Freight forwarding involves a dense and interconnected network of global suppliers and transportation providers, often overlapping to provide services for a single international shipment. The complexity of these networks leads to complexity in billing and invoicing as well, particularly as the supply chain and ocean transport has become increasingly unpredictable. Freight forwarding finance and accounting teams play a crucial role in monitoring and managing costs and inbound payments, and keeping the company financially healthy. Accounting teams are responsible for a lot of data that requires a keen attention to detail, but are too often reliant on time-consuming, manual data entry.
This article discusses the valuable role of accounting in freight forwarding and supply chain and explores current processes and challenges to managing freight statements of account. It concludes with suggestions on improving statement of account processing with automation and artificial intelligence technologies.
The supply chain is a complex, yet integral part of today’s global economy. It encompasses many facets of a business, from material sourcing and procurement to production and distribution. Each step within the supply chain process involves numerous players - suppliers, vendors, and logistics providers - in order to get a finished product to the ultimate end customer. Supply chain executives have the distinct challenge of linking each step in the process, maintaining inventory, meeting production schedules, and filling customer orders, while ultimately controlling costs. Similarly, freight forwarders are managing multiple parties and vendors for the international shipping portion of the supply chain. Forwarders must monitor origin and destination fees, freight costs, customs fees, and various accessorial charges for each shipment in their possession, and mitigate costs where possible.
Accounting and finance experts play a valuable and increasingly vital role in supply chain and freight forwarding cost management. They bring analytic expertise, economic perspectives, and an objective, unbiased approach to supply chain planning. Additionally, they provide services that improve overall supply chain execution, such as:
Freight forwarding and supply chain accounting teams also have a comprehensive understanding of supplier and vendor payment terms and how those impact cash flow. They can assist in high-level planning when considering new contracts by providing insight into how payment agreements will impact overall financial health and stability. They are also a key link to maintaining positive vendor relationships through consistent, on-time payments, ensuring continued service and loyalty within the vendor network.
Given the complexity of freight forwarding and the need to manage multiple vendors across a single freight transaction, accounting is an enormous task that requires a great deal of time and attention to detail. Invoice management can be particularly tedious, as shipments may contain multiple containers and involve multiple providers, customs brokers, and NVOCCs. Statements of account (SOA) can help simplify invoice management, but it is important to understand what they are and how they are organized.
First, it is important to note the difference between an invoice and a statement of account. An invoice is simply a request for payment for goods or services rendered, generally for a single transaction - in the case of freight forwarding this would be a single booking. A statement of account is a summary of products and services rendered within a given timeframe, and a recap of any outstanding invoices and payments received. SOAs are typically issued in addition to individual invoices and provide a big-picture overview of vendor invoices.
Freight statements of account may be formatted differently across vendors but should contain similar information:
Statements of account provide a helpful summary of vendor invoices, but they can present challenges for accounting teams attempting to reconcile expected charges to actual invoiced charges. These challenges exist when processing SOAs in the Payables Module of Cargowise as well, due to the platform’s process requirements for invoices and SOAs.
This means that for the data on an SOA to be useful, accounting teams must manually work through the statement to compare charges in Cargowise. There are several problems with managing SOAs this way:
It seems clear that manual statement of account processing in Cargowise is inefficient and drains labor resources. Fortunately, there is a better way!
Considering the inefficiencies and challenges of manual statement of account processing in Cargowise, it makes sense that freight forwarders are looking for alternative solutions to invoice management. Expedock’s platform provides an answer, by automating the extraction of SOA data, reconciliation of discrepancies, and posting of SOA to the Cargowise Payable Module.
In order to understand the benefits of automation, it is important to first understand how Expedock’s system processes statements of accounts. Once an SOA is uploaded to the system, AI gets to work understanding the document, mapping the locations of various fields and values, and transforming those values to the correct values within Cargowise. Expedock AI extracts each line item that represents a unique invoice on Cargowise, as well as the identifying reference numbers that exist on the SOA, such as MBL, HBL, container, booking numbers, and so on. The AI does not require each invoice to include the same reference values, it can handle different permutations per item and use each key to find corresponding shipments on Cargowise.
Once the statement of account has been uploaded and mapped, Expedock audits the invoices to compare anticipated accruals to actual invoiced amounts and identify any discrepancies. Accounting teams can quickly verify and approve discrepant invoices, as the system identifies discrepant line items within each invoice. Once these have been verified and reviewed, the invoice data is sent directly to the Payables Module in Cargowise.
Manual invoice management and statement of account processing is taxing on accounting teams and, in an increasingly digital world, it is completely unnecessary. Automation of SOA processing offers multiple benefits to freight forwarders, including:
Expedock is on a mission to build a powerful data infrastructure that generates unprecedented efficiency and profitability to all players in the industry. Their software brings automation to invoice management and statement of account processing so supply chain accounting teams can focus on big-picture projects rather than tedious data entry tasks. Expedock delivers automation and AI-powered solutions for extraction and reconciliation, increases accuracy, and delivers exponential cost-savings.
See how automated statement of account processing can benefit your business. Get in touch to request a demo today.