Cost drivers for otr fleets newbrand1Presentation Transcript
Understanding the Value of a Payment Program to National Accounts: Cost-Drivers within the Trucking Industry
Top-of-Mind Concerns for Over-the-Road Fleets. 1 Kuntz, Ray. Transportation’s Role in Climate Change and Reducing Greenhouse Gases. July 14, 2009. Today’s national fleets are juggling a multitude of financial challenges. With average fleet operating margins of 2-4% in the United States 1 , these financial variables ladder up to overwhelming business concerns for over-the-road trucking companies. A survey by the Kinetic Group of 300 fleets participating in aftermarket parts programs identifies the role billings and payments can play in managing these financial challenges for fleets.
Overall, 66% of respondents claimed that participation in a payments program provided their company with the opportunity to decrease operating costs, and nearly 71% are more likely to buy from suppliers that offer a payments program. Payment Cost-Drivers in the Trucking Industry. Most Important Decision-Making Factor For Program Participation Of Those Fleets Who Actively Participate In At Least One (1) Aftermarket Parts Payment Program
Fleets overwhelmingly identify parts pricing as one of the most important decision-making factors when evaluating suppliers. Implementation of standard pricing across aftermarket dealer networks, however, is tricky. The aftermarket sales model for truck parts and equipment is fairly consistent across the trucking industry. Original Equipment Manufacturers (OEMs) sell aftermarket parts to national accounts through a network with fleets, there is no model in place to consistently reinforce this pricing across the sales network. A payment program implemented across your sales network guarantees pricing to national accounts while maintaining a seamless purchase experience. Parts Pricing.
78.5% of fleets agreed that purchasing controls offered within their billing and payment solutions were important to their businesses. Purchasing Controls. Procurement managers need to control company costs while protecting against fraud and account misuse. When trucks require maintenance while on the road, the ability to establish transaction volume or frequency limitations, purchase order requirements, or truck identification requirements prior to purchase authorization becomes a vital cost-management tool.
75% of fleets cite consolidated billings as a key program benefit. Consolidated Billings. The decentralized sales structure of the trucking industry results in billings from multiple dealers in various formats with inconsistent transaction details submitted to national fleets, which are managing payments for purchases made by a multitude of truck drivers across the country. The time it takes to reconcile purchase orders with invoices and issue separate payments for individual transactions is expensive, though rarely quantified. Payment programs that consolidate the billing process minimize the amount of time national accounts spend administering payments - a benefit often overlooked by fleets until they’ve experienced the time-savings.
Common Pitfalls to Avoid.
Inappropriate Credit Allocations . 25% of fleets identified “other credit accounts” as the primary reason they do not utilize their OEM payment accounts more often. By allocating insufficient credit lines to fleet accounts, you may corner them into utilizing alternative methods of payment when it is time to make a purchase .
Limited Sales Network . Allowing only an abbreviated segment of your dealer network to participate in your payment program creates confusion among dealers, fleet managers, drivers, and accounting departments rather than simplifying the transaction process.
Restricted Account Options . When nearly 80% of payment program participants claim that purchasing controls are important to their management practices , limiting the account options available to a fleet may decrease the perceived value of the payment program, and ergo limit participation and usage.
The top reason fleets participate in a payment program is convenience / ease of use. When implementing a billing and payment solution, OEMs need to asses all aspects of convenience.
Customer-Value Equates to Business Growth. In the end, a billing and payment program for national fleet accounts must provide value to their trucking business. If fleets do not find value (quantitative or qualitative) in a billing and payment program from an OEM, the program will not be successful. Only by understanding top-of-mind fleet business concerns and cost-drivers in the payments process can OEMs in the trucking industry develop a billing and payment program that appropriately addresses fleet needs. By doing so, however, OEMs can successfully target the 71% of national accounts that are more likely to purchase from suppliers with a payments program and drive incremental revenue into the sales funnel.
Multi Service. Innovation Where it Matters.
Multi Service invoicing specializes in the design, implementation, and management of custom billing and payment solutions. The company collaborates with clients to isolate specific commercial credit and payment issues, identify measurable portfolio growth goals, and design a tailored private label payment solution to optimize customer loyalty. The company’s expertise in business-to-business sales processes assists clients in maximizing the lifetime value of individual commercial accounts and optimizing their overall commercial portfolio.
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