More accurate accruals
Shipments rated
Value rated

Accurately accruing costs for shipments is one of the biggest challenges for shippers of all sizes. To produce accurate accruals, there are a lot of moving parts but VTM’s expertise and tools can help simplify the process and drive better, more accurate results.

In this success story, we explore how VTM:

  • Approaches integrating data from a shipper’s ERP or TMS system

  • Uses real rate tariffs/agreements to rate shipment data

  • Leverages analytics tools to create insights from the accrual data

The Challenge

A national shipper of industrial supplies and materials asked VTM how to get better access and visibility into their expected freight costs before the invoice was received and processed.

Further complicating their challenges, there were many new team members on the shipper’s finance and logistics teams, so a lack of institutional knowledge meant they needed extra flexibility in the design process to ensure it evolved as they learned their business.

In an increasing rate environment, they were facing several critical challenges that more timely and accurate accruals helped address:

  • The need for reliable data for the finance team to forecast cash flow and demands

  • The need for management to identify carrier-level trends as soon as possible

  • The need to drive process improvements, like always selecting the least cost carrier when possible, and measure the impact when the least cost carrier is not selected

Impact on the whole team

Before working with VTM, lack of visibility and insights into shipment costs at the front-end of the process had broad impacts across the entire organization.

Logistics managers found out about a least cost carrier opportunity costs only after invoices were paid, leading to millions in potential savings by simply using the right carrier for the shipment.

Finance managers were constantly surprised with fluctuating demand for cash to pay carriers, often leading to payment delays while the team sorted it out.

Historically, the accounting team’s accruals used a basic average shipment cost multiplied by the number of shipments formula, so naturally it ignored lane-specific rates and the profile of products shipped (ex: multiple LTL FAK classes), leading to major over and under accruals each month.

The Process & Solution

VTM’s unique approach to understanding a shipper’s needs and customizing a solution to address those needs came into play here. Though the shipper was able to mostly leverage our tools out of the box, there were several key elements that needed to be flexible in order to accommodate the shipper’s key stakeholders and business process workflow. The VTM approach to delivering on these customizations include:

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