With margins already tight and operational costs continuing to rise across the fuel and energy distribution sector, businesses can ill afford the hidden cost of late payments or lost invoices. FleetGO (formerly DreamTec) offers an automated invoicing system that solves a major operational and financial headache, while integrating seamlessly with your ERP.
Find out how to break free from paper-based invoicing and take the slack out of your billing cycle.
- What is the problem with payments?
- What are the main causes of delays?
- What are the consequences of late payments?
- How FleetGO speeds up your billing cycle
- Request a demo
What is the problem with payments?
It is a harsh irony that the very industry responsible for keeping fuel flowing to countless businesses and homes is itself constrained in terms of cash flow by the strain of late payments. Research by Billabex shows that the average Days Sales Outstanding (DSO) in US logistics, for example, is 52 days. In a challenging economic climate, the trend is moving towards even longer DSO timelines.
Similarly, Dun & Bradstreet figures from 2022 show that local distribution companies are among the hardest hit by late payments, with only 47% paid within the current billing period and 6.8% paid 90 days late or more. The risk is that what begins as a recurring issue gradually becomes accepted as standard practice.
But while the phrase “late payments” may imply bad faith or poor business practices on the part of the customer, it is important not to jump to conclusions. In many cases, the fuel distributor is partly to blame, particularly when relying on conventional paper-based invoicing, which is no longer aligned with a sector characterised by price volatility and currency fluctuations in cross-border deliveries. Add human error to the mix, and the result is confusion.
In many cases, customers are ready and willing to pay, but simply do not have the correct invoice in hand. Manual back-and-forth to reconcile figures extends the timeline further, putting additional pressure on the already thin margins within which most fuel distributors operate.
Whatever the root cause, when payments are late and invoicing becomes bottlenecked, businesses find themselves dangerously exposed, with increasingly large sums tied up in accounts receivable. Many are then forced to seek financing to support cash flow, which further impacts profitability.
What are the main causes of delays?
Payment chains can already be complex in larger organisations, but where manual processing is the default, progress slows even further. In LPG and fuel distribution, there is also an accompanying trail of safety, logistics and compliance documentation to track for each delivery, meaning several stakeholders or departments may be involved in a single order.
With each step, the complexity and time to resolution increase, errors creep in, and delays accumulate. With digital invoicing, the ERP can extract valuable data from every transaction to support business forecasting and reporting. In a manual system, however, even that advantage may be lost.
Distributors often fall short when it comes to giving clients everything they need to make timely and accurate payments. While some customers will inevitably push payment terms to the limit to support their own cash flow goals, bloated billing cycles typically occur for the following reasons:
Disputes over total cost
This may be caused by a difference between the volume ordered and the volume delivered, or because rates have been calculated according to an unexpected fuel tariff or currency rate.
Accessorial charges
The distributor may have applied supplementary fees to cover waiting time or other penalties. Even when all additional charges are itemised on the Bill of Lading, the customer may still dispute them.
Invoicing errors
A recent study found that for 15.1% of invoices transacted in Europe, incorrect information was a reason for delay. Other studies place the error rate in manually generated invoices at a consistent 25%, occasionally reaching as high as 55%. These may include careless human errors, such as an incorrect billing address stored in the system, or failure to apply agreed discounts because data is siloed between sales and treasury departments. These discrepancies do not just delay the billing cycle; they can also have consequences for tax compliance.
Missing paperwork
The driver may hand over the printed Bill of Lading and Proof of Delivery to the customer, but each document may then pass through several hands before reaching accounts payable. At the delivery site, it only takes one missed handover between shifts for vital paperwork to go missing.
What are the consequences of late payments?
The most obvious effect of overextended billing cycles is reduced cash flow, which in smaller companies may even lead to difficulty making payroll, with knock-on effects for driver retention.
But for businesses of any size, late payments represent an additional and unnecessary cost that erodes already tight margins.
There is the employee cost of chasing overdue payments. There is the processing cost of correcting errors, estimated at an additional 20% according to research by Resolve. There is the potential legal cost of pursuing late payments through the courts. And there is the less tangible cost that invoice disputes place on customer relationships, business reputation and employee satisfaction.
Regulation to the rescue?
Businesses cannot yet rely on regulation alone to resolve the issue. Under EU law, electronic invoicing is currently mandatory only for public administration, and will not come into effect for private businesses until 2028. Existing late-payment directives are not robust enough either. The European Commission published a proposal in 2023 to limit payment terms to 30 days, but this would not apply where one of the contracted parties is outside a member state.
How FleetGO speeds up your billing cycle
FleetGO enables your business to bypass delays with a paperless invoicing system that integrates seamlessly with your existing ERP and accounting software.
How it works
- Using their handheld tablet connected to the in-cab dashboard, the driver completes the fuel delivery. The meter, not the driver, populates the invoice and prints a ticket based on the meter reading, reflecting the fuel delivered rather than the fuel ordered. This enables highly accurate billing and eliminates the need for credit notes. If it is a priced ticket and the delivered quantity changes, a price matrix system can adjust the price accordingly or be instructed to accept the original price regardless.
- The driver hands the printed single-part ticket with the meter reading, as required by law, to the customer and signs the delivery ticket on the tablet device. The driver leaves the site without needing to retain any paper copies. If the delivery is unattended, the driver can sign on behalf of the process where required.
- A PDF electronic copy of the ticket or POD is generated and sent immediately to the business ERP, with all transaction information recorded and ready for posting in the sales ledger. An electronic link is also created in the ERP to the signed delivery ticket for future retrieval and distribution.
- The finance team can issue an invoice immediately, or the invoice can be generated automatically through workflow automation, with the signed POD attached.
Problem solved
- Accounts receivable no longer has to wait for drivers to return completed dockets
- Drivers spend minimal time at the delivery site handling paperwork
- Full compliance with meter ticket requirements at the point of delivery through a single-printer solution
- No need for drivers to calculate fuel costs manually; this is done automatically
- All adjustments or additional fees can be captured through the handheld device
- Customers avoid unexpected billing surprises and can better forecast fuel purchases
- Signed PODs are digitally archived for instant retrieval whenever needed
Conclusion
If you are a fuel distributor currently struggling with late payments, invoice delays or billing cycles that are out of sync with your cash flow, discover how FleetGO’s innovative onboard stock management and invoicing solution can help.
See how easily it integrates with your ERP and explore the potential benefits it can deliver to your bottom line.
