When people think of artificial intelligence (AI), they often conjure movie scenes with robots taking over the world. Tech entrepreneur Elon Musk hasn’t helped that image by calling AI the world’s “greatest existential threat.” While great for the box office, these misrepresent AI and discount its tremendous benefits for nearly every aspect of our lives.

Driver-assisted cars, improved customer experiences, cancer detection, and wildlife conservation – artificial intelligence is powering it all, but that’s just a small portion of how AI impacts our everyday lives.

What is artificial intelligence?

Artificial intelligence comprises computer systems able to perform work typically limited to human intelligence. Machines use large amounts of data and its patterns to learn tasks. The technology becomes “intelligent” over time through experience to achieve decision-making abilities comparable to humans. Using this learning, AI creates automation for specific activities typically performed by humans.

Is AI the end of the workforce as we know it?

Former Alphabet Inc. Executive Chairman Eric Schmidt shared a story of automation at the Global Digital Futures Policy Forum in 2017. The introduction of ATMs in 1969 was thought to be the elimination of teller jobs in the banking industry. However, the number of tellers doubled between 1970 and 2010. ATMs allowed banks to operate with fewer tellers, which supported the opening of more banks, increasing teller jobs overall. The moral of the story? While artificial intelligence will change job duties over time, it doesn’t necessarily mean the elimination of jobs.

Doug Thompson, president of Agilify Automation, which specializes in machine learning, often gets asked about AI’s impact on staffing. He doesn’t see AI automating whole jobs, but instead giving higher-level cognitive opportunities for staff and leaving lesser tasks to computers. When speaking to the Indianapolis Customer Experience Professionals Association recently, he said, “If a company doesn’t remain competitive, people will lose their jobs. If a company applies AI to process more volume at higher quality, they remain very competitive and don’t have to eliminate jobs.”

What are AI’s major benefits?

Resource savings

AI is a time and money saver for organizations. Traditional IT projects often require long development cycles with expensive internal or external human capital attached. Machine learning projects by comparison can be deployed more rapidly with less money. Surveyed organizations at the forefront of AI adoption report seeing up to 44% cost savings on projects. AI also brings new tech to legacy systems. The risks associated with switching CRMs or ERPs keeps many businesses on outdated technology. With the assistance of subject matter experts within the business to identify areas for automation, machine learning can bring new life to existing systems at a significantly lower cost than adopting a new management system.

Data discovery

Approximately 90% of the world’s data was created in the last two years. This glut of information presents prime opportunities for machine learning. Unlike humans, artificial intelligence can analyze vast amounts of data quickly. Businesses can leverage information never considered before to create competitive gains.

Connectivity

Artificial intelligence works across systems and can streamline multiple databases. Consider a customer service representative working with clients of various product lines. Information often sits within different systems requiring CSRs to access multiple data sets to generate solutions. You know it’s happening when you hear, “Can I put you on hold for a moment?” Artificial intelligence brings this data together rapidly allowing CSRs to quickly access answers to improve customer experience.

Error Reductions

AI lives on data inputs. Clean information eliminates errors caused by human interpretation. AI also minimizes person-to-person knowledge deterioration when training. Machine learning brings continuity to job-related tasks and the timing of their delivery across staff for better employee management. Machines, unlike humans, also don’t take vacations or get sick. Their work is always as good as the data given to them and they can work continuously.

What can be automated?

Think of AI like an Excel macro – it learns repetitive tasks and executes them as many times as needed. Ask your staff what tasks they do daily. Where do they get the information and what steps are taken to complete the task? How much time would be saved in automating the task? What additional work could replace that time? AI automation time adds up quickly. Even 60 seconds a day across 80 associates generates significant opportunities in an eight-hour work day for a company.

Does FreightRover use AI?

FreightRover’s affiliate partner Rover180 recently announced its acquisition of Vemity, an Indiana-based company specializing in artificial intelligence automation and machine learning. As a result, FreightRover will soon integrate artificial intelligence into its PayEngine platform to improve invoicing and supply chain payment processing. Vemity’s technology allows PayEngine to harness often overlooked data to reduce manual work, improve invoice accuracy, and increase payment velocity for buyers and vendors along the supply chain. The technology provides better payment processing scalability without increased time and effort.

What’s Next for AI?

According to The Brookings Institution, the US currently spends approximately $1.1 billion annually on non-classified AI projects compared to China’s commitment of $150 billion over the next decade to the technology. To stay competitive, President Trump recently signed an executive order called the “American AI Initiative” to dedicate more federal resources toward artificial intelligence advancement.

We will continue to operate in an AI-filled world with new discoveries happening in nearly every sector including healthcare, manufacturing, retail, and finance. Unlike the Hollywood movies, rather than robots taking over the world, they will be helping to solve the world’s challenges. To quote HubSpot, AI isn’t “human versus machine. It is human and machine versus a problem.” With that in mind, the opportunities are endless.

