How to Optimize Logistics Business For Greater Control of Cash Flow

 

Since the logistics and freight industry mostly runs on credit, complete payments can take days or even weeks to be fulfilled. While you may be patient and trusting of your debtors but you too have bills, maintenance, and salaries to contend with. Along with these scheduled and known payments, you also need to have a buffer of cash flow to handle unforeseen situations like strikes and seasonal demands to take care of.

If cash flow is not managed well, it can disrupt your operations and start hurting your revenue. In a recent survey by Softlink Global, we found that 60 percent of owners and managers of businesses that were growing indicated that - cash flow is a barrier to their growth. 

SME owners indeed run a tight ship, therefore, having a larger cushion of liquidity becomes crucial. With well-worked processes and supporting logistics management software, businesses can get firm control of their cash flow and finances.

Bring accuracy to your billing

Every day many logistics businesses lose time and money from manually entering incorrect details in bills and invoices. This can be easily avoided by capturing details from the time of initiation of the charges into the system.

Freight management solutions created a master ledger of all charges required for processing. Brokerage freight, commission, taxes are some of the charges that are mentioned in various bills and invoices. Software stores all of these in a master sheet and auto-picks them in the invoices and other documents to be generated.

Even your fixed and variable costs can, thus, be captured accurately. When there are reduced manual data entries, errors can be avoided too. 

Disseminate information across the organization

When you start expanding, one of the first things you would like to tend to is keeping all teams on the same page. Information not reaching on time is equivalent to no information. 

In today's digital age, one would expect information to be accurate, timely, and clear. Demurrage and Detention charges can gather up to 20 times the value of the container itself. Reasons for such lapses can range from lack of documentation to miscommunication. 

This additional cost of the shipment may have to be borne by you, the carrier, or the customer, depending on the contract terms. The inclusion of such surprise charges put a dent in your cash flow, not to mention the ire of the customer. Real-time dissemination of data, shipment status, and other information across your organization helps avoid unnecessary costs and keeps your financials healthy.

Managing Credit and Optimizing resources

Some freight forwarders make use of multiple resources, which may not be their own, to conduct their business. This may be a good strategy to keep more cash handy in a seasonal slack in business. But your bills won't stop coming, will they? That is the reason you must maximize the use of your assets whether owned or leased.

Spreadsheets and isolated systems won't tell you your opportunities and further how you could grab them. An integrated cloud freight management software like Logi-Sys brings all your functions and data onto a centrally accessible platform. It allows you to map your opportunities with the resources at hand. Some of the capabilities include:

• Forecasting an increase or decrease in demand
• Identifying the most profitable/in-demand routes
• Assigning and limiting credit to your customers
• Managing roller coaster freight volumes and rates

With a smart freight system, you can bring more liquidity to your company and manage credit and cash flow in demanding situations.

Summary

Sometimes it is not a huge cost that causes a crater in your revenue but multiple smaller costs that add up. Using proven logistics software and agile processes, attain control of your company's cash flow and continue to grow.