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March 2019

Why Smarter Freight Payments Begin With The Invoice
Why Smarter Freight Payments Begin With The Invoice 150 150 Roger Hatfield

Money drives any business, but in the freight and logistics market, business cannot occur until funds are moved. Considering how crucial seamless payments are in the market, it’s concerning that issues like payment delays, errors and fraud remain so prevalent.

These issues can be traced to the industry’s complex nature, coupled with its ongoing use of legacy technologies that fail to deliver the accuracy and speed business partners need to conduct business. CloudTrade Logistics Vice President Roger Hatfield told PYMNTS in a recent interview that freight and logistics is “an industry driven by payments.” But to fix problems with B2B payments in the freight and logistics sector, solution providers must begin with the invoice.

In addition to being one of the first steps in initiating payment, the invoice holds key information that both sides of a transaction need to move money (and goods) efficiently. Today, however, the logistics sector continues to rely on paper invoices, manual data entry, Electronic Data Interchange (EDI) and Optical Character Recognition (OCR) technologies.

“In the logistics vertical, a significant portion of freight invoices are processed using traditional EDI,” Hatfield said. “However, there is still a lot of paper being processed, due to a lack of resources for EDI projects – and the invoice volume is also too low. The accuracy of OCR solutions is not acceptable, and the fees for outsourced data entry continue to increase.”

The most immediate implications of a lack of efficient digital data exchange between two business partners in this industry include a customer’s delayed payment to a service provider, as well as the service provider failing to efficiently reconcile payments received.

But Hatfield explained that the knock-on impacts of this data bottleneck go deeper.

Data Bottlenecks, Business Delays

“If you’re capturing bad data, then all your decisions in the payment lifecycle can be at risk,” he said. “OCR or manual data capture is slow and often ridden with errors, and the complexity of some freight invoices means you only have time to capture a fraction of the information that’s contained on an invoice. This is all valuable data.”

This shortcoming exposes businesses throughout the supply chain to issues like payment delays and even fraud, due to the inability for companies to two- or three-way match an invoice against a purchase order or delivery documentation. It can also lead to non-compliance with rules and regulations like tax and customs requirements, which Hatfield said is “one of the biggest challenges to the industry today.”

Even when companies invest significant resources in developing compliance programs and establishing their systems and processes to remain compliant, a lack of accurate, timely data means mistakes can be easily made – no matter how many control points are in place.

Shippers relying on supply chain financing, factoring or dynamic discounting solutions also stand to lose significantly as a result of inaccurate or delayed invoice data, noted Hatfield.

“Since the invoice discount rate is driven by the age of the invoice, the processing cycle is critical,” he said.

Faster (Accurate) Invoices, Faster Payments

In B2B payments, it’s common sense that the faster an invoice is sent and received, the faster a payment can be initiated. While that’s not always the case as companies delay supplier payments to hold onto capital for as long as possible, Hatfield said there are tangible benefits to “invoice velocity,” as CloudTrade described it, including the ability for a supplier to be paid as well as the opportunity for a buyer to access early payment discounts.

Once again, data emerges as a valuable asset when it comes to faster invoicing, he continued, thanks to the ability to manage complex shipment invoices – which can contain multiple bills – in datasets for individual processing. In other words, faster invoicing means faster data analytics when companies deploy the right technology.

In CloudTrade’s case, that comes in the form of its digital invoice processing platform for the freight industry, announced earlier this month. The solution aims to deliver automated data capture and analytics while allowing industry players to continue the practice of sending PDF invoices by email. Hatfield also noted that the platform is more accurate than legacy OCR technology, and invoices can be processed in a matter of hours.

Key to the success of any automated solution is the availability of custom features, including support for unique business rules to promote compliance. And while faster invoicing and automated data capture are essential to accelerating B2B payments in the market, Hatfield emphasized the importance of the broader implications of seamless invoicing, payments and movement of data in the freight and logistics market, from compliance and fraud risk mitigation to quicker access to working capital and a more holistic view of business spend.

“Using CloudTrade, they can process files and payments faster than ever before, but more importantly, identify and capture incorrect spend from the detail on complicated invoices,” he said.

By PYMNTS Posted on February 28, 2019

Why we’re building CloudTrade Logistics
Why we’re building CloudTrade Logistics 1024 614 Roger Hatfield

In January this year, we launched CloudTrade Logistics, our solution that helps US carriers, freight audit and freight technology companies get 100% validated data from freight invoices with no OCR or human intervention. As we approach the end of Q1, it’s an opportune time to provide an update on how we’re getting on.

