Freight Payment Best Practices Improve Cash Flow

You can achieve significant business results through the expert management of your freight payment process. Much depends, however, on your ability to systematically and precisely manage the timing of these payments.

That’s because organizations with significant logistics expenses (for freight transportation, warehousing and related supplier services) can greatly improve their cash positions by making payments almost precisely when they are due. If you pay too early, you’re not taking advantage of extended terms that may have been negotiated. And if you pay too late, you may not only lose any early-pay discounts, but you might also jeopardize a strategic relationship in the supply chain, which could stall manufacturing processes or delivery of goods to store shelves.

Outsourcing Freight Payment

Due to the high cost and complexity of managing freight invoices, their processing and payment is one of the most commonly outsourced AP functions. But whether you pay freight invoices in-house or use a service provider such as Cass, you must ensure that your process has the sophistication to tightly manage the timing of payments.

Precise Freight Payment Timing

Cass offers precision payment capabilities that enable invoices to be paid according to your business rules. Although it sounds simple, many providers and freight payment systems cannot successfully cycle freight invoices to their due date (read our white paper to understand why). The Cass system schedules invoices to be paid when they are due - so if two invoices are approved for payment on the same day, and one is due in 30 days and the other is due in 60 days, each will be paid according to its due date. One of the many benefits of this is that your company maintains higher levels of working capital. Batching invoices as they are approved and paying them at the same time isn’t a sound cash management strategy and can be avoided with the right solution.

For more information about payment processing cycles and how they affect cash management, read the white paper, “Increase Working Capital through Best Practices in Freight Expense Management.”