Digital ledger technology is giving companies back their Fridays

This fireside chat recap is from Wednesday’s FreightWaves Supply Chain Meets FinTech event.

FIREPLACE CHAT TOPIC: How leading freight companies are using digital ledger technology to process end-to-end payments.

DETAILS: Digital accounting technology is one of the innovations driving the fintech revolution. DLT uses independent computers (nodes) to record, exchange and synchronize transactions. In shipping, DLT can be used to speed up payment processing by making the process more transparent and reducing or even eliminating disputes.

PERFORMED: Marc Brousseau, Product Marketing Consultant, Transcard, and Paulo Fernandes, Corporate Partnerships, Global Trade, Mastercard Worldwide

BROUSSEAU BIO: Brousseau is a leader in accounts payable, accounts receivable, payments and document automation. A popular speaker at industry conferences, webinars and podcasts, Brousseau uses his 27 years in the space to advise end users and solution and service providers on how to use automation to improve document and payment driven business processes. Brousseau has chaired numerous educational conferences and served on several industry committees and boards.

FERNANDEZ BIO: Fernandez has more than 20 years of international experience in the payments industry. He is currently responsible for developing partnerships and strategies to embrace new payment streams in the freight vertical, with a focus on port ecosystems and digital freight exchanges. He has held several regional and global roles at Mastercard, leading the development of payment and data solutions for corporate, banking and government clients ranging from financial inclusion and B2B e-commerce to supply chain management, travel, rapid ACH payments and SMB support business.

See: How Digital Book Technology Is Changing Freight Payments

KEY QUOTATIONS FROM BRUSSO

“In a nutshell, the way people process their payments and manage freight is not good enough. the trucking industry is plagued by invoice disputes and lack of visibility and cash flow issues, all of which combine to create major challenges for shippers, brokers and carriers. So today we have an environment in which… approaches to automation are just not good enough.”

“Up to 70% of all accounts end in dispute. And many of these controversies involve seemingly minor issues, yes – some additional charges that were unexpected. And what happens is, in most cases, it results in a phone call, or in most cases, an email between the carrier and the shipper. And we get into this never-ending loop back and forth trying to get to the bottom of things. And the reason we have this problem is because shippers and carriers are sitting on mountains of data, but they can’t use it. And that really speaks to the fragmented path we’ve taken on automating cargo handling. We believe the solution is to use distributed ledger technology to bring shippers, carriers and brokers together. It’s evaluated in a digital end-to-end way.”

“Obviously, when you’re heading into a recession, it’s tempting to think it’s time to shut up, that it’s not the time to automate. But in many ways, it’s just the right time to rethink the way we do things and our underlying cost structure. The way most freight companies, whether shippers, brokers or carriers, have gone about automation is a mix of point solutions and closed networks that will never lead us to the end-to-end digital environment that [is needed]. What organizations need to do is rethink automation. And we believe digital ledger technology offers the right foundation for this. And if you can use this kind of technology, now you can enforce the rules. You can have this visibility when events happen in the field. You can make your money work smarter with built-in financing and payments. We believe this will be crucial. Businesses will look for ways to do more with less, and we believe that digital ledger technology is a great lever for that.”

FERNANDO’S KEY QUOTES

“One of the use cases we are working with is a large corporate shipper that was about to lose one of its key carriers mainly due to high [number of] disputes. The carrier was saying, “Look, I need to pay faster these days.” I need to reduce the number of invoice disputes I mentioned. I can’t wait for payment for 30 to 40 days because of the cash shortage, be it driver salary increase, gasoline increase, etc. the operator gets better control over my system. … Number one is the transparency of the process, and that means that at any time of the day, I can clearly see the status or the status of the invoice.”

“Distributed ledger technology [Mastercard uses] from a company called DLT Labs from Canada. And what they’re doing is essentially … taking data from IoT devices from the trucks that are driving through [the platform] and basically feed it into the data smart contract. So you have a real-time invoice. What Mastercard does is not only bring the partnership together, but it enables payment and we do what we do best, which is basically crediting one side and debiting the other side. But we are taking another step forward. What we’re doing today is we’re taking that invoice and bringing it through what we call the supply chain finance marketplace. Then we bring in a lot of financiers who can then actually finance that particular situation.”

“Friday is that day [sees the most] disputes. It’s almost like we’re giving you your Fridays back. why? Because disputes arise with high transparency, in particular for the carrier. The most important thing is the high transparency of accounts payable and thus … improving the relationship with my customers. So instead of calling on Friday and saying, “Where’s my payment?” how about calling and saying “let’s play golf or something because we’re free on fridays?”