The importance of payments to freight cannot be underestimated. Few things slow business quicker than the late administration and execution of payments. Given the challenges that technology has been able to solve in other sectors, it’s hard to understand why such an integral part of the supply chain still suffers from a large number of problems. These problems lead to delays, errors, compliance risks and, in the end, costs.

We launched CloudTrade Logistics to solve these problems. By integrating invoice processing and digital data exchange for all parts of the US freight industry, we enable companies to overcome inefficient methods of freight invoice processing, giving them the opportunity to transact digitally with trading partners, regardless of size, maturity or complexity. Our users include logistics companies, business process outsourcing firms and freight payment providers who needed an alternative to EDI and OCR to process and capture data. The list of potential users is long and the potential for cost savings across the industry is great.

We believe that our solution is different from anything else on offer in the freight industry, for three reasons.

1. 100% compliant validated data –

We offer 100% compliant, validated data because our product allows our users to create custom-designed business rules and validations that run on the vendor supplied invoice; we don’t mistake an ‘I’ or ‘L’ for a ‘1’ which ensures the data we deliver is 100% accurate data. We remove the issues with incorrect data appearing in data fields such as Tax or VAT, account code or depot location data fields and when this is combined with our rules engine we can put in place controls to ensure that the PO is included and referenced on the invoice, that the PO is valid and sufficient funds available to pay the invoice and in some cases that the item/ship codes are correct – all of this helps the back office matching processes in TMS, ERPs and different finance systems.

A key risk for any business is collecting and using bad data. Audit and payment processes can be put at risk and an inability to process payments quickly can lead to problems with carriers and shippers. Even if a company uses compliance programs and systems that guarantee they remain compliant for tax and customs requirements, if the problem occurs at source, where data is inaccurately collected, mistakes will be made. This can lead to a delay in payment, increased audit activities and extra expense – and it’s one reason why CloudTrade Logistics is so useful for our customers.

2. Our solution is powerful –

Our unique approach to data capture means we are able to collect a large amount of data from an invoice. Most organisations make do with capturing “header-level” data only. But we go beyond this, capturing as much (or as little) information as our customers require, giving them the data they need for their back office systems and with the added benefit of being able to understand their detailed spend profiles. This means a company can process files and payments faster than ever before, whilst longer term, identifying and capturing incorrect spend from the detail on complicated invoices.

3. Our solution is fast and transparent –

We designed our solution to increase ‘Inbound Invoice Velocity’, which is a positive for all parties, as it means that payments can be made earlier, early payment discounts can be applied and cash/working capital can be made available immediately. Using CloudTrade Logistics also means that an invoice is always visible through the capture process, from when it’s been received, converted and then sent to the back office system.

Our solution can convert complex multi-bill carrier/shipment invoices into unique document sets for separate processing in the back-office systems; we can work with a single multipage document containing 1,000’s of pages, or process multiple files contained on one email – we haven’t failed a challenge yet!  We know, it can take a manual operator using a key-to-screen or OCR solution up to 30 minutes to capture the data on a multi page shipment or complicated invoice. CloudTrade Logistics completes this task in a matter of seconds.

Our solution is built upon our unique Gramatica technology and it offers 100% accuracy for most major carriers. Further, it’s also the first solution of its kind to allow freight payment providers, third-party logistics and business process outsourcing partners to increase efficiencies, cut operational costs and increase throughput, by doing away with the manual or OCR processing of PDF and paper invoices which invariably produce errors.

Global ambitions

We have recently launched the product into the freight and logistics market, and it’s been received very positively. We’ve seen an increase in new enquiries, our carrier reach is expanding and we have been working with our existing clients in the industry to help them increase ‘invoice velocity’.

Our plans for the future of CloudTrade Logistics include pushing further into the US. In time, we’re also looking to build upon our existing offering, enabling clients to process other complex documents that need rules and validations running against them. But that’s for the future.

For now, we’ve been delighted with the positive response we’ve had from US users and we look forward to working with them throughout the rest of 2019. Our focus will be on working with key partners and helping as many users in the freight and logistics industry as possible, providing a simple, best-in-class technological solution to a problem that we feel should have been fixed a long time ago.