Freight Bill Payment and Audit an Introduction
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Freight Bill Payment and Audit an Introduction

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    Freight Bill Payment and Audit an Introduction Freight Bill Payment and Audit an Introduction Document Transcript

    • of questions that can be better answered when you have ac- cess to rich true Operational Business Intelligence. Transparency is also provid- ed when spend data is readily available to all supply chain partners and can be used to achieve efficiencies in costs and time-to-market delivery for goods and services. Se- lecting the right suppliers to handle your transport and logistics, while at the same time ensuring all movements are executed in compliance with contracts and tariffs, is a complicated science that re- quires accurate and timely data. Auditing of freight invoices is not routinely done or is done in a very limited manner, which means that many com- panies are leaving millions of unclaimed overcharges on the table. In many cases the base freight may be less than the accessorials or other arbitrary charges on many shipments. However, utilizing a sophisti- cated electronic rating process Companies, manufacturers, and distributors spend billions on transportation movements across global regions, utilizing different modes of transport and multiple service levels. In addition, numerous transpor- tation providers are used, invoices are billed in multiple currencies and supply chain data may be contained in dis- parate systems. Many execu- tives are creating mandates to bring costs under control and the logistics team is in the ‘cross hairs’ of many of these executives. Visibility into the “who, what and where” of global freight spend is a primary goal of all supply chain professionals. By removing and integrating the silos of information, freight spend can help identify oppor- tunities for direct cost savings, pinpoint poor supplier relation- ships and uncover inefficien- cies in supply chain opera- tions. Are distribution centres in the correct location? Has our market shifted? Should we consider setting up cross dock facilities? These are the types ensures that all line items are fully audited and cost avoid- ances are identified and cor- rected before invoices are paid. Outsourcing to a freight pay- ment service expert provides an extremely detailed audit process and ensures that in- voices are paid correctly up front while eliminating the costly process of having to file claims after the process. The procurement process is also greatly enhanced by using freight spend data to support a closed loop process. Spend data is used as a tool to create the RFP’s in the procurement process and is considered a best-in-class process. The freight audit and payment process provides a strategic advantage by allowing compa- nies to better manage their supply chain data on a global scale. Executive Summary: Freight Bill Audit and Payment—What is it? The name alone says a lot– at its core, the industry is about the proper Audit and Payment of Invoices in the Supply Chain sphere. But what does that really mean? As above, we see that the core objectives of Freight Bill Audit and Payment trans- cend this simple objective. The Supply Chain manager of to- day needs much more from these stacks of transportation provider invoices than timely and accurate payment. The reality is, of course, that we live in a heavily data- centric world, where the mod- ern Supply Chain Executive specifically needs up-to-date and accurate details of their transportation spend to make critical decisions on the future of an organization’s varied logistics networks. Data Entry, Audit, and Pay- ment are still key components to a successful Freight Bill Audit and Payment program: but best-in-class performance goes well beyond these basics. Making sure invoices are paid correctly according to your supplier contracts is key– but understanding your network is far more important. Freight Bill Audit and Payment: An Introduction Points of Interest: What is Freight Bill Audit and Payment? An Overview of the Key Process Steps. Supply Chain Visibility. Key Notes on Value Added Tax. JANUARY, 2012 Copyright© 2004-2012 iMagine Global Solutions Inc. • Proprietary & Confidential • Do Not Distribute • All Rights Reserved • All Information, Data and Materials Provided on an "AS-IS" Basis, Without Warranty or Representation of Any Kind. [Global Visibility of the Supply Chain via the iFocus Dashboard]
