Accelerating Settlements and Cash to Close: How to Enhance Cash Flow with an Automated Transportation Management System
By Tyler Burns
UPDATED: August 11, 2023
| 4 min read
In the last 10 years, the logistics industry as a whole has undergone a dramatic digital transformation. Technology now powers operations that would have been unimaginable not long ago. Transportation in the oil and gas industry, however, remains stubbornly analog. Pen and paper still reign supreme, which in a cash intensive business can lead to costly errors and delays. Fortunately, modern transportation management systems solve many of these challenges, streamlining the invoicing process and accelerating settlements and cash to close.
How manual invoicing processes burden your business
Traditionally, the invoicing process is highly manual. Drivers complete their loads, write up their bills of lading, and drop the paperwork off at the office at the end of the day. There, someone eventually goes through the pile and passes it on to the accounting team, who enters the data into a spreadsheet. If and when errors or gaps are discovered, accounting must go back to dispatch and play detective: who did what, where and when and how.
This process introduces a number of challenges. First, each step involves ample opportunity for human error. From drivers including all the correct information on the bill of lading to ensuring that all the tickets make it to accounting to crunching the numbers in Excel, so many manual actions add up to an inefficient and inaccurate procedure. The errors, in turn, create a heavy administrative burden. Staff spend hours tracking down missing data or backtracking a mistake, driving up costs, eroding employee satisfaction, and increasing turnover in a position that already struggles with retention.
Most importantly, however, manual invoicing slows down settlement and cash to closes. Quite simply, if it takes longer to send out an accurate invoice, it takes longer to get paid. Invoicing delays impact the business on a variety of levels. They stymie cash flow, which hinders operations. They strain relationships with vendors. They lead to a deluge of complaints via support requests, which further bogs down the business with even more administrative burden. And of course, slow settlements and cash closes directly affect the bottom line.
Oil and gas shippers can address these issues with a digital transportation management system (TMS). A TMS automates the settlement process, connecting to your ERP to expedite cash closes. It saves time, improves efficiency, and increases accuracy, so you always get paid promptly and reliably.
With a modern TMS, each step of the settlement process is digitized. A bill of lading is created directly in the system. Dispatch assigns it to a driver, either manually or automatically based on predefined rules. If a certain client prefers a certain driver, for instance, or drivers need certain qualifications, or you prefer to always use the least expensive option, that logic can be incorporated into the TMS. This mitigates the risk of losing legacy knowledge as older generations retire as well as the learning curve associated with a high turnover role. Further, the digital system is intuitive to the younger generation aging into the dispatch world. They grew up on their phones, and that’s how they expect business to work.
Once the bill of lading is assigned, a driver can open the app on his phone or access his orders via text or email. He can accept or deny the order, and the clock starts ticking as soon as he starts moving toward his destination. Each step is digitally documented: pick up time, stamps, location, volumes, and more. When the ticket is closed, the system automatically sends the bill of lading directly to the customer as well as the back office via its integration with the ERP system. It then creates an invoice and a driver settlement.
Industry-leading transportation management systems like W Energy also incorporate geofencing capabilities. Geofencing automates invoicing by triggering actions as soon as the driver arrives at or leaves a destination. The system uses location to instantly close the bill of lading and send the invoice as soon as the truck departs, eliminating one more step for error-prone people and automating the process even further.
In addition, transportation management systems streamline complex rate structures. Instead of having to rely on spreadsheets and memory, the TMS automatically assigns assessorials to order details. It goes far beyond price per mile to accommodate any number of details and structures. This also increases accuracy and reduces the number of support requests that the business needs to field.
Sending each bill of lading automatically to the customer improves the audit process, too. Customers gain full visibility into their invoices and can collaborate directly with the billing company. Through an easy-to-use portal, they can see what they were charged, any materials attached to the order, and when and how each step was executed. This visibility fosters the relationships between shippers and their customers, leading to stronger and longer lasting collaborations.
It’s time for the oil and gas industry to catch up with the rest of the logistics world. With a cutting-edge transportation management system like W Energy, shippers can automate the invoicing process from open to close. The result: faster settlements, more consistent and timely cash closes, and cash flow you can count on.
Tyler started his transportation career running marketing and business development for All Things Automotive which was founded through a multi-million dollar investment partnership from Carquest. After that business was sold to the Thomas Automotive Group, Tyler began working in automotive and transportation consulting for Mcmillan Doolittle in Chicago where he later founded Carmacy, a tech forward fleet servicing business based in Memphis that grew to service 12 markets nationwide and counted Autozone, Hertz, Merry Maids, as clients. That business was sold to Spiffy in 2019. Tyler later joined a team in Boston that founded and sold a shipper TMS, Kuebix, to Trimble Transportation. In 2021, following his work at Trimble, he joined W Energy to drive new market opportunities for the W Energy TMS platform.