Liner Cost Management

According to Aberdeen Research, a typical accounts payable user processes about 20 invoices per day. Considering the loaded cost of these workers — plus ancillary costs of managing the associated manual processes — each invoice costs an average of US$11 to process and takes about 16 days. For a company receiving hundreds of thousands of invoices each year, that's a substantial annual line item.

Approximately 22% of vendors offer early-payment discounts. But many organisations aren't operationally organised enough to take advantage of them. The result: lost discount opportunities, late penalties, and AP staff falling behind on increasingly complex workloads.

When AP is not integrated with operational systems used to verify the vendor services actually rendered, the failure modes compound — and they all hit the financial close.

Research by The Hackett Group has found that top-performing companies process a higher percentage of vendor invoices electronically than their peers. The Aberdeen Group found that more than half of organisations now consider AP a strategic function — not a clerical one. The Institute of Management and Administration (IOMA) identifies the major drivers of AP automation as large transaction volumes, pressures to reduce costs, and impact on cash flow and operating budget.

These pressures don't sit only inside AP. They run through the entire procure-to-pay and order-to-cash cycle. What makes automated AP a practical reality today is not just functioning technology — it's the broader value that comes from automating any number of processes throughout the procure-to-pay cycle on the same integrated platform.

To achieve real automation in cost management, a carrier needs a solution that addresses several specific capabilities. The right system reduces manual processing while extending strategic AP capabilities to operations.

With the extreme pressure on bottom lines, shipping lines are now managing costs and vendors more efficiently. Over the last 5+ years, the role of AP at all enterprise levels has changed dramatically. Specifically, AP used to be a cost centre processing and reviewing transactions, coordinating with departments, responding to inquiries, reconciling accounts, and performing paperwork.

Now, AP plays a larger support role — helping control, coordinate and analyse key business processes. The function has become more visible within the organisation, with main responsibilities now in quality assurance, contract and policy compliance, reporting and analysis. This shift comes at a cost of increased workload and responsibility.

To deal with that, AP departments need to redeploy their skilled knowledge workers from back-office administrative tasks — invoice processing — to more business-critical management activities. The way to do that is to automate as much of the underlying process as the technology allows.

SVM CVP (Cost and Vendor Payment System) is Solverminds' activity-based cost report and control platform. It automates, regulates and processes vendor invoices. The system uses user-defined location/terminal-based operation activities to validate vendor invoice charging rates against contracts, and computes operation cost estimates from agency reporting of loading and discharging quantities.

SVM CVP helps agency users automate the computation of operation cost to produce disbursement for submission to the line AP department in a timely manner. Principals' AP department users gain real-time access to operation cost — disbursement and expense reports — allowing early detection of any extra cost incurred. When vendor invoices are registered or electronically uploaded, the invoice-matching function identifies any mismatched charge items for easy dispute processing. The result is effective cost-control management and improved productivity at both ends of the principal–agency relationship.