The picture of efficiency

Cash is the lifeblood of your business. To boost profits, smart managers look for new revenue-producing and cost-cutting strategies. As many inexperienced business owners learn the hard way, however, profit does not necessarily equal cash. To maintain healthy cash flow, you must manage days sales outstanding, or DSO, which is the average time, measured in days, your customers pay after you deliver their loads. Often, managers focus strictly on the period between sending the invoice and receiving payment. But too few carriers truly manage the period between delivering the load and sending the invoice.

Every day that passes from when you deliver a load to when the customer receives your invoice is another day before you get paid. Accelerating bill presentment requires eliminating bottlenecks and delays in the invoicing process caused by pushing paperwork around. For many carriers, document imaging and workflow systems are the solutions to faster and more efficient bill presentment.

“Our goal is to invoice the customer the day after delivering,” says Tom Connard, president of Florida Express Carriers Inc., a 200-truck carrier in Jacksonville, Fla. Connard says the company cut seven days from DSO and mails about 70 percent of its invoices the next day by using TripPak Online, a system that combines overnight document delivery and outsourced imaging/workflow services.

Besides faster bill presentment, imaging and workflow systems can increase productivity and reduce labor costs, thus enabling companies to shrink overhead or to add trucks without incurring additional overhead.

Speeding delivery
Generally, the longest delay in the billing process is getting paperwork to the office. Carriers that don’t understand the dynamics of cash flow often just wait until drivers return home or to another terminal to obtain documentation. That practice means you might not see paperwork for a week or more.

The most basic way to address this problem is to use an overnight or two-day delivery service such as FedEx, United Parcel Service or Truckload Management Inc.’s TripPak Express. If you do nothing else but cut your paperwork delivery from seven days to one or two, you have made major strides in speeding your cash flow. Indeed, many very small trucking companies may not need a solution any more sophisticated than this.

Scanning documents from terminals and remote locations is another approach for speedier document delivery. Quality Distribution, a tank carrier based in Tampa, Fla., and operating 3,300 trucks, has scanners at all terminal and tank wash locations. Drivers scan their own paperwork and Quality Distribution manages it using Transflo, a commercial imaging and workflow system from Pegasus TransTech.

“In the old days, the driver would fax or mail paperwork back to the terminal or even hold on to it and deliver it himself,” says Keith Margelowsky, senior vice president of performance planning for Quality Distribution. The carrier found that paperwork arrived up to six days after loads were delivered. When paperwork arrived, staff would spend at least another day opening, copying and filing. The carrier now mails its invoices typically in less than three days after loads are delivered – an overall improvement anywhere between 5 and 10 days, Margelowsky says.

For drivers, the system is simple. They gather trip documents together, fill in their trip number on an indexing sheet and feed documents through a scanner. The indexing sheet is scanned first, followed by the shipping documents. This process eliminates the need for a scanning clerk at the terminal site. Drivers can also scan documents in at Pilot Truck Stops, as Pegasus TransTech has scanning services available for drivers behind the cashier counter.

Instead of routing scanned documents to a central location, some carriers may choose to process invoices separately at two or more terminal locations. One reason may be to give independent contractors their settlement checks on the spot rather than wait for the central office to process their paperwork. In this scenario, imaging systems help companies move paperwork back and forth between terminals at the click of a mouse.

TMI’s TripPak Online combines the advantages of overnight document delivery and imaging. TripPak Online subscribers have drivers send paperwork to TMI, which opens, scans and indexes the paperwork from drivers’ trip envelopes and routes the images, through a secure, high-speed connection to the fleets by the next morning.

Simplifying paperwork
Because getting documents to the billing department faster doesn’t require document imaging, the true benefits of imaging lie elsewhere. Imaging creates efficiency by consolidating other processes, such as copying, sorting, filing and pushing paperwork from one person to another.

“Our goals of imaging were to improve productivity, lower DSO and find and organize paperwork,” says Gary Weilheimer, senior vice president of finance and technology of American Trans-Freight LLC, an 800-truck carrier based in Morrisville, Pa.

