"I wish I could invoice people for wasting my time."

Ever find yourself thinking that?

Ask any operations manager, and they'll tell you they've had this thought countless times while trying to match vendor invoices with shipment documents.

It's a common frustration in the world of logistics, and they're not alone in this.

Old school freight settlements are way too common. They put on a straight face, but not before long, they give away the secret: this system just does not work.

What do you get out of a system where unfortunate operations managers have to match month old invoices to last quarter’s PODs? Only this: managers who feel like they’re paperworms, shippers who know they’ll get away with anything because you just don’t have a process to manage them, goods stuck on the road when they should be in the retail store.

Bad freight settlement keeps shippers in the yards, when they should be on the roads.

This is no laughing matter. Inefficient freight settlement, In the long run, can financially strain companies.

That's why we've pooled all our experience and insights from the logistics industry for one purpose – create a comprehensive guide on freight settlement problems and solutions.

In this guide, we’ll delve into the nuts and bolts of freight settlement, tackling key questions and offering practical freight settlement solutions.

We'll cover:

• What is freight settlement?
• What are the top freight settlement problems?
• Why are paper-dependent freight settlement systems problematic?
• Which are the key freight settlement documents?
• What’s the best freight settlement solution?
• Why you might want to ask for a demo of Traqo – a freight settlement solution that just works.
• Why do they say: "Good freight settlement is good business."
• Freight settlement problems and solutions: FAQs
  

What is freight settlement?

Let’s zoom out a bit, and first refresh our memories on ‘what is freight management’. (Obviously, it’s much more than freight settlement.)

Freight management is essentially about managing the movement of goods.

Think of it like organising a big road trip, but for products.

For example, imagine yourself as the supply chain manager of your country’s biggest toys manufacturer. Your toys need to travel from your factory to stores where kids can buy them.

For you, freight management is all about planning this trip efficiently and cost-effectively.

This means that you need to do three things well:

• Find the right transportation (like trucks or trains)
• Find out the best routes
• Guarantee that the toys arrive on time and in good condition

Wait, where's the freight settlement here? Hang on.

What is Freight Settlement?

Now, let's talk about freight settlement.

This is the process that happens after the road trip is over.

In freight settlement, the manufacturer (your employer – the toy company) pays for the services of the transportation service (like a trucking company).

Sounds simple? It isn’t.

You don’t just find an invoice in your mailbox, smile at it, and approve it for payment.

Freight settlement, unless you’re doing it the smart way (and we’ll talk about it in a moment), is where most manufacturers and D2C brands leak money, 24 x 7.

Why’s it so?

Let’s learn about the top freight settlement problems.

What are the top freight settlement problems?

Imagine this: your company could be dealing with a whole bunch of shippers at once, each using different types of transport - trucks, trains, maybe even ships.

Now, every invoice you get from these shippers could be packed with line items. And we're not just talking about the straightforward costs; there are always those extra charges that no one saw coming. Things like fuel surcharges or fees for handling special items.

Is your operations manager groaning under the weight of an old school freight management system?

Nobody has a crystal ball to predict these costs, and there's often no straightforward way to check if they're legitimate.

Then comes the Herculean task of reviewing and verifying these invoices. This isn't something you can do in a jiffy. It requires time, manpower, and a lot of paperwork. If you’ve spent even a year in a manufacturing company, you know that time is a luxury, and going through invoices is like sprinting inside a maze with a blindfold on.

Let's not forget that invoice processing is riddled with challenges. If the number of legal disputes over freight charges is anything to go by, it's clear there's often a big gap between what's expected and what's billed.

So you’ve got a bunch of freight settlement problems to deal with at every step of the freight settlement process.

• Invoice Generation
• Invoice Review and Verification
• Resolution of Discrepancies
• Approval and Payment
• Record-Keeping
• Audit and Compliance

All of this complexity brings up a bunch of questions:

With so many shippers and invoices, how do you ensure none gets lost in the shuffle?

• When you see an extra charge, how do you confirm if it's justified or not?
• If you disagree with a charge, what steps do you follow to resolve it?
• How do you maintain and update your freight settlement documents to ensure everything is current and correct?
• With so much to review, how do you allocate your team’s time effectively?
• How do you ensure you're not paying more than what's due?

You’ve probably thinking: we’ve been working with afreight management system for a long time already. We’ve never felt it’s broken. Should we be bothered?

Let’s find out. While we’re not saying that old school freight management systems can’ work, we’re convinced that the bigger you grow, the more vulnerable they get.

Why does that happen? Let’s find out.

Why are paper-dependent freight settlement systems problematic?

