Supply chains are the links that underpin commerce, from the single click of an online “buy” button to the doorstep delivery.
Along the way, after the purchase is made, there’s an intricate web between shippers and carriers at work — along logistics routes that match firms with truckloads. And at each point, there’s a broad range of documentation to provide and payments to make.
Pete Rogers, CFO of Echo Global Logistics — a company focused on simplifying transportation management, connecting those who have goods to ship with the firms that deliver them — noted that managing exceptions and payments, which can hold up deliveries, isn’t an easy task.
He told PYMNTS’ Karen Webster that supply chains, even as the pandemic recedes a bit, are still being roiled by inefficient document and payment flows. Meanwhile, inflation has continued to drive up operating costs, and the driver shortage remains in place, putting more emphasis than ever on cash flow.
None of this is exactly new — the pandemic has only thrown all the pain points into sharp focus.
“We’ve seen accelerations of trends that have been in the background for the last 10 to 15 years,” Rogers told Webster.
But he said the urgency is building for small- and middle-market freight firms with one or two fleets on the ground, which may not be able to tap the credit markets as easily as they might have in years past to keep operations humming.
The longer days sales outstanding (DSO) are stretched, the more slowly cash winds up in coffers.
An all-in-one platform like Echo’s can help bring firms together to quote, book and track shipments while managing invoices and payments.
In terms of functionality, the firm’s solution collects the payment from the shipper and then pays the carrier separately — in effect facilitating two payments (the transaction is not just a straight flow through from one party to another).
He said, too, that the platforms can provide value as a broker offering access to an extensive network of carriers.
“We’ve got access to capacity from everything from one or two truckloads in a fleet to national carriers as well,” he said. “It’s the value of that network that provides significant flexibility and ability for shippers to move goods.”
Ideally, he said, carriers should be able to fill their trailers up with freight and handle the proper documentation quickly so that they aren’t sitting in a dock for hours instead of trying to unload cargo. With digitization, the carrier can send documents to online portals from their phones.
Rogers explained that the company offers two online portals. EchoShip allows firms to get quotes and book less-than-truckload and full-truckload shipments and facilitate payments while automating back-end processes. EchoDrive focuses on giving carriers real-time access to bid on loads and upload documents.
As to the automation, interactions between shippers and carriers can also be smoothed with third-party tools and advanced technologies such as artificial intelligence (AI). Those movements toward automation can instantly “recognize” documents and check them against shipments to reduce manual checks, signoffs and other processes, he said.
Automation also smooths exception management — chiefly by enabling shippers to capture documentation on the front end to ensure there isn’t a problem with data reconciliation on the back end. Carriers need assistance in sending those documents as easily and as quickly as possible, so that all parties can focus on payment terms.
Echo has sought to “mimic” some of the business-to-consumer (B2C) payment options that all of us have become accustomed to via Amazon and other eCommerce sites, he said. And both of its portals offer simplified checkout.
“We can pay people quickly — and that makes them want to come back to the platform,” Rogers said.
The payment preferences themselves are changing too, he said. By and large, carriers are electing to be paid (virtually) through automated clearinghouse or cards, although Echo continues to have a significant factoring presence as well. AI and algorithms make payment history and underwriting key considerations in extending credit.
And perhaps not surprisingly for a business as old as commerce itself, the freight industry still has elements where paperwork is involved — as evidenced by the paper checks that remain a steadfast payment option (and are part of Echo’s own offerings), he said.
“You want to automate the market, but you don’t want to alienate the firms that are not there yet,” he said. “Education can be very helpful here.”
Looking ahead, he said, Echo continues to examine how to make billing and collection more automated across the freight industry’s largest portals. Those can be enhanced by robotic process automation (RPA), matching shipments with carriers (and here, said Rogers, technologies such as blockchain can improve document flow).
Increasing the visibility of when bills will be paid, and in what manner — and how best to identify and address exceptions — can have a positive impact up and down supply chains.
With embedded payments in the offing as firms book shipments, a digital ecosystem is taking shape across logistics. Cash flow will always be king, Rogers said.
“Being able to send and receive payments as quickly as possible and have them go through the system with limited human touch and just appear in a bank account, and knowing when the cash is coming — well, that’s a big deal,” he told Webster.