The air is crisp, the leaves are turning and Amazon’s Prime Day is already in the books, which can mean only one thing: the holidays are nearly upon us. Between holiday gifts, greeting cards and Black Friday orders, an estimated 800 million packages are expected to be shipped during the upcoming season, marking one of the highest volumes of orders shipping companies will have ever seen around the holidays.
Given the task ahead, and when also considering ongoing worker and supply chain challenges, many shipping companies should be rethinking business as usual. With an opportunity to plan ahead and prepare for moving such a sizable quantity of packages, these organizations will want to take stock of every aspect of their operations – including the back office – to identify troubleshooting areas and openings for creating new efficiencies. A few questions to consider that will help shape a successful plan:
What accounting tools are available to shipping companies that want to better manage their back office?
Let’s start small. Many local and small-scale shipping companies use QuickBooks as their main accounting system, which means it’s likely they’re also managing their books themselves. If they’re fortunate, they may have so much business or extra capital that calling on an outside accountant makes the most sense. Even in those cases, however, these organizations routinely lean on QuickBooks and other similarly accessible systems to record and share their accounts data with a vendor.
But accessibility doesn’t always translate to best business practices. For instance, if a company has certain growth goals, such as branching out to multiple locations, or it has other business verticals outside shipping and logistics, cookie cutter accounting systems may not be enough – even when the company engages with a third-party vendor to handle its books. Larger shipping companies, and those with ambitious growth aspirations, may turn to enterprise resource planning (ERP) software solutions. NetSuite and some other name-brand ERPs may allow these organizations to get by, at least for a time.
Increasingly, though, more businesses – even some smaller-scale organizations – are embracing automation. As this practice gradually transforms from something of a novelty into the norm, more shipping and logistics business leaders are becoming aware of its benefits. Meanwhile, the remaining automation holdouts run the risk of being left behind by the competition.
How does building a stronger back office help shipping companies smooth out the impact of the holiday season rush?
Business owners in the shipping and logistics industry run exceptionally busy operations throughout the year, but never busier than during the holidays. Meanwhile, their success is based on maintaining high volumes – and not just in terms of packages moved. Many of these organizations have complementary offerings, and connecting customers with these other areas of the business requires an elevated level of service in the front office. This has a two-fold effect on back-office operations, both creating a more complex set of accounts while also limiting the amount of time an owner or supervisor can spend managing those accounts in the back office.
As a result, companies that handle their own books, as well as those that rely on legacy systems to pass on accounting data to a vendor, are constantly playing catch-up. Many shipping and logistics companies are satisfied simply to have their books settled and ready for audit by tax season. But a business leader who wants to know how their organization is operating at any given time won’t be able to access that information until after a quarter has ended – sometimes long after. And a company with aspirations to expand won’t have the necessary accounting information on hand to secure capital from a lender.
Smaller companies and many midsize businesses typically lack the resources for pricey ERP software, but some emerging automated solutions are not only more affordable but also able to provide more timely and reliable information than traditional accounting systems have proven capable of. These solutions leverage artificial intelligence to set up and manage data reporting, financial workflows and more, with the ability to provide an aggregated, holistic view across multiple verticals and locations.
Now these organizations have the solution to keep up during the holiday season. Are more customers expected during this time? Will the average customer transaction increase? Is additional staffing required to handle the holiday influx? Automated solutions help a business plan for these contingencies and, with virtually real-time reporting, adjust as necessary in the moment.
How can accounting software better help a company prepare for the future of online business and shopping following the holiday season?
Shipping and logistics companies may be fully focused on prepping for the upcoming holiday season, but their organizational timeline doesn’t end there. The holidays come around again this time next year. And what about all those months in between? And the year after that? The shipping industry never sleeps.
Which means the benefits of automated solutions come with the potential to have amplifying effects throughout the year, and indefinitely into the future. As shipping and logistics becomes a more service-oriented sector, organizational leaders need time in the front office to build relationships with customers and introduce them to other products and areas of the business. This is critical not only to growth but also to long-term survival in the industry.
Automation, then, has a cascade effect for these businesses: Owners and managers are freed up from the back office to provide a higher level of customer service. Automated accounting solutions identify profit margins sooner and more accurately than other systems, allowing a company to react (adjust product costs, negotiate with vendors, etc.) almost in real time. And automation also allows a business leader to better understand costs, targets and profits across multiple locations, empowering them to make better decisions – again, virtually in the moment.
It’s important for a shipping and logistics business leader to know that automation can help an organization run a smoother operation during the busiest season of the year. It’s invaluable for them to know that automated solutions can help their business become more efficient and profitable, both during the holidays and after the season has ended.
Sugam Pandey is the CTO and Co-Founder of Docyt, a cloud-based AI-powered financial workflow and accounting automation platform for hoteliers. Docyt makes accounting software run better. Sugam has deep expertise in software engineering, data science, security and accounting for the hospitality industry.