Today more than ever, managing payment reporting and providing logistics excellence within the supply chain is essential for achieving continued growth and profitability. Finding the right mode of transportation can be challenging enough, but securing payments can be equally daunting. Network managers must balance local needs and restrictions with an increasingly global focus on transportation management and various freight payment processes. And with transportation costs increasing around the world, cost controls and guidelines have become more vital than ever for the modern-day transportation network manager.
What Does Freight Payment Services Mean?
Freight audit and payment are vital services that keep the supply chain functioning smoothly by ensuring payments are made and received for services rendered during shipping. The freight payment process focuses on auditing and paying freight invoices promptly to prevent missed opportunities and payment delays. It also focuses on collecting the data needed to create records and reports that track freight spend, commercial invoices, and logistics payments throughout the supply chain. Global managers aim to standardize practices and collaborate with a worldwide partner to solve challenges. The key to freight payment services is managing these expenses and overcoming difficulties with invoices and payments as efficiently as possible within the network.
Problems Surrounding Traditional Logistics Payment Processes
One of the most significant challenges associated with freight payment services is cost management. Reducing freight spend and lowering shipping overhead costs is vital for ongoing growth in today's competitive global market. Any way the freight payment process can improve is critical. According to The Journal of Commerce Online, reducing freight spend can have a tremendous impact on profitability. Consider this: A shipper with $1 billion in revenue could end up paying $50 million to $100 million in freight spend. This same company could end up managing over 40,000 invoices in a single year. All of these costs and expenses can quickly add up and eat into profits. Therefore, freight payment process management is critical to achieving sustained profitability.
Defining the Top Types of Freight Payment Services
Knowing the various freight payment meanings is critical to understanding how they can impact the supply chain network. Developing industry and company-specific freight carrier payment terms can help managers to easily determine the right freight payment services for their unique needs. Some of the more common options include:
Broker or Third-Party Factoring
Freight brokers provide financing and payment reporting on behalf of the company, usually for a flat-rate fee, which enables shippers and carriers to focus on tasks other than invoicing. This is thanks to the use of online dashboards, apps, and innovative software.
Carrier Factoring
This unique option provides services with no minimums, no reserve and a low flat rate. Carriers experience additional peace of mind while securing the best rates with easy-to-follow steps that help to streamline the freight payment processes.
Load Board Integrated Payments
Shippers and brokers use online load boards to post loads and get bids from a vast pool of brokers and carriers. This allows for faster capacity management, easier rate negotiation, and access to the best freight carrier payment terms.
Prepaid Freight
When logistics managers and directors have a general idea of what their freight loads will cost to ship, a prepaid approach may help free up team members and give management one less concern.
Collect Freight
This option for supply chain payment reporting focuses on the amount of freight that gets transported and presents the shipping rate based on volume, weight, or several shipments made. This method is based on a predetermined base fee.
Digital Credit and Cost Underwriting
Additional fees such as inspections, legal fees, customs and duty fees, and similar operational expenses also need to be considered when managing payments and finding the correct freight carrier payment terms.
Maximize Profitability Quickly and Easily With the Right Freight Payment Options
From implementing the right freight payment software and processes to choosing from among the many types of freight payment available, it is essential that the freight payment services align with the needs and goals of the transportation service providers implementing them. Get a demo today of HaulPay, a ComFreight product, to see how the platform streamlines freight payment processes.
