or where critical information may be stored at customs checkpoints themselves or tied to containers moving across countries. In a sign of additional complexity, said Wagers, ports may not “understand” the information about freight the same way the ocean carrier does.

For the data to be reliable, it all must be stored in the same place and shared across parties to track the internal supply chain of money movement that keeps physical supply chains operating.

As Mor stated, “we have customers that will come in and deploy 10,000 to 100,0000 payments in a month … and the most important thing is that a payment is a data point that will lead to another data point and to another data point.”

The more that the internal and external questions about who created and modified this information can be reduced, the better.

But that’s no easy undertaking, given the fact that the data — how it’s collected, how it’s disseminated and presented — is fragmented at best. Even the largest global ocean carriers don’t have standard payment and invoicing processes within their own firms. The European and U.S. operations may be connected with application programming interfaces (APIs) and have electronic invoicing in place; the Asia-Pacific (APAC) divisions or Latin American units may still be doing invoices through manual means.

And as Wagers noted, at the end of the day, the payments piece and what must be done to settle — whether it’s with a shipper, a vendor, a customer, a consignee — is all about the remittance, and the data that needs to be presented in a way that ensures all parties are clear about the transaction.

Creating Opportunities

The movements to streamline and modernize these systems are tied to working capital, which has been pressured in the current economy, and which continues to be pressured amid inefficiencies in the payments themselves. The fits and starts continue to add to the complexity of freight payments, he said.

Those same complexities create opportunities for firms like Routable, which operates as a payables platform that automates payments at scale for businesses paying their vendors, and Flexport, focused on digitizing and automating the complexities of freight forwarders to help freight payments speed up.

Mor said that the platform model ensures that parties can trust the data, that it’s repeatable and formatted the same way, so that there’s a standard of communication. If that standard is not there, then unwieldy email chains take shape, as everyone tries to figure out what’s going on — and that adds too much time to the payment to be released.

“It can even be as simple as sending one payment for 15 PDFs worth of invoices — and converting those 15 PDFs to a zip file so the recipient can get it,” he said of the efforts to simplify things. Information needs to be unpacked in seconds — not over a period of days. Unpacking data quickly and in easily-digestible fashion can keep vendor relationships healthy.

“Data integrity and a really good operations team can make vendor retention easier,” said Wagers, as firms can see exactly what is happening with the physical movement of goods.

By way of example, he pointed to Flexport’s Transmission offering, which is an iOS- and Android-based trucking app that captures data as containers move across supply chains. The platform lets trucking firms know when cargo is ready to be picked up at ports and where it should be routed — which in turn helps make for a better, data-rich payments process. Flexport also has a financing and factoring product that helps firms transact more quickly.

As Wagers told Webster, “with this information … I don’t need to look at every single thing and spend time and effort and money in a non-automated world. That’s the silver bullet.”

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