Sharing Logistics Data Without Compromising Sensitive Information

Factoring companies play an essential role in the logistics industry, helping truck owner-operators to improve cashflow and streamline back-office operations. A means of speeding up payment for services, factoring can also help small to midsized carriers reduce overhead and increase margins. 

The factoring company takes on collections, billing the shipper or broker and earning a fee that is typically a percentage based on the value of the invoice. Not all factoring companies and fee arrangements are alike; in some agreements, the seller shares risk with the factoring company, whereas in others, the factoring company assumes all risk, meaning it must collect from the shipper or broker to get paid. 

Brokers are typically paying factors for 55% to 70% of all loads today, instead of making payments directly to carriers. The challenge lies in getting all constituents in the logistics ecosystem to work together, using data to reduce friction in payments processing without increasing the risk of compromising proprietary client information. 

While some carriers have been reluctant to disclose factoring partnerships, it’s time for the industry to embrace the factoring model. Factoring partnerships make sense for owner-operators and fleets because they accelerate paydays and provide critical liquidity. 

In addition to improving cashflow, factoring allows logistics companies to focus on their core competencies. Owner-operators and smaller fleets can benefit from a factoring partnership by outsourcing collections and concentrating on their core business of delivering freight and providing outstanding service. Such outsourcing can significantly reduce the time that carriers spend on manual processes.

Intelligent automation makes the factoring process seamless, helping to pay clients and charge debtors faster. It can also be used in the back offices of carriers to free up time typically spent on manual document processing.

The platform takes things a step further by eliminating issues upfront. For example, when a factoring company purchases an invoice, it needs to be reassured that it can bill the broker or shipper accurately and seamlessly on behalf of the client.

The same is true for a 3PL, which pays the carrier and bills the shipper. Carriers, too, need to pay their own employees and bill customers. Regardless of the relationships that underly the transaction, there’s always the need to make a payment and bill a debtor. Intelligent automation removes the friction in these processes.

Instead of employees opening invoices, reading documents and making judgment calls on routine cases, which slows the process and leaves room for human error, intelligent automation can extract data from invoices, ensure that amounts match rate confirmations, and pay automatically in routine cases. If there’s a mismatch, the system flags the invoice for an exception review. 

Intelligent automation can reduce these processes from days to hours, and hours to minutes, by accurately classifying documents. In real-world deployments, the technology reduces manual processing by 60% to 70%, so that knowledge workers can use their expertise to resolve edge cases instead of spending the majority of their time on tedious manual processes. 

By taking the clerical work out of processes, companies can improve both efficiency and job satisfaction. Employees can use their skills for tasks that create value, drawing on their expertise in areas such as  mobile image capturing technology and transportation industry relationships. 

Yet another component is trust. Some logistics providers have been reluctant to embrace factoring due to data-security concerns, and worries that their customers might be poached in a tight market. The solution lies in finding a partner with the experience and technology to serve as a neutral party that can securely manage data for all players, including factors, brokers and carriers. 

As data science evolves, it will be possible to use data within the logistics ecosystem more broadly to generate insights that make the supply chain more efficient and resilient. In the near term, look for technology-enabled providers that can accelerate payments, enable tracking and offer self-service features. The right partner can enable data-sharing without compromising information, moving the entire ecosystem forward through closer collaboration.  

Mario Duckett is senior vice president of growth, broker and factors at Transflo.

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• Source: https://www.supplychainbrain.com/blogs/1-think-tank/post/36381-sharing-logistics-data-without-compromising-sensitive-information