February 15, 2022

How Monthly Freight Invoicing Process Automation Saves Ops & Human Resource Costs

How Monthly Freight Invoicing Process Automation Saves Ops & Human Resource Costs

Considering the many challenges and ongoing volatility in the global supply chain, enhancing operational efficiency through automation is a top priority for stakeholders throughout the industry. Freight forwarders play a unique and pivotal role in the supply chain - linking suppliers, transportation providers, and buyers through a collaborative, yet fragmented, international shipping process. Freight forwarders act as a mediator between parties and are responsible for tracking data, documentation, and freight invoices for thousands of shipments in transit. 

Freight invoice management is a tedious task and can bog down a forwarder’s operations team. A single shipment usually includes upwards of five individual invoices that require review and entry. With the enormous number of invoices and limited time to process them, operations teams may take shortcuts or make unintentional errors that lead to increasing revenue losses over time. This ultimately leads to decreased profits, unhappy employees, and dissatisfied customers. Fortunately, automation technology provides a better way. 

This article discusses the challenges of manual freight invoice processing, how invoice processing is managed in Cargowise, and finally, how automated solutions create operational efficiency in invoice processing.

Challenges with Freight Invoice Processing

Quick and efficient freight invoice processing is critical for freight forwarders, as it can impact valuable relationships with carriers and vendors that are necessary to run the business. Unfortunately, given the number of vendors and amount of paperwork required to move an international shipment, managing and reconciling invoices is a tedious and difficult task. Traditional freight invoice management attempts to consolidate data from siloed and disparate systems into a single database, but there are many challenges to this manual process:

  • Time: Manual freight invoice processing is incredibly time-consuming. On average, manual processing accounts for 2 to 4 hours per day of a staff member’s time – up to half of their working hours. This is inefficient for both productivity and labor costs, as operational teams could make better use of this time in keeping goods moving and taking care of customers.
  • Staffing: Manual freight bill processing takes more time, which ultimately leads to increased operational staffing needs to scale as a business grows. Additional labor, training, and human resources costs significantly impact profitability and present challenges in recruiting and retaining employees during the current labor shortage. 
  • Errors: Manual processes are inherently more prone to human error. Freight invoice management requires immense attention to detail and accurate data entry - for teams processing hundreds to thousands of invoices in a week, errors are inevitable. This creates even more work to identify and correct errors, delays payment, and adds up to significant revenue lost over time.
  • Unstructured Data: Freight invoices are generally unstructured with very little consistency across vendors, creating challenges to data entry and processing. Operations teams must learn to scan documents for relevant information and enter data accurately into ERPs and logistics software. Optical character recognition (OCR) solutions attempt to scan documents and extract data, but have fallen short in delivering accuracy on complex, unstructured documents like freight invoices.
  • Lost Revenue: Discrepant invoices require a diligent review process and include many phone calls or emails with vendors to dispute inaccurate charges.  This takes substantial time and effort, but if left unchecked, freight forwarders may lose thousands of dollars in revenue to discrepancies. 
  • Unhappy Customers: Vendor invoice processing directly impacts customer invoicing, as customers are typically billed for all accrued charges on a shipment. Unidentified discrepant line items in vendor invoices that are repeated on customer invoices can result in confusion over charges and an unpleasant customer experience. Correcting these issues retroactively requires time and delays incoming cash flow.

Challenges of Freight Invoice Processing in Cargowise

Cargowise TMS solution provides a centralized hub for logistics operations and is utilized by freight forwarders and 3PLs around the world. Their technology has changed the supply chain industry and improved coordination and collaboration, but challenges remain for operators in processing freight invoices in the Cargowise platform:

