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Logistics is an industry that depends on speed, efficiency and accuracy for virtually every aspect of its business but one – payments.
Up and down supply chains, paper checks remain the dominant form of payment, requiring manual data entry that slows every stage of the process, particularly when it comes to towing and warehouse operations. A recent webinar from PYMNTS.com revealed that 64% of B2B payments are still handled by check, compared with the 67% of consumer payments that are made electronically.
Transitioning to digital payments would allow companies both large and small to streamline invoice and payment collection, enabling them to speed up operations and improve efficiencies across the supply chain. Here’s how.
THE IMPACT OF PAPER PAYMENTS
Logistics payments usually occur on the fly, so businesses that don’t have a system to support real-time transactions are operating at a disadvantage. The reliance on paper checks, cash and fleet checks creates supply chain bottle necks and problems that include:
- Lost or mishandled payments: When a business lacks a digital platform to invoice and accept payments electronically, cash is often accompanied by handwritten invoices and receipts. It’s difficult to keep track of these paper invoices – they can be lost or even stolen, resulting in missed revenue. In addition, if an employee has to log transactions based on paper invoices, human error can result in incorrectly logged amounts. According to PYMNTS.com, B2B payments have a staggering 18% error rate.
- Delayed payments: Paper transactions mean warehouses don’t get paid in real time and have to be billed later. This can be difficult to track in areas of the business where unexpected charges may occur. For example, in the warehouse environment, accessorial fees can be charged based on how the load arrives. Was it late? Did the load require special handling or unloading fees? All contribute to delays in payment.
- No accepted form of payment: Another problem posed by paper is when a payment is expected in real time, but the carrier doesn’t have an accepted form of payment, such as a paper check or cash. The representative is then forced to waste time finding an accepted payment method. This means a slowdown of operations, forcing workers to devote their time to a single transaction rather than focusing on more strategic initiatives.
THE BENEFITS OF DIGITAL PAYMENTS
PYMNTS.com reports that the average B2B paper invoice costs $17 and takes 10 days to process, while the entire lifecycle of a B2B transaction takes a snail-like 34 days. By digitizing payments, companies can improve operational efficiency in the warehouse and on the road, making it easier to collect payments, support more payment options, and ensure there isn’t a paper invoice or receipt to lose. By embracing digital payments, logistics businesses can:
- Reduce reliance on paper: A move to digital payments is more than just getting rid of the hassle of checks – it reduces reliance on paper overall. This includes paper invoices, manual data entry, storing old paper records and reducing touchpoints that create opportunities for mistakes and mishandling. Digital payments also increase employee productivity, eliminating the need to write out receipts by hand and leaving workers with more time to focus on company initiatives.
- Enable real-time mobile payments: Because these digital platforms are mobile, they come to the aid of the logistics industry outside the warehouse as well. They allow users to approve and pay for towing services, late fees and other accessorial charges for loads. If a truck breaks down, a shop often won’t send a technician to fix the truck or release it until work orders are signed off and payments are made. Workers using digital platforms are able to do this rapidly, preventing them from getting stuck figuring out how to make a payment.
- Streamline operations and increase ROI: Reducing the industry’s dependence on paper and instead leveraging digital payments will speed up operations and increase revenue opportunities. The cost of transitioning to digital payments is easily recouped by the ROI that comes from streamlining operations and eliminating revenue leaks.
To run your business as efficiently as possible, evaluate your payment processes and what digital payments could mean for you.