Using imaging effectively requires an indexing system that makes it easy to search digital files. McGriff Industries, a 200-truck carrier based in Cullman, Ala., uses an imaging system offered by McLeod Software. Using a digital scanner and desktop computer, a McGriff clerk batches, scans and indexes bills of lading and other shipping receipts by manually typing in a reference number, which is the trip number at McGriff.

Some fleets use an automated indexing process to save more time and money. Many companies have drivers place barcode stickers on paperwork or pre-print barcodes on proof of delivery documents. Scanners read the barcodes and automatically index the documents. Companies can also buy advanced scanners and software with optical character recognition and form recognition technology for automatic indexing.

In addition to offering faster indexing, suppliers of imaging systems have created ways to speed entry of key data – such as weight and other accessorial charges – from shipping documents into the billing system. Microdea Inc.’s Synergize Imaging product uses a dual monitor card, which enables a single PC to run two applications at once on two separate monitors. On the left screen, billing clerks see the scanned documents. On the right screen is their accounting software. Clerks read and input information from the shipping documents, such as the bill of lading, directly into the invoice.

“Any time anybody has extra time, we have them jump into the queue and type some bills,” says Rav Lal, director of finance and IT systems at Hi-Way 9 Express Ltd, a 120-truck LTL carrier in Drumheller, Alberta, Canada. “We reduced our staff by two people and even when we had two people off sick we were able to click along without missing a beat.” Hi-Way 9 Express uses the Microdea product together with Maddocks Software’s TruckMate enterprise suite.

The power of integration
After using document imaging for more than a year, American Trans-Freight moved to phase two -adding workflow software to fully integrate imaging with the company’s dispatch and management software. In American Trans-Freight’s case, McLeod Software is the provider for both the document imaging system and the dispatch and management software.

“We added workflow to improve productivity, provide cross training and utilize the imaging system the way it was supposed to be,” Weilheimer says.

Workflow is a software engine that automatically routes documents to the next stage of the business process based on the company’s rules. Once images are scanned and indexed, workflow speeds business processes by managing document flow to appropriate office personnel: vehicle inspection reports to the safety director; driver cash receipts to accounts payable, etc.

Workflow systems are also customizable to match the document printing requirements for each customer. One customer may only want a bill of lading with the invoice, while others may want a bill of lading and certificate of analysis.

“For customers that don’t need [paperwork], they don’t get it. Some customers do EDI billing,” says Steve McCormick, director of information services at Cornhusker Motor Freight Lines, a 350-truck carrier in Omaha, Neb. Cornhusker uses the Transflo imaging and workflow system from Pegasus TransTech together with TMW Systems’ TL 2000 enterprise software.

Other uses of workflow software include management tools to measure employee productivity and to track billing statistics, such as cost per billing. Managers can truly measure the amount of work that needs to be done each day and not just gaze at the height of the paperwork on someone’s office desk. The greatest benefit of workflow software lies in integrating data with your management and dispatch software.

“The true benefits of imaging are the integration opportunities,” says Florida Express Carriers’ Connard. Dispatchers, for example, can have instant access to archived shipping documents through their dispatch module and can answer shippers’ billing questions with the customer on the phone. Florida Express also uses TMW’s TL 2000 enterprise software suite together with TMI’s TripPak Online.

Some managers may view imaging and workflow systems as a means to reduce the number of office personnel. Another benefit is the ability to grow your operation without expanding overhead.
“We’ve added 80 trucks without adding office personnel,” says Cornhusker’s McCormick. American Trans-Freight noticed the same benefit. The imaging and workflow system enabled the carrier to “layer more business without adding administrative staff,” Weilheimer says. “We did it for growth. That’s our difference with other carriers. We’re not looking to reduce overhead but to get more contribution from overhead.”