Traditional freight management systems were all we had before the age of digital tools and automation. They can still work for small and mid sized manufacturers today. But soon enough they’re destined to run into trouble.

Where Traditional Freight Management Systems Run Into Trouble

1. Human Error in Data Entry: Picture someone manually entering data into a system or filling out paperwork. Mistakes are bound to happen, right? A wrong figure here, a misspelt name there. These small errors can lead to bigger freight settlement problems like incorrect billing or misrouted shipments.
2. Lack of Real-Time Tracking: In traditional systems, tracking the progress of a shipment is like trying to track a fleet of trucks on the road without a GPS tracker. You only get updates when they stop to call you. Without real-time tracking, companies can't accurately predict arrival times or quickly respond to delays.
3. Inefficient Communication: In a logistics system, information has to pass through several people, and each time, there's a chance for miscommunication. Delays in communication can lead to invoice errors and overpayments.
4. Paper-Based Systems: Imagine piles of paper — invoices, shipment orders, delivery receipts. Not only is it easy to lose important freight settlement documents, but it's also a challenge to quickly find information when you need it. This leads to slower processing times and a higher risk of errors.
5. Inflexible to Change: Traditional systems are like a big, old ship that's slow to turn. Adapting to sudden changes in demand, transportation issues, or market fluctuations can be really tough. A process that depends on a few people and over-relies on vendors is bound to break.
6. Limited Analytics and Reporting: Traditional systems often provide limited data. This makes it difficult to analyse performance, identify trends, or make informed decisions.

By now, it’s very clear – freight settlement is complex. One of the biggest reasons for this is that the freight management itself is complicated. Too many partners, too many fleets, too many routes, too many types of products, and too much paperwork. Let’s delve on this a bit longer – too much paperwork. This is the real freight settlement problem. This is why manually controlled freight settlement processes are slow, tiresome, and prone to errors.

Why? For this, we need to understand why there’s so much paperwork in the freight management process.

Knowledge is the enemy of deceit. Don’t overpay vendors because you just don’t have the resources to verify invoices.

Which are the key freight settlement documents?

1. Bill of Lading:  This is one of the key freight settlement documents. It’s like the ID card for your shipment, detailing what's being shipped, where it's going, and how it's getting there.
2. Freight Invoices: These are critical freight settlement documents that list all charges related to the transportation of goods. Think of them as the bill at the end of a meal, itemising each cost.
3. Proof of Delivery: This freight settlement document confirms that the shipment has reached its destination. It's the final piece in the delivery puzzle, confirming that the goods have arrived as expected.
4. Rate Confirmations: These are essential freight settlement documents that outline the agreed-upon rates for transportation services.
5. Purchase Orders and Contracts:  They detail what services are being procured, under what terms, and at what cost. These documents lay the groundwork for the whole freight settlement process.
6. Load Confirmations: Part of the freight settlement documents that confirm the specifics of each load being transported, crucial for ensuring that everything is on track and as agreed.
7. Claims Documentation: This is a crucial part of the freight settlement documents, as it helps in resolving any disputes or issues that arise during transportation.

Is it any wonder, then, that manual freight settlement is such a nightmare and the hotbed of so many freight settlement problems?

What would you prefer?

This?

Or this?

But the bigger question is – how do you solve these freight management problems?

What’s the best freight settlement solution?

To effectively tackle the challenges of freight management, a technology-driven freight settlement solution is essential. Here's how such a system could revolutionise the freight settlement process:

1. Compatibility with Common Industry Platforms: It should easily fit in with the tools that shippers and brokers already use. Imagine it getting along with systems like SAP as if they were old friends.
2. Flexibility for Diverse Workflows: The system should be adaptable enough to handle the real-world complexity of any freight management process.
3. Digital Record-Keeping: The era of manual record-keeping and paper trails needs to be behind us. The system should digitally track all relevant data, and eliminate the need for physical records.
4. Smart Decision-Making Features: The system should be intelligent enough to assist in decision-making. It should make life easier for operations managers.
5. Enhanced Workflow Speed: The idea is to achieve a tenfold increase in efficiency, reducing time spent on coordinating and executing tasks.
6. User-Friendly Interface: Lastly, the system should be so intuitively designed that even partners who aren't tech-savvy can use it without any hesitation.
   

Try Traqo - A Freight Settlement Solution That Just Works

There’s no way we can claim that this part of the guide isn’t self-serving for us. What we can definitely claim, however, is that all our claims are verifiable.

We’ve seen some of the biggest names in global manufacturing put their freight settlement problems to rest with Traqo’s freight settlement solution.

Traqo is a user-friendly, cloud based, freight settlement solution made to work for any industry.

Here’s how Traqo’s freight settlement solution benefits you.

