Digital Payments Processing: Four Strategic Benefits for Logistics Companies.

The freight and logistics (F&L) industry is confronting many pressing requirements as it deals with a difficult economic environment and the pandemic’s reverberations. Controlling costs, adapting to changing supply chains, boosting competitiveness, and taking advantage of technological advances top the agenda. It’s a difficult balancing act.

Payment processing represents one operational area offering opportunity to help meet these priorities. Reliance on manual and inefficient procedures is still associated with payment to drivers and employees, as well as for trade invoices, delivery settlements, refunds and other transactions. Fortunately, effective new digital payment solutions are available to alleviate this problem.

This article highlights four strategic benefits that logistics firms can generate using the right solution for payroll payments.

Cost savings and operational efficiencies

F&L payroll payments typically involve multiple steps and frequent delays with truckers on the road for long stretches. Lack of automation, high volumes, backlogs, and use of paper checks are prevalent. The upshot is staff productivity loss and added cost burden in a tight margin business.

Solutions such as PreferPay® from CommercePayments® assume complete life cycle management of a company’s payments to its drivers and other employees. Automation streamlines the process for all by accepting a payment request from the carrier’s financial system, communicating electronically with the driver, issuing payment according to recipient preference, and returning information to the carrier system for reconciliation. Multiple payments and supporting documentation can be automatically batched to generate additional efficiencies, and any check escheatment issues that arise are handled by the bank. This end-to-end solution saves time and frees staff to concentrate on non-routine work.

Choice and convenience for payment recipients

People today expect choice, speed, and convenience in their financial transactions. Mobile digital payments are growing in use, propelling a technology market increase of 16% compounded annually.¹ Real-time payments are forecasted to grow 30% a year through 2030.²

A contemporary digital platform enables F&L drivers and other employees to select from his or her preferred method of payment to accelerate the receipt of funds: direct to debit card or direct deposit. Paper checks can also be issued from the system. Users access the software on computers or smartphones without requirement to create and manage an account, username or password. These features remove friction from the process and improve the financial experience for all.

Enhanced competitiveness through flexibility and resilience

Market shifts are creating new demands on logistics firms. A recent report described a “rapidly changing logistics environment” in which carriers and shippers “need to think more collaboratively and proactively.”³

The report further notes that today’s supply chains are not emphasizing just cost reduction. Instead, “a new value has taken hold – resilience,” involving “trade-offs among core priorities such as speed, service, optionality, and savings.”

Digital, real-time payroll payments automation helps build just such resilience and agility. Companies gain new levels of flexibility unavailable when manual, paper-heavy processes dominate. Their staffs can be focused on more strategic work. Software configuration options let firms adapt to the particular needs of their stakeholders. Each of these outcomes builds competitive strength.

So does workforce satisfaction. As in many industries, F&L faces shortages and a competitive market for drivers and other talent. A solution like PreferPay® can bolster recruitment and retention by offering highly convenient payroll payments. The platform can also support an option seeing increasing use. Earned Wage Access programs allow on-demand pay upon completion of work or a project. It is not a loan or advance pay. Surveys suggest that 21% of American workers would like to access wages as earned, while 20% of companies with largely hourly workforces are expected to offer the program by the end of 2023.⁴

Contribution to digital transformation

F&L is overdue for investment in technologies that aim to transform supply chain management. An Accenture study found that over three-quarters of surveyed leaders believe the industry has “historically lagged behind in digitalization maturity,” and 72% say most carriers lack “a roadmap in terms of what needs to be done.”⁵ They also overwhelmingly (76%) said companies failing to build strong digital capabilities “will seriously endanger their business” in the face of burgeoning competition from “e-commerce giants, whose agile, streamlined, customer-friendly and cost-competitive logistics are setting the benchmark.”⁶

Digital payment solutions for payroll and other volume transactions provide a key link in the transformation chain by powering financial automation efforts and the move away from paper-filled transactions. The fact that they are relatively easy to implement makes them strong candidates for early adoption.

The right digital payroll payments platform not only delivers returns in the near term, it also serves as a foundation on which to build numerous future offerings that benefit drivers, employers, and other supply chain constituents. Realize the competitive edge your business can gain with PreferPay® by visiting our website and requesting a demonstration.

Also See:

• Automation is trendy
• Integrated Banking and Payment Solutions from Commerce Bank

CommercePayments® solutions are provided by Commerce Bank.