How bad data makes a mess of settlement

Inaccurate, incomplete, or inconsistent settlement information hurts all shippers and logistics providers

The logistics settlement process is complex at best. Bad information makes it more so.

The ideal settlement process

At Trax, we say settlement begins when someone submits a shipping order. A logistics provider then delivers the goods, issues an invoice, and books the sale. The shipper reviews the invoice, allocates the cost, accrues the expense, and pays the invoice. The logistics provider books the revenue. We say settlement ends when both companies use the data in their analytics systems to make management decisions.

This is the “clean and simple” version.

Where things get messy

In reality, settlement is often much messier. The full process may include 20 or more steps. The steps may involve a sender, a shipper, a receiver, and one or more logistics providers.

To complete each step, the parties rely on information someone else provides. That information is often inaccurate, incomplete, or inconsistent with other information.

Consequences of bad data

Bad information—or bad data—dramatically increases settlement pain, costs, and risk for both shipper and logistics provider.

It raises the logistics provider’s cost to generate a good invoice. Logistics providers may unknowingly undercharge or overcharge their services. Disputes over invoices unnecessarily increase order-to-cash cost and days sales outstanding (DSO).

Deficient invoices, in turn, make it necessary for shippers to audit them and dispute charges. Disputes delay shippers’ payments. Often logistics providers can’t collect the full revenue they’ve booked—even after costly attempts to justify their billing

Most audits don’t find every deficiency in every invoice. As a result, shippers may overpay or underpay for services.

Many auditors file invalid claims. Carriers often settle these claims because of the cost and time to defend their billing..

Bad data may also prevent shippers from allocating and distributing costs correctly.

Neither party can fully automate settlement if they can’t match documents and can’t reconcile shipments with requests.

You can’t see or feel bad data. But the effects you can see and feel in your business are unnecessary cost, delay, conflict, and stress. Bad data also causes less effective management decisions. Shippers and logistics providers see and feel these effects every day.

What should I do now?

Discover how Trax Certified Invoices help solve the problem of bad data.

See how the Trax Open Logistics Settlement Platform identifies and fixes bad data.

Contact Trax for more information.

Go to the Trax product overview.