FreightRover’s PayEngine provides a mutually beneficial supply chain finance program for companies and their vendors. Companies benefit from extended pay terms to improve working capital while providing their suppliers with tailored options for accelerated receivables.

Despite the wins supply chain finance provides both parties, many companies hesitate to implement a structured payable program due to balance sheet concerns. Poorly managed programs can result in trade payables reclassifications to debt, which negatively impact leverage ratios and debt covenants.

PayEngine’s program meets all trade payables accounting standards to protect a company’s balance sheet and bottom line. Following is our guide to understand the difference between a trade payable and debt in a supply chain finance program.

The First Question:
Has the economic substance of the trade payable changed?

When accountants review payables classifications on the balance sheet, they look at each of the following categories to assess if the trade payable has been modified in such a way that it is creating a financing cash inflow that benefits the company. Accountants will look at the categories collectively to assess the entire supply chain finance program as well.

Terms:

  • Settlement of trade payables cannot take place at a date later than or for an amount other than what is stated on the original invoice upon submission to a third-party payor. Doing so would be considered borrowing, which is debt.
  • A new trade payables arrangement cannot change the terms between a supplier and a third-party payor that’s inconsistent with normal trade payables terms.
  • The company cannot participate in or influence term negotiations between the supplier and third-party payor. The vendor and third-party must negotiate directly.

Population Impacts:

  • A trade payables arrangement must apply to a broad range of suppliers. However, the program does not need to include all suppliers. Companies can extend days to pay without all vendors accepting the new terms if most suppliers do comply.
  • Supplier participation in a supply chain finance program must be voluntary. If enrolling is required to maintain a relationship with the company, a debt reclassification may be required.
  • Should a large majority of suppliers impacted by extended pay terms select an accelerated pay option, which marks a significant change from the previous arrangement, this could trigger a debt reclassification. For example, if a company extends terms from 30 days to 120 days and now most of their supplier base elects to monetize receivables and did not prior to the change, this would require review as potential debt.

Benchmarks:

  • Companies can extend pay terms to align days payable outstanding or other working capital ratios with peers without changing the structure of their payables to debt financing. As a reference point, the US average across the largest 1000 companies currently is 57 days.
  • Trade payables should not include the accrual of interest prior to when the trade payables become due. Late payments can incur interest without reclassification impact.

Credits:

  • A company must retain its negotiation rights with the vendor directly and have the ability to withhold payment. Application of credits must be consistent with past practices. For example, if a company places a freight claim against a carrier, they should have the ability to withhold payment to the carrier until the issue is resolved. If a third-party payor compensates the carrier prior to the completion of the claim negotiation, and the company must arrange for a credit that’s inconsistent with how they’ve traditionally done business with the carrier, there could be a debt implication.
  • Whether or not a vendor decides to monetize their receivable cannot impact the company’s cost of goods sold or services received from a vendor. The third-party’s arrangement with the vendor and company must be independent of the other party’s interests. Therefore, a company cannot pay a vendor more to offset the cost of accelerated receivables.

Legal Characteristics:

  • Companies cannot change the legal characteristic of trade payables. Events that indicate characteristic changes include: immediate draw-down of credit lines, altering trade payable seniorities, securing trade payables through collateral, or incorporating default provisions.
  • In general, trade payables cannot have guarantees. However, in the case of a parent company being “jointly and severally liable for a subsidiary’s obligation,” a reclassification may not be required if it is the sole indication of a debt trait.

Impact of Third-Party Payor:

  • Implementing a structured payables program may be part of a larger accounting outsourcing strategy. This could include using a third-party platform like FreightRover’s PayEngine, which includes posting invoices and assigning accounts for fund withdrawals as payables reach their maturity date.
  • Rates paid to the third-party payor by the company cannot vary based on things like the number of vendors selecting a quick pay option or number of invoices sold to the third-party.
  • Red flags for debt reclassifications include: the third-party receiving new rights, if the third-party has influence on which invoices get paid, or if the third-party can withdraw funds from the company’s other accounts without consent if sufficient funds become unavailable.

If you are interested in learning more on trade payables or modifying your vendor payments using PayEngine’s technology and supply chain finance program, visit www.freightrover.com/pay, email info@freightrover.com, or call 866-621-4145.

FreightRover’s PayEngine provides a mutually beneficial supply chain finance program for companies and their vendors. Companies benefit from extended pay terms to improve working capital while providing their suppliers with tailored options for accelerated receivables.

Despite the wins supply chain finance provides both parties, many companies hesitate to implement a structured payable program due to balance sheet concerns. Poorly managed programs can result in trade payables reclassifications to debt, which negatively impact leverage ratios and debt covenants.

