Here are five ways going “digital” on the payment side helps make logistics processes more time- and cost-efficient for shippers.
In a global marketplace that’s in constant flux, shippers are always looking for new ways to streamline their supply chains, improve logistics efficiency, and save money. Whether they’re trying to navigate tariff changes, stay ahead of changing customer preferences, or whittle down high transportation bills, shippers are using digital payment processes to eradicate paper, phone calls, and emails instead of a more streamlined, tech-enabled approach.
“The logistics industry is about speed, efficiency, and accuracy. Warehouses strive to turn trucks around swiftly, keep the dock doors filled, and process as many loads as possible,” RoadSync’s Robin Gregg writes in How Digital Payments Improve Logistics Efficiency.
“The same goes for truck drivers and carriers – if they’re not on the road, they’re not generating revenue,” Gregg continues. “But in a space where speed and efficiency are so important, the industry is overly reliant on something that is incredibly inefficient – paper.”
Doing Away with Paper
Few logistics leaders would argue the fact that paper is inefficient, yet many warehouses and distribution centers continue to rely on at least some paper-based processes. It spans from facility gate management, yard management, transportation management, inventory management, and payment management processes. Any inefficiencies or errors in any of these areas are propagated through the entire supply chain.
A good starting point for companies looking to break out of this mold is the payment arena, where passing invoices back and forth across departments and organizations can lead to a high number of inaccuracies, errors, overcharges, and other problems.
“Paper throws a wrench in accounts receivable processes for many companies,” PYMNTS.com points out in The Logistics of Paying Warehouses Electronically. “Logistics, however, often faces a few extra challenges when companies like warehouses and trucking firms accept payments. Those transactions often occur on the fly, placing the burden of real-time invoicing and payment on businesses that lack the systems to support such real-time transactions.”
Here are five key benefits that companies see when they digitize their logistics processes:
- No more lost invoices. “Digitizing the tracking, invoicing, and collection of payments greatly improves the payment experience for both sides of the transaction,” Gregg writes. “It’s easier to collect, more payment options can be supported, and there isn’t a paper invoice or receipt to lose.”
- Less human error and theft. Using digital payments not only minimizes the hassle of using paper checks, but it also reduces companies’ overall reliance on paper. “That includes paper invoices, manual data entry, storing old paper records, and reducing touchpoints that create opportunities for human error or even theft,” Gregg points out.
- Less operational disruption. The actual act of accepting cash or check payments disrupts operations. For example, a warehouse that cannot accept cards means a driver may have to travel to take out cash, or a driver who pays in cash — forcing a warehouse professional to take the time to find change — means a slowdown of operations, causing workers to spend more time on the transaction than on more tactical and strategic initiatives, PYMNTS.com reports.
- Better transparency and security. Transparency and accountability are harder to achieve with cash payments because they are anonymous and difficult to trace, The Better Than Cash Alliance points out. “Digital payments increase accountability and tracking, lessening the risk of corruption and theft.”
- Streamlined employee management. Traditionally, transportation employees submitted receipts of expenses incurred, with those receipts then reviewed and reimbursed by administrators. A form of digital payment, fleet cards can automatically provide this oversight and simplify the transportation accounting process. “Contactless smart cards that use a chip based on RFID technology are found most suitable in the transportation sector,” Medium There’s More to Come
Companies that adopt a digital payment mindset can also take advantage of new options that help them streamline their supply chains even further. For example, Electronic Invoice Presentment & Payment (EIPP) includes any web-based business-to-business (B2B) system that can issue invoices and receive payments against those invoices electronically.
Looking out a bit further, blockchain—which supports the maintenance of distributed ledgers that can be used by all parties involved in the supply chain—will continue to mature and evolve into a more mainstream option. Once that happens, its potential as a digital payment option that shippers can use to create a more streamlined end-to-end supply chain process will surely continue to grow.