In the arena of freight transportation, shippers and carriers should ideally be on the same team — and the settlement process can be a game-changer. Just as a well-coordinated team with a strategic game plan dominates the field, a well-executed, efficient, and effective settlement process allows shippers and carriers to collaborate seamlessly, driving toward a shared victory. This winning dynamic not only puts the shipper at a competitive advantage but also empowers carriers to excel and deliver exceptional service.
As a shipper, it is important to understand that the settlement process is a crucial aspect that can make or break your relationship with carriers, and for everyone to come out a winner, it needs to be a priority in any game plan. Effective settlement can create a winning situation for both shippers and carriers putting the shipper at a competitive advantage. On the other hand, a bad settlement process can lead to miscommunication, discontented team members, and missed opportunities for success — which for shippers can bring more expensive transportation costs and refusal of services.
In short, an efficient and punctual payment process for carriers enhances the reputation of shippers, enabling them to forge a winning partnership that leads to enhanced service, favorable rates, and a reputation that shines brightly in the competitive arena of the freight industry.
So for those who have already completed the steps in parts 1 and 2 of our guide that outline the best practices to keep in mind when you start settlement within Shipwell and the steps to ensure a smooth onboarding process, here are the final seven tips to include in your settlement playbook on how to make the process a winning experience for both you and your carriers:
1. Set expectations:
Setting expectations from the beginning of the project is a key aspect of any successful relationship. This means providing the what, when, and how of settlement. The ‘what’ meaning what settlement documentation is needed. The ‘when’ meaning when the documentation is needed and when payment will occur. The ‘how’ meaning how financial adjustment during shipment shall be communicated and approved, how settlement documentation should be delivered, how it will be evaluated, and how any disputes will be handled. Setting expectations from the beginning will align parties and set healthy expectations throughout the process.
2. Establish and share metrics
Shippers have proven success when they establish metrics to track settlement performance and share updates consistently with internal and external stakeholders. Suggested metrics are:
- Straight Through Processing % by Mode: Percentage of loads where the total freight charges in the Shipwell load matches the carrier’s invoice by mode without the need for any further adjustment — For example, a Full Truck Load target of 95% is widely used.
- Invoice Exception Resolution Time: Time between when an invoice comes in with an exception and when it is reviewed and resolved — Suggested target: 72 hours.
- Percentage of Loads with Invoices: Percentage of loads marked delivered where a carrier posted an invoice — Suggested target of 95%
- Invoice Posting Cycle Time: Cycle time between the load being marked delivered and an invoice being posted — Suggested target of 3-5 business days.
3. Pay on time
Timely payment is essential for carriers. Shippers should make every effort to pay carriers on time, as per the agreed-upon terms. Delayed payment can not only cause financial strain for carriers but can also damage the relationship between shippers and carriers. If a delay may happen, then a shipper should be proactive in communicating this delay.
4. Offer incentives
Offering incentives such as prompt payment incentives can motivate carriers to provide better service and better pricing.
5. Establish an efficient and proactive settlement process:
Having an efficient and proactive settlement process reduces the risk of items falling through the cracks and unneeded payment delays. This settlement process should be focused on efficiently and accurately identifying items and instances where carrier follow-up is needed.
6. Provide feedback
Shippers should provide feedback to carriers on their performance. This includes positive feedback along with improvement opportunities. This can help carriers improve their service and build a mutually beneficial long-term relationship with shippers.
7. Communicate effectively
Communication is pivotal to a successful freight settlement process. Communicating effectively starts with setting expectations. Dispute resolution is a key area where clear communication can reduce friction and save time. Communicating effectively includes being timely and proactive when issues arise. Shippers should pay special attention to providing clear communication about payment and ensuring transparency should any issues arise.
In conclusion, a situation where both shippers and carriers come out as winners is born out by setting expectations, establishing and sharing metrics, paying on time, offering incentives, having an efficient and effective settlement process, providing feedback, communicating effectively, and building a relationship. By following this playbook, shippers can benefit from better service, more favorable rates, and a more positive reputation for shippers in the freight industry.
Shipwell helps our customers hit their mark on all seven of the plays in the settlement playbook with an operationally efficient and easy-to-use settlement experience. So if you’re looking to lead your team to victory, don’t settle for a poor settlement experience — reach out to Shipwell to learn how we can help guide you toward success.
If you are already a Shipwell customer, speak with your Customer Success Manager to learn more about how Shipwell can help you create settlement experiences that see both you and your carriers come out as winners.
For those who aren’t yet a Shipwell customer but are looking to enhance your settlement process to maximize your operational efficiency and effectiveness, fill out the form below or reach out to us today at email@example.com
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