PayEngine’s program meets all trade payables accounting standards to protect a company’s balance sheet and bottom line. Following is our guide to understand the difference between a trade payable and debt in a supply chain finance program.

The First Question:
Has the economic substance of the trade payable changed?

When accountants review payables classifications on the balance sheet, they look at each of the following categories to assess if the trade payable has been modified in such a way that it is creating a financing cash inflow that benefits the company. Accountants will look at the categories collectively to assess the entire supply chain finance program as well.

Terms:

  • Settlement of trade payables cannot take place at a date later than or for an amount other than what is stated on the original invoice upon submission to a third-party payor. Doing so would be considered borrowing, which is debt.
  • A new trade payables arrangement cannot change the terms between a supplier and a third-party payor that’s inconsistent with normal trade payables terms.
  • The company cannot participate in or influence term negotiations between the supplier and third-party payor. The vendor and third-party must negotiate directly.

Population Impacts:

  • A trade payables arrangement must apply to a broad range of suppliers. However, the program does not need to include all suppliers. Companies can extend days to pay without all vendors accepting the new terms if most suppliers do comply.
  • Supplier participation in a supply chain finance program must be voluntary. If enrolling is required to maintain a relationship with the company, a debt reclassification may be required.
  • Should a large majority of suppliers impacted by extended pay terms select an accelerated pay option, which marks a significant change from the previous arrangement, this could trigger a debt reclassification. For example, if a company extends terms from 30 days to 120 days and now most of their supplier base elects to monetize receivables and did not prior to the change, this would require review as potential debt.

Benchmarks:

  • Companies can extend pay terms to align days payable outstanding or other working capital ratios with peers without changing the structure of their payables to debt financing. As a reference point, the US average across the largest 1000 companies currently is 57 days.
  • Trade payables should not include the accrual of interest prior to when the trade payables become due. Late payments can incur interest without reclassification impact.

Credits:

  • A company must retain its negotiation rights with the vendor directly and have the ability to withhold payment. Application of credits must be consistent with past practices. For example, if a company places a freight claim against a carrier, they should have the ability to withhold payment to the carrier until the issue is resolved. If a third-party payor compensates the carrier prior to the completion of the claim negotiation, and the company must arrange for a credit that’s inconsistent with how they’ve traditionally done business with the carrier, there could be a debt implication.
  • Whether or not a vendor decides to monetize their receivable cannot impact the company’s cost of goods sold or services received from a vendor. The third-party’s arrangement with the vendor and company must be independent of the other party’s interests. Therefore, a company cannot pay a vendor more to offset the cost of accelerated receivables.

Legal Characteristics:

  • Companies cannot change the legal characteristic of trade payables. Events that indicate characteristic changes include: immediate draw-down of credit lines, altering trade payable seniorities, securing trade payables through collateral, or incorporating default provisions.
  • In general, trade payables cannot have guarantees. However, in the case of a parent company being “jointly and severally liable for a subsidiary’s obligation,” a reclassification may not be required if it is the sole indication of a debt trait.

Impact of Third-Party Payor:

  • Implementing a structured payables program may be part of a larger accounting outsourcing strategy. This could include using a third-party platform like FreightRover’s PayEngine, which includes posting invoices and assigning accounts for fund withdrawals as payables reach their maturity date.
  • Rates paid to the third-party payor by the company cannot vary based on things like the number of vendors selecting a quick pay option or number of invoices sold to the third-party.
  • Red flags for debt reclassifications include: the third-party receiving new rights, if the third-party has influence on which invoices get paid, or if the third-party can withdraw funds from the company’s other accounts without consent if sufficient funds become unavailable.

If you are interested in learning more on trade payables or modifying your vendor payments using PayEngine’s technology and supply chain finance program, visit www.freightrover.com/pay, email info@freightrover.com, or call 866-621-4145.

Moving Forward in a Digitized World

In today’s world we see digitization all around us, you can order your groceries on the internet and have them show up at your door an hour later or catch a ride with the push of a button.  Technology is integral to our lives and many of us would probably be lost without our smartphones, tablets or laptops at our disposal.  It only makes sense then that the transportation and logistics industry would follow suit.

“It has become an increasing challenge for the logistics industry to stay on top of new advances in business processes…customers want full transparency into where their delivery is at all times.” according to Logistics Management.

Freight xChange takes those concerns and turns them into a powerful, streamlined automation tools that connects the logistics industry in new ways.

 

Your Freight, Your Way

Freight xChange provides carriers, shippers and 3PLs with peace of mind, knowing that they are connecting to the people they want.  The portal is white-labeled, enabling shippers/3PLs to customize the internal board to fit their business while carriers can select freight with a single click.  Everyone sees what they need and can trust they are working with the right people.  Streamlined freight management doesn’t end with delivery. FreightRover’s PayEngine works seamlessly