The Promise And Pitfalls Of Invoice Intelligence

Post written by

Shannon Vaillancourt

President and Founder of RateLinx, transforming supply chain management by providing customized, integrated data services and consulting.

Automated invoice management has opened the door to a new way of thinking about freight payment. Gone are the rows of clerks processing and auditing freight bills by hand. Automation relieves the staff of their routine tasks and allows them to focus on more strategic endeavors.

With invoice intelligence, companies can resolve a full range of problems and manage their supply chain more strategically. Logistics managers shift from making sure the freight bills are paid on time to using the intelligence for better decision making.

The Promise Of Automated Invoice Management

Automated invoice management is evolving the freight invoice process with the intent of leveraging the information into something greater -- intelligence to make better decisions. It is a natural enhancement to the traditional freight audit function, which collects the necessary information to determine if the invoice should be paid. Traditional questions may include: Is the amount correct? Or is it at least within a rate tolerance deemed acceptable by the shipper? Automation takes this to a higher level.

By taking a more intelligent approach, the task of freight audit is transformed from a tactical payment function to a highly valuable, strategic initiative. For this transformation to occur, the rate tolerance is removed. Then, the system captures additional shipment information that may not affect the rate but can be used to deliver business intelligence to the shipper. This information can include the type of service selected, route selected, company or customer location details, etc.

Beware Of The Pitfalls

These additional data points -- or attributes -- are collected and stored by the invoice management software. Having access to these aggregated attributes is interesting, but this is not where the real intelligence lies. The more insightful intelligence is created when the software matches invoice attributes to order, shipping and tracking attributes generated by other systems.

There is a practical challenge when matching data generated by different sources with different objectives. For example, the shipper is looking for intelligence from the invoice, but the carrier created the invoice. The carrier’s invoicing solution is focused only on one objective: generating an invoice to get paid. Their system does not fulfill the shipper’s desire for intelligence. The burden falls to the shipper to select an invoice management system that provides additional shipment insights to make future decisions with confidence.

There are many aspects of intelligence that benefit the shipper. Perhaps the most valuable benefit is eliminating the rate tolerance, which creates an accurate baseline of how the company is currently operating. The potential pitfall occurs when the shipper relies on “intelligence” based on inaccurate or incomplete data and projects future cost savings strategies that never come to fruition.

Practical Insights Solve Problems

With invoice intelligence, the shipper has access to both practical details and strategic insights to better manage logistics. Here are just three examples of how invoice intelligence can help solve everyday problems.

• Optimal routing: With additional attributes, a shipper can now use the data to determine if the optimal carrier was used for the given shipment.

• Improved carrier relationships: The additional attributes could show how to improve a tender process that never fully works, leading to less frustration on both sides and naturally improving relationships. For example, the additional attributes might show chronic detention charges result from a broken transport management system (TMS) tendering process. Once the error is resolved, the new process reduces frustration on both sides, improving the relationship.

• Better freight forecasting and budgeting: The use of invoice intelligence when implementing new rates with carriers, combined with a zero-dollar rate tolerance, leads to faster issue resolution and more accurate forecasting.

What To Ask Before Implementing Automated Invoice Management

The advantages of using intelligence gathered from automated freight invoice management are clear, but it is important to select the right system for your company. Consider the following five questions when looking to select an intelligent invoice management system:

• Implementation complexity: How long will it take to turn on the solution, and what level of internal IT resources is required?

• Timeliness of data: Does the solution provide data and insights in a timely manner to make key decisions in real-time?

• Scalability of the data: Is there a limit to the amount of data -- or the different attribute types -- that can be stored?

• Analytics: Does the system already have a robust analytics package or do you have to start from scratch?

• Collaboration: Does the provider understand your specific business needs through a collaborative approach?

When you are satisfied with the answers to these questions, you can be confident you will be able to move forward with the solution that offers valuable invoice intelligence to improve your supply chain management.


President and Founder of RateLinx, transforming supply chain management by providing customized, integrated data services and consulting....