Virtual benefits
Once imaging and workflow systems are up and running, the next step for many carriers is to bring imaging to the Internet. American Trans-Freight is nearing the completion of this “phase three” process, Weilheimer says. Giving customers instant access to shipping documents on the company’s website, he says, will speed up the collections process. Instead of calling and asking American Trans-Freight to send another copy of the bill of lading or POD, customers can download the documents directly from the website.

At Quality Distribution, having online tools cuts out delays in the collections process from misfiled or missing paperwork. “If I have a collection problem, I can e-mail a document or I can say ‘here’s the trip number. Go on the website find it yourself,'” says Quality Distribution’s Margelowsky. “Imaging gives carriers a better mouse trap.” As a tank carrier, having billing documents online is especially useful since the company generates many accessorial charges and extra paperwork, he says.

Getting customers to visit your website to download shipping documents or accepting an e-mail invoice with document attachments may take some training. Some may never accept a scanned document in lieu of the original. As any fleet manager knows, what is most convenient for the carrier does not always square with the customers’ wants.

“We service the needs of the shipper and consignee,” Weiheimer says. “When we’re setting up new accounts, we see if they’re Internet enabled and if they want a paper invoice or not.” Besides reducing customer inquiries, American Trans-Freight’s website will reduce calls from drivers about settlement issues. The website will include password-protected accounts for drivers to view images of settlements.

“It gives drivers the ability to go back and see information. And another thing – it gives the wives access,” Weilheimer says. “(The website) will speed up the process of taking phone calls from drivers, sales agents and motor carriers. Inquiries can be made online instead of creating a bottleneck in our office. That eliminates the first question, and they call us if they have further questions.”

Truly a value?
If you can handle billing and collections with one or two employees – who may have other duties as well – imaging may be an investment you can live without. From a workload standpoint, document imaging and workflow systems appear to benefit carriers that are at or near an administrative breaking point. Regardless of size, however, improving cash flow and profits, is a high priority. And even if imaging and workflow systems do not make sense now, the more you grow, the more likely that it will. Whether you have 10 trucks or 1,000, paperwork is a real burden and cost.

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Truckload Management Inc.(
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Should you play host?
One decision facing carriers shopping for imaging solutions is whether to buy an in-house system or use an application service provider model. In general, the main difference between the two choices is whether you want to buy storage space upfront or pay for storage as you go.

“What they’d be saving by going to an ASP is eliminating the storage unit,” says Adel Harike, manager of the imaging department at McLeod Software. The storage “unit” typically consists of a PC and a digital jukebox – a file server with a robotic arm that manages the storage onto optical disks. These items, along with the software that allow the PC’s driver and the digital jukebox to communicate, cost about $13,000, Harike says. Instead of a digital jukebox, companies can buy a CD-Rom and archive images. Typically, ASP models require a carrier to buy a scanner and PC, which together cost about $6,000, Harike says.

In the ASP model, carriers pay a fee based on the number of pages scanned, though some services charge by document type instead. The carrier scans images at their workstation and sends files through a broadband connection to a remote server operated by the ASP. Images can then be retrieved instantly on demand. Another cost consideration is workflow software, which you may have to buy even if you choose an ASP version of document imaging. The workflow software is typically the largest expense.

“In principle, [in-house systems] are typically pretty expensive for a single station,” says Collin Ruskin, vice president of business development at Microdea, a provider of imaging and workflow solutions. “Normally, an entry station is feasible, cost-wise, for a company with about 50 to 60 trucks or 85 to 100 trucks if they’re LTL.”

Another consideration is how much you plan on scanning. For anything to do with billing, scanning represents an improvement in cash flow, and is thus a high-return area. But paying someone else to store your driver applications or maintenance records is a low-return area. Having an in-house system allows you to do both with virtually no extra costs over time, says Steve McCormick, director of information services at Cornhusker Motor Lines, a 350-truck carrier in Omaha, Neb.

“The big reason we went in house is so we could store more. With an ASP, you’re paying per document. You’re unable to do marginal return areas – like logbooks, etc. Buying an in-house system encourages us to do more for less.”