In the UK, the transport and logistics sector is navigating a number of challenges, from oscillating fuel costs to the intricacies of post-Brexit trade. In this landscape, an often underemphasised yet vital operational inefficiency demands attention: the need for modernisation in the accounts payable (AP) process. By fine-tuning this critical back office function, transport and logistics firms not only bolster operational efficiency but carve out a pathway to resilient and sustained growth in a highly competitive and unpredictable market environment.
Managing Diverse Operational Costs
The Issue:
Every transport and logistics venture, regardless of its scale, encounters a vast spectrum of operational costs. There's the overt expenditure in vehicle maintenance – ensuring that fleets, whether on the road, air, or sea, operate at their optimal capacity. Concurrently, costs associated with warehousing, especially in the era of e-commerce and just-in-time delivery systems, which can also vary significantly based on location, size, and the nature of goods stored. This sheer volume and variability of invoices translates to huge administrative costs when using manual systems for Accounts Payable.
Basic automation systems often fail to account for the real-life complexities that these invoices encompass. For instance, purchase orders and invoices may not always match 100%, perhaps one showing a company’s full name and the other an abbreviated form. Simple, rules-based automated AP systems often struggle with processing these edge cases, forcing companies to fall back on time-consuming manual methods. However, AI-enabled AP software can automate workflows even when there is complexity involved.
The Solution:
Kloo’s AI-powered automated AP system provides logistics companies with the tools to accurately account for the complexity of the industry. Optical character recognition and AI are layered to input data from an invoice automatically, which are then matched to the corresponding POs using AI’s contextual reasoning, with a high degree of accuracy and no human intervention. Kloo’s AI-powered AP system also allow firms to automatically and precisely categorise their expenditure —whether it's for vehicle maintenance, cargo handling, or route optimisation. This granular categorisation, in turn, facilitates comprehensive reporting, empowering financial decision makers with a crystal-clear view of where funds are directed and how they contribute to the overarching operational matrix.
There are huge savings to be made through AI-powered automation. According to a Goldman Sachs report, a mid-size enterprise incurs approximately £13 manually processing a single invoice, adding up to eye-watering sums for a company processing tens of thousands of invoices every year.
Rate Fluctuations: Navigating Volatility
The Issue:
The world of shipping is intrinsically tied to the whims of rate fluctuations. From the availability of space on a vessel to sudden geopolitical shifts, numerous variables can influence costs. Such unpredictability, while being part of the industry's nature, represents a challenge for outdated manual AP systems. The time needed for manual processing leaves AP systems constantly out of date, failing to keep up with the agility of the industry and risking overpayments and strained supplier relations.
The solution:
Automated AP solutions provide a much-needed degree of transparency, creating an automated, well-documented audit trail for each transaction, from purchase order to proof of payment, all traceable in one platform. This not only enables better financial management but also enables informed decisions on the fly, in an economic landscape which is less predictable than ever.
Streamlining Approval Workflows
The Issue:
The transport and logistics sector thrives on punctuality and swiftness, where timely delivery is the bedrock of its operations. Given this backdrop, any delay, especially in crucial administrative tasks like accounts payable, can have a cascading effect. Bottlenecks in approval processes for expenditures can easily become a significant strain on your financial operations, posing risks of late fees, straining indispensable client relationships and disrupting smooth operations.
The Solution:
Kloo’s AP platform allows you to set up fully customisable simple or threshold-dependent approval workflows, to which requests are automatically assigned. Approvers can then review and approve spend with the necessary financial context, straight from their email inbox, alleviating friction in the approvals process and ensuring that invoices and payments pass seamlessly through the necessary approval channels without getting stuck in bureaucratic limbo. Such an approach ensures not only efficiency but also consistency, allowing logistics companies to focus on their core operations without being bogged down by administrative hurdles. In an industry where every second counts, automation is an invaluable tool to ensure back-office operations are as streamlined as your production line.
Takeaways: The Road Ahead for Transport and Logistics
In the fast-paced environment of the transport and logistics sector, manual AP practices are not only obsolete but detrimental to growth and service efficiency. There are distinct challenges rooted in the very fabric of this industry - from the unpredictability of rate fluctuations to the diverse nature of operational costs.. By adopting AI-driven automated AP solutions, businesses can transition from merely reacting to challenges to proactively harnessing technology as a strategic asset. Such modernisation not only promises substantial cost savings but also facilitates more agile, transparent, and responsive operations. As the transport and logistics sector evolves, embracing automation in accounts payable will be pivotal in steering these enterprises towards a future of sustained growth and unparalleled efficiency.
Learn more about how Kloo delivers unprecedented efficiency for your Accounts Payable.