1. Keeping Track of Settlements and Audits: Traqo's system carefully monitors all the details of trips and related expenses. This means it's easier to spot and fix any billing mistakes or differences, which are common headaches in freight settlement.

2. Direct Bank Link for Quick Payments: By connecting directly with banks, Traqo speeds up the payment process. This is a big help in avoiding those usual delays in getting settlements done.

3. Ensuring Freight Settlement Document Accuracy: Every invoice and expense report goes through thorough checks. This step is vital for making sure everything is correct and secure, addressing issues like wrong billing or incomplete paperwork.

4. Secure Approval Process with OTP: For approving payments, Traqo uses a one-time password system. This adds an extra layer of security, ensuring that payments are authorised correctly and reducing the chance of mistakes.

5. Easy Upload of Invoices by Vendors: Both vendors and transporters can upload their bills and costs in the same place. This makes the whole process of managing and matching invoices a lot smoother.

6. Full Oversight for Managers: Before approving any payments, managers can look at all the relevant details like freight settlement documents, trip information, and initial checks done by Traqo. This helps them make better-informed decisions and can clear up disputes faster.

7. Efficient Settlement Process: With Traqo, settlements can be done with just a few clicks, which is a significant improvement from the days-long process it usually takes.

8. Seamless Integration with Current Systems: Traqo easily fits in with the systems and databases companies already have. This helps streamline the settlement process by using existing information.

9. Diverse Tracking Options: Traqo offers different ways to track freight, either through the driver's phone or traditional GPS. This flexibility is key for accurate billing and solving disputes.

10. Automating Trip Management: Trips are automatically set up and closed in the system, reducing the chance of human error and making this part of the job less of a hassle.

11. Thorough Audits for Funds: The system's connection with banks and its standard checks ensure every financial transaction is on point and secure, tackling issues like compliance and accuracy.

12. Incorporating Toll Information: By including toll gate data, Traqo helps in precisely tracking transportation costs, crucial for accurate freight billing.

Why do they say: "Good freight settlement is good business."

1. Keeps Your Cash Flow Healthy

Think of freight settlement like the heartbeat of your business's cash flow. When it's done right, you avoid overpaying on shipments and get billed accurately for the services you use. This means no unexpected expenses eating into your profits.

2. Builds Strong Relationships with Carriers

Good freight settlement is like the glue in your relationship with transportation carriers. When both sides agree on the costs and services without dispute, it builds trust.

3. Saves Time and Reduces Stress

Ever been caught up in a billing dispute? It's time-consuming and stressful, right? With efficient freight settlement, you cut down on these disputes.

Freight settlement problems and solutions: FAQs

Q: What are the elements of freight settlement?

Freight settlement involves invoice verification, payment processing, audit and compliance checks, dispute resolution, and record-keeping. It ensures that the transportation services provided match the agreed terms and costs

Q: What does it mean when freight charges are settled?

When freight charges are settled, it means that the payment for transportation services has been agreed upon, verified, and processed, closing the financial transaction between the shipper and the carrier.

Q: What is freight payment?

Freight payment is the process of transferring funds from the shipper to the carrier as compensation for transportation services. It's a crucial part of the freight settlement process, following the verification of invoices.

Q: What is freight management in logistics?

Freight management in logistics involves planning, organising, and overseeing the movement of goods from origin to destination. It includes selecting carriers, negotiating rates, managing shipments, and ensuring timely delivery.

Q: How can technology improve freight settlement?

Technology, such as automated software and cloud-based systems, improves freight settlement by enhancing accuracy in billing, speeding up payment processing, enabling real-time tracking, and reducing manual errors.

Q: What is the role of an audit in freight settlement?

An audit in freight settlement checks for accuracy and compliance in billing and transactions. It involves reviewing invoices, contracts, and delivery records to ensure charges align with agreed terms.

Q: How does dispute resolution work in freight settlement?

Dispute resolution in freight settlement involves addressing disagreements over invoices or service quality. It typically includes reviewing freight settlement documents, negotiating between parties, and, if necessary, involving legal or arbitration processes.

Q: What are common freight settlement problems?

Common freight settlement problems include billing discrepancies, delayed payments, inaccurate documentation, disputes over service quality, and compliance issues with transportation regulations.

Q: Can freight settlement impact customer satisfaction?

Yes, efficient freight settlement can enhance customer satisfaction by ensuring timely deliveries and accurate billing, thereby maintaining a good business reputation and trust.

Q: Why is freight settlement documentation important in freight settlement?

Freight settlement documentation is crucial as it provides proof of agreements, services rendered, and transactions made. Accurate and complete records are essential for billing, audits, and resolving any disputes that arise.