Freight Accounting

How freight payment solutions automate cost allocations, accrual files, and payments

Process Improvements in Freight Accounting

Due to the high cost and complexity of managing freight invoices, their processing and payment is one of the most commonly outsourced AP functions. The initiative to implement a best-practice freight payment solution enhances your existing accounting automation initiatives and greatly reduces the administrative burden that freight costs.

Some of the many process improvements you’ll gain:

  • Reduce the administrative burdens of recording complicated transportation expenses
  • Replace multiple disparate sources for accounting data with one
  • Consolidate many freight carrier payments into one
  • Offload carriers’ invoice-related inquiries and billing dispute management

Cass Delivers on Your Accounting Needs

Cass freight payment solutions meet the needs of both transportation and accounting groups. Our clients’ accounting requirements vary widely, as do their accounting/ERP systems. Cass is the expert organization for meeting the accounting needs of a diverse client base.

Our commitments regarding freight accounting are strong:

  • Provide accurate monthly freight accruals
  • Deliver cost allocations per your requirements – at any level of detail, such as SKU
  • Support specialized freight accounting needs, including allocations at your lowest costing level
  • Deliver consistently and on a timely basis to meet cut-off requirements
  • Provide real-time or near real-time visibility into invoice status and scheduled and historical payments
  • Provide transparency to the payment process
  • Provide documented processes with defined business rules
  • Cycle invoices individually, paying according to individual due date or unique scheduling needs

Automate the Cost Allocation Process

The cost allocation process for transportation expense is difficult and labor-intensive. The typical high-volume shipper maintains a large number of accounting codes for freight expenses. Whether the rules for allocating these expenses are simple or complex, assigning them to the appropriate cost centers can take an inordinate amount of work.

Companies allocate and assign their freight expenses in various ways: by move type, product class, SKU, supplier, destination, etc. – and often with some very sophisticated combination of rules. The only way to efficiently and consistently allocate freight expenses in such an environment is through the use of a customized, rules-based system that automates the process.

As the leading business processor for freight payment, Cass automates the cost allocation process to meet the complicated requirements of some of the world’s largest shippers.

With a highly automated system, we integrate data from a number of sources, such as invoices and supporting documents, client shipment files, and sometimes third parties, to build a powerful database that allows cost allocations at the most granular level necessary.

We provide full integration with your ERP or accounting software to minimize ongoing resource requirements for assimilating freight accounting data into your current accounting system(s).

Generate More Accurate Freight Accruals

The generation of a freight accrual begins by calculating the expected cost of a shipment. This is done using a rating engine, such as the Cass Ratemaker®application. Ratemaker contains a database of information about your contracted carriers, freight contracts and corresponding rates. When you provide a shipment file to Cass – containing information such as carrier, weight, origin, destination, and other key data  the rating system makes mileage and other calculations, and provides a total expected cost for that shipment.

Until an invoice is received for the incurred expense, this rated shipment record forms your freight accrual.

When an invoice is received, additional information – such as charges for unplanned expenses – may cause the shipment cost to change. In this case, the final shipment cost serves as the accrual amount.

See how The Hershey Company ensures accurate, detailed accounting data.

Accurate accruals rely on the quality of the rating engine. Ratemaker is used by Cass clients globally, and considered more advanced than most rating engines because it:

  • Rates every shipment at the charge level for maximum accuracy
  • Rates shipments for any geography – eliminating guesswork for accruing international shipment costs
  • Calculates costs in all currencies; can convert accruals to a single currency

We record all accrued expenses according to client-defined accounting rules, by division, move type, and/or cost center, for example. The accrual file is transferred to our client via system integration with your ERP or accounting system.

For clients lacking the ability to send shipment files, Cass can establish accrual information based on processed but not yet paid invoices and past history. While not as accurate as using a shipment file, this process typically yields results that are better than those currently achieved by most companies.

Are you following best practices in freight payment? Download our 6-point guide  to find out.

Ready to Achieve More?

Then let us show you how we can turn your freight payment process into an asset, instead of an incomplete solution that’s draining your resources.

Your modern shipping operations need modern expense management, without endless admin, questionable data, or missed cost savings.

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