    • 1—Receipt of Invoices: The transportation providers will send their invoices with all supporting documents directly to the freight payment company. Invoices are received in paper hardcopies at our mail centers globally, electronically via EDI or PDF, or through our web portal. Once re- ceived, all of the paper invoices and supporting docu- ments are scanned, indexed and digital images are created for enhanced workflow automation. 2—Data Entry, Data Validation, and Rating: After documents have been scanned, the key data elements are captured from each invoice and addition- al information may be captured from supporting docu- mentation as required. Customer specific data ele- ments can also be captured based on predefined busi- ness rules. Bill of lading numbers, delivery numbers, purchase order numbers and other shipment related references are also captured and can be used for a “Match Pay” process. In a ‘Match Pay’ process, these unique reference numbers can be matched to ERP systems like SAP or Oracle or any other proprietary file for shipment validation and data population from the customer’s database. Core data checks based on cus- tomer specifications authenticate that the invoice should be paid by the customer [valid location, account number, etc.], and that the transportation provider is a valid supplier for your organization. Once invoices have passed these checks, they are rated against the cus- tomer’s existing supplier contracts and tariffs for accu- racy, and if necessary– invoice corrections are made visible to the supplier via e-mail. The Data Load pro- cess through eLoader also includes a comprehensive duplicate check– including invoice number, shipment number, shipment dates, charge amounts, etc. 3—Exception Management: Exceptions can be caused by failed business rules, incorrect or missing data, approval required for specific charges and payment amount disputes related to rat- ing errors. Based on the type of exception, invoices will be automatically routed to the iResolution™ web portal tool. The proper parties are notified by email so that the appropriate action can be taken. Items requiring the customer’s attention are posted to the customer’s queue in iResolution,™ and items requir- ing the Transportation Provider’s attention are posted to the Transportation Provider’s queue in iResolu- tion,™. A third potential queue, known as Collabora- tion allows for the customer, the transportation pro- vider, and nVision Global associates to resolve in- voice disputes in an automated workflow between all three parties. 4—Cost Allocation: Automated General Ledger Coding is an key step of invoice processing: this customized business logic allows for a systematic allocation of individual costs, accessorial charges, VAT and applicable taxes to the correct cost centres. Customized file feeds can be cre- ated for uploading directly into the customer’s ERP system to further eliminate manual posting methods. Similarly, through the use of match-pay processes, Accrual files may be created to create a clear picture of paid & outstanding items by individual cost allocations within the customer’s organization. 5—Closeout, Preparing For Payment: The invoices are processed in weekly cycles meaning that all bills processed during a week are batched for payment according to the customer’s financial sched- ule. Payment terms can easily be customized to max- imize your company’s working capital or cash manage- ment requirements. This allows for better control of your DPO (days payable outstanding), which may be an important consideration for the Treasury or Finance organization. Detailed weekly summary reports are then delivered to all customers. nVision Global’s Five Key Processing Steps:Page 2 ‘Tomorrow’s Vision Today.’
    • “Accurate, real time data is a must for any company to ensure business strategy compliance and realization of supply chain optimization.” In most instances, the auditing of Value-Added Tax requires that any adjustments identified due to a rating error are processed with an associated credit memo from the supplier. nVision Global’s process notifies the supplier of the error, and provides them appropriate detail to issue the credits as re- quired so that payment can be made in a compliant manner with the relevant tax authorities global- ly. Additionally, once payments are made- invoices can be returned to customers in a variety of ways to Value-Added-Tax is a system of indirect taxation used by over 130 countries globally- however, for customers in Europe, processing of Value-Added-Tax is always a fore- most concern due to the fiscal re- quirements of each member state and the reclaimable costs that can be lost in a deficient process. While Freight Payment is not itself a compliance or reclamation service for Value-Added-Tax, the process facilitates both key corporate ac- counting areas through extensive data capture and customer busi- ness controls. satisfy invoice archive retention requirements. This can be managed directly by the customer in a paper archive format, or [where permit- ted by law] nVision Global can supply a digital archive CD of all processed images, as well as through our long term hosting solu- tion iHistorical Plus.