  • Unstructured Data: As with manual freight invoice processing, Cargowise requires data from digital or physical documents to be entered manually. This requires time and labor from the operations team and does little to increase efficiency. Additionally, operators may attempt to save time by entering invoice charges as a lump sum instead of individual line items, making it nearly impossible to identify discrepancies. 
  • Accruals and Rate Reconciliation: Manually auditing expected accruals in Cargowise against actual invoiced charges is another time-consuming process that can bog down an operations team. Failure to properly identify discrepant charges presents many issues for a company’s bottom line:
  • Over-paying vendors: fees and surcharges are more common today due to port congestion and delays, but these charges should be verified and confirmed with vendors before issuing payment blindly or charging back to customers.
  • Double-paying accessorial charges: ship lines often send detention and demurrage invoices to destination agents, as well as the freight forwarder. If duplicates are not identified in time these charges may be paid twice - and may take months to recuperate from a ship line.
  • Incorrectly billing customers: invoicing customers for discrepant charges that have not been verified can slow down payment and negatively impact cash flow.
  • Auditing Statements of Account: Vendors often provide a monthly statement of account (SOA), a summary of shipments, charges, and payments received over a given period, in addition to individual invoices. SOAs are useful for verifying accrued charges, but within Cargowise any charges not included on an original invoice must be manually created as an unallocated transaction in the Payables Module, instead of entering the invoice directly to a shipment. This process requires operations teams to review each shipment on the SOA individually to identify any discrepant charges.

Manual freight invoice management in Cargowise presents significant challenges to operations teams, requires hours to execute, and creates staffing needs that put pressure on human resources. Automation technologies provide a solution.

Automating Freight Invoice Processing to Save Operations & Human Resources Costs

Freight forwarders are spending too much time, labor, and resources on manual invoice processing, even with advanced tools like Cargowise. Fortunately, advances in automation and artificial intelligence (AI) offer a solution for streamlining these processes accurately and efficiently. Automated systems help operations teams with freight invoice management by eliminating manual processes in several key ways.

  • Data Extraction: Automation technology eliminates the manual task of data entry from unstructured invoice documents. To do this, AI learns to “read” an invoice, maps relevant fields, then extracts that data to link the invoice directly to a corresponding shipment on Cargowise. 
  • Invoice Auditing: Once an invoice is linked in Cargowise, AI technology works to compare the invoiced charges to the expected accruals. If the invoice and accruals match, the invoice automatically posts to Cargowise. If they do not match, AI identifies the line-item exception and flags the discrepancy for review. Operations teams only review discrepant invoices, allowing them to focus on reconciliation more efficiently and ensuring discrepancies are not overlooked or overpaid.
  • Statements of Account: Advanced automation and AI systems can also identify, extract, and post data from Statements of Account directly into the Cargowise Payable Module. This feature saves operations teams hours of labor required to review statement data on multiple shipments.

Operations teams directly benefit from automating freight invoices because it improves productivity and accuracy, and saves a substantial amount of time. Teams have more time to focus on moving freight, improving customer service, and strategic projects to grow the business. Additionally, eliminating tedious, boring tasks can improve employee retention and generate higher skilled roles to deliver more value to business development. Employees are more likely to stay at a company with opportunity for growth - automating simple tasks opens more doors to make that possible.

Automation allows freight forwarders to grow their business, without adding operational staff to manage manual data entry. This means automation indirectly benefits human resource teams, as it minimizes the cost of recruitment, training, and payroll. This is especially important with growing labor shortages and increasing minimum wage requirements. Automation and AI does not replace human employees, it simply takes over tedious data entry tasks and gives employees an opportunity to do more meaningful, valuable work.

Automate Freight Invoice Processing with Expedock  

Freight forwarding businesses that are serious about saving on operational and human resource costs must consider the benefits of automation technology. Expedock has helped hundreds of forwarders eliminate unnecessary data entry and harness the power of AI to automate freight bill processing, delivering savings of up to 80% in labor costs. Automation enhances operational productivity by freeing up time for big-picture projects and customer service, while improving employee retention and reducing turnover. 

Expedock delivers automation and AI-powered solutions for extraction, auditing, and reconciliation, and creates exponential cost-savings for freight forwarders. Get in touch with their experts today for a consultation and demo.

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