It has long been accepted by third-party logistics providers (3PLs), freight brokers, carriers, and shippers that invoicing errors are just a part of doing business. Multiple research reports state that up to 25 percent of all freight invoices have some kind of error.
The issue of invoicing errors is so common that many organizations have established an accepted variance threshold that determines if they will dispute an invoice or accept it.
While not uncommon in our industry, the reality is that these invoicing issues and consistent errors do have a negative impact on your business and could likely be one of the biggest obstacles to growth and operational efficiency.
Following are some of the ways that repeated invoicing errors and discrepancies are impacting your business and what you can do to remove this from your business and realize sustainable growth.
Extending Your Days Sales Outstanding (DSO)
DSO is the average number of days that it takes for a company to collect payment after a sale has been made. Whenever you have an invoice with an error or a discrepancy that needs to be resolved, you are extending the time it takes for you to get paid.
Good business dictates that you want to get paid as quickly as possible, but if 25 percent of your invoices have errors, this timeline only extends, putting a pinch on your cash flow and growth.
Reducing Cash Flow and Profitability
The outcome of a delayed DSO is felt by limited cash flow and reduced profitability. In today’s competitive and low-margin business, every dollar counts, and many organizations are limited in the strategic investments they are able to make because of the time it takes to process their invoices and address errors that are commonplace.
Those brokers and 3PLs that have solved their invoicing issues have experienced the ability to scale profitably and increased their cash flow which provides more business flexibility and financial health.
Damaging Customer and Carrier Relationships
Invoicing errors and exceptions can cause frustration and dissatisfaction among your customers and carriers, who expect to receive accurate and timely invoices. This can damage our reputation and trust, and lead to lost business opportunities or increased churn.
These relationships are too valuable and need to be nurtured and one of the ways you can provide a great experience is through the accuracy of the freight audit and invoicing process.
A Decrease in Operational Efficiency
For many organizations, the way they try to solve invoicing errors and exceptions is through human intervention. Not only is this a costly proposition and time-consuming, but it also requires that you add more people (overhead) as you scale.
This also has the potential to keep your human resources and attention from the core of your business activities and strategic goals.
Many of those that I speak to believe in the process they have established for their freight audit and invoicing even when they experience the impacts stated above. They point to the fact that they have a transportation management system (TMS) and other technology, but even with that, it is not enough. The typical process is broken and serves only to keep sustainable growth at bay.
Navix is the solution to not only alleviate the invoicing issues that are so common but also provide you with the quickest way to growth and operational efficiency. By integrating with your current systems, Navix streamlines the invoice approval and payment processes and delivers the following:
- Reduction of invoice error rates to near zero percent
- Lower DSO on average of three days
- Increase the cash conversion process by up to 50 percent
- Increase operational efficiency by over 25 percent
- Enable 4 – 7x growth without adding additional overhead.
By using software solutions that can facilitate invoice approval and payment processes between us, our customers, and our carriers, we can speed up payments, reduce disputes, and enhance visibility.
There is no need to use disparate technology and keep adding people to your freight audit and invoicing. There is a better way that I would be happy to show you. If you want to grow and gain a competitive advantage, there is no better way to do so than Navix.