™ Do you audit the line item charges of your supplier invoices? Are invoices automatically rated through a rules-based rating en- gine? Are all contracts, rate agreements, and tariffs stored in a central re- pository that is accessible online? Are General Ledger Accounting Codes assigned by an automated logic? Do you provide web-based access Some key thoughts to consider when Benchmarking your current Freight Payment procedures: What is your cost to process an invoice internally? Staff, IT Sup- port, Supplier Management, Man- agement oversight, etc. Are paper invoices and all support- ing documentation scanned upon receipt and electronically routed using automated workflows? What percentage of your invoices are processed electronically? to your transportation providers for freight bill payment inquiry and dispute management? Do you have a consolidated data warehouse that provides sophisti- cated real-time analytics on your Supply Chain Spend? We offer a strong suite of expert, easy to use, opera- tional business intelligence tools enabling you to ac- cess any detailed level of information - 24 / 7 through the Internet. These tools allow a granular visibility to the inner se- crets of your supply chain, tailored to support any need of our professional customers. Accurate, real time data is a must for any company to ensure business strategy compliance and realization of supply chain optimization. The fact that companies consistently strive to create a clear real time picture of the global cost of transporta- tion confirms that present-day visibility in most organi- zations does not meet the requirements of today’s supply chain. From the entry of the bill forward, [either through paper or electronic delivery methods], the key data elements from both the invoice and supporting docu- ments are captured along with relative costs, deliver- ing real time global transparency and visibility. This, along with powerful analytical tools, empowers you to improve your supply chain optimization and to realize additional cost reduction opportunities. Page 3 ‘Tomorrow’s Vision Today.’ Visibility Key Notes on VAT: Benchmarking Your Existing Process—Key Questions
    • CONTROL: Outsourcing of the freight bill audit and payment activities to a specialized provider brings a reliable control mechanism to all entities and geographical markets in which you are doing business. It also allows for compliance with increasing reporting requirements and allows the procurement function to benefit – having a central reposi- tory of historical transportation cost data and up to date provider contracts and rate information available. COST EFFICIENCY: An efficient process for ordering transportation services, fulfilment, and administrative and financial settlement realizes considerable cost reductions. The Transportation Provider’s inquiries are eliminated through the ability to access invoice and resolution status thus avoiding spending non-core business efforts trying to resolve non- compliant invoicing issues. The freight bill audit and payment process eliminates the risk of paying duplicate or erroneous invoices, delivering transportation cost reductions and contract compliance. VISIBILITY AND BUSINESS INTELLIGENCE: 24/7 access to updated real-time data covering shipment, financial and Transportation Provider performance (KPI) measurements delivers considerable value visualizing “as is” and reveals business optimization opportuni- ties. About nVision Global: Since its inception, nVision Global has evolved from a regional Freight Payment company to one of the fastest growing Global Freight Audit, Payment and Logistics Management service providers in the industry. nVision Global boasts facilities on four continents, superior technology, quality services and comprehensive business intelligence applications second to none. As we Partner with our customers, we are committed to listening and dynamically customizing our processes to support each of their unique business requirements. Our commitment is to provide each customer with respon- siveness that is unparalleled in the industry. We are dedicated to this philosophy because we understand that a successful relationship depends on the delivery of state of the art technology, quality focus, flexible processes, unparalleled service and global business intelligence. Find us online at www.nVisionGlobal.com Page 4 ‘Tomorrow’s Vision Today.’ Freight Bill Audit and Payment: A Summary Copyright© 2004 to 2012 nVision Global Technology Solutions, Inc., all rights reserved. This document and all intellectual property including but not limited to all business rules, users manuals, source code, database and framework structure is protected by copyright laws and international treaties. None of this material may be used for any commercial or public use. No part of any material appearing in it may be reproduced, stored in or transmitted to any other computer program. No material appearing in the document may be disseminated in any form, either electronic or non-electronic, nor included in any retrieval system or service without prior written permission from nVision Global Technology Solutions, Inc.