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What is the “true cost” of processing a freight bill?
Author(s) -
Bass Howard K.,
Garg Ashish,
Iijima T.J.
Publication year - 2002
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/jcaf.10139
Subject(s) - accounts receivable , payment , profit (economics) , yield (engineering) , business , finance , economics , profit margin , value (mathematics) , operations management , microeconomics , computer science , materials science , metallurgy , machine learning
In the current downturn, managers are searching for the so‐called “hidden fat” in theirdepartmental budgets. One area where focusing management attention could yield substantial value is the frequentlyneglected accounts receivable (A/R) function. This article seeks to provide finance professionalswith rigorous estimates of A/R costs in the commercial freight industry. While pure processing costs aresignificant, implicit financial costs such as receivable carrying costs can run up to three or four times higherthan processing costs. Web‐based payment solutions will continue to provide sterling opportunities toimprove relationships with trading partners, to save time, and to improve profit margins by cutting costs. © 2003 Wiley Periodicals, Inc.