Supplier payments visibility, why is it important?

January 13, 2016 Pieter Kinds

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Today, we are taking you with for a closer look at a rather interesting report, The 2015 state of B2B payments report. This report focuses on the state of electronic payments (“ePayments”) in the B2B marketplace. It highlights the major advantages of ePayments compared against paper checks, including across-the-board increased visibility into supplier payments.

On a yearly basis, Ardent Partners publishes a handful benchmark studies regarding the accounts payable (“AP”) marketplace. One of those is the annual research effort into the state of business-to-business (“B2B”) payments, called “The State of B2B Payments 2015: Emerging Business Value”.

Both supplier as supplier payments visibility are increasingly important for modern business, mainly because executives are nowadays looking into internal data as a way to drive nuanced decision-making, benchmarking etc. As stated by one of the contributors of the report, Matthew Delman (Senior Payables Researcher), visibility into (freight) payment data can be a huge competitive advantage for the enterprise in a marketplace where it remains critical that internal departments run as efficiently as possible. "The most important thing to understand about AP is that, when reduced to its essence, the function is tasked with distributing cash to suppliers. This may seem like an oversimplification, but consider that supplier payments are arguably the single largest non-payroll source of cash outflows in the entire enterprise. This is especially true in enterprises that produce physical goods, and only slightly less so for those that create digital goods, such as software, or organizations that provide services instead of products.

As a result of this position, the payment data that AP controls can provide a tremendous amount of useful financial intelligence. Without visibility into this data, however, AP becomes something of a “black hole” in the enterprise’s cash management strategy. Invoices go in, payments come out … but no one really understands what happens in the middle or can even view the data that AP collects."

Transportation payment visibility

In logistics, accounts payable depends on the transportation department to deliver accurate accrual and general ledger information for correct cost allocation. That being said, many transportation executives will describe this a challenging task. Freight audit, or freight audit & payment can be described as a collection of multiple processes serving as an accounts payable service for transportation invoices. Providers of this service act as a trusted third-party between shipper and their transportation carriers to receive, process, and handle the payment of invoices.

Freight Payment Benchmark Study 2015

How can freight audit & payment provide visibility?

The requirements for a solid freight audit & payment system, with minimal manual activity, are:
1. Invoice Reception. Typically manual invoices are sent via e-mail and electronic invoices via the integration with your accounting system (EDI)
2. Validation process (data capture). As soon as the invoices are received, your freight audit provider will validate and audit all the invoices individually to make sure that duplicated and incorrect invoices are intercepted and corrected.
3. Accurate cost accounting and accruals. As a result of the freight payment service, your carrier will apply the correct general ledger code(s) to freight invoices, based upon the rules provided by the shipper.
4. Exception handling and extra cost management. Integrated should be a platform where carriers can register additional costs via a unique reference number. These costs will be reviewed by the appropriate person on the shippers side and if correct will be added to the original shipment. This gives a great insight in the extra costs in transportation and saves the customer and the carrier time in its handling.
5. Payment. Following the above steps, a provider usually "close" once a week and issue an invoice or request for transportation funds to the shipper. Upon receipt, the shipper will validate the payment request and issue funds to the freight payment provider to finalize the payments to the transportation carriers.
6. Shipment data provided business intelligence. Shippers will have access to an online reporting tool as part of a freight payment solution. This will provide the shipper with full visibility and transparency on any invoice that is processed, handled and paid. Typically, KPI reports, overbilling reports and freight spend dashboards belong to the standard reporting set-up. Moreover, logistics and finance managers will instantly have access to reports that accommodate crucial needs around financial reporting, such as raw data reports and accruals.

 financial consolidation of shipments

Read the full B2B payments report

The report shows the perspectives, experience, and accomplishments of more than 200 AP and finance leaders, as well as examining the trends affecting the marketplace and offering recommendations for improvement. Access the full report here to view more insights regarding payment visibility and the state of the B2B payments marketplace.

The State of B2B Payments 2015

Learn more about the freight audit & payment advantages and capabilities of ControlPay on our website. As a global and EMEA freight audit provider we are at the forefront of how carriers are nowadays billing their customers. With our unique e-invoicing solutions we eliminate paper where legally possible, speed up the billing process and automate many manual handling points in the freight audit, coding and payment process. For more information, please contact us via info@controlpay.com

More ControlPay - Global & EMEA Freight Audit & Payment content:

How freight audit reduces your freight spend
Small parcel audit: invoice mistakes you can expect as a shipper
Freight invoice auditing: The ever-increasing importance of technology

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