Virtually all freight brokers and third-party logistics providers (3PLs) understand the continual challenge of scaling their business while maintaining profitability. Traditionally, increasing business volume meant hiring more staff leading to higher overhead costs which can have a negative impact on profit. Many of these additional hires were made to deal with the increased volume of invoices that scale along with volume.
However, what many organizations are discovering today is that they can scale their business without having to increase their headcount, which leads to an increase in profitability.
The most advanced 3Pls and freight brokers are taking advantage of artificial intelligence (AI) and machine learning solutions that enable them to automate their cash conversion cycle which allows for scale without the burden of increased personnel costs.
Here are a few ways that businesses are applying these solutions for the betterment of their business.
Streamlining Invoice Processing
A significant part of the cash conversion process in freight brokerage and 3PL operations revolves around invoicing and payment cycles. Manual invoice processing can be time-consuming and prone to errors, leading to delayed payments and customer dissatisfaction.
Even the basic use of AI can have a profound impact on the operational efficiency of a business.
Research conducted by PWC found that even the most rudimentary use of AI can save businesses 30-40% of hours spent on such processes.
Enhancing Collections Management
Efficient collections management is crucial for freight brokers and 3PLs to maintain a healthy cash flow. When organizations experience a strain on cash flow it limits their ability to make strategic investments in corporate growth. Reducing the time from order to cash is one-way organizations can avoid the pinch of limited cash flow.
Using AI and machine learning as a part of the cash conversion process can shorten the order-to-cash process by more than 50% and far outperforms the traditional, manual methods that are still being used by many companies today.
By using AI, brokers, and 3PLs can analyze historical payment data, customer behavior, and market trends to prioritize collections efforts, reducing the number of days sales outstanding (DSO), minimizing the risk of bad debt, and collecting payments faster.
Optimizing Cash Flow Forecasting
AI and machine learning enables freight brokers and 3PL providers to analyze vast datasets, including historical transactional data, market trends, and macroeconomic indicators. All of these inputs enable a more accurate forecast of cash flow and better business planning.
Accurate cash flow forecasting empowers companies to make informed decisions, plan for contingencies, and seize growth opportunities without overextending their financial resources.
As organizations scale, the ability to do this manually continues to be a resource drain and accuracy decreases. Using AI to rapidly process the existing data and forecast what lies ahead will better position organizations for long-term health.
The integration of AI and machine learning into the cash conversion process can significantly transform the operations of freight brokers and 3PL providers. By streamlining invoice processing, enhancing collections management, optimizing cash flow forecasting, detecting and preventing fraud, and implementing personalized customer engagement, companies can scale their businesses without adding headcount.
Veritas Logistics has realized the value of adopting AI solutions into their business operations and as a result, has experienced a 4x increase in volume without having to add additional headcount to their organization. If you are interested to learn how you can do the same for your business, let us know, we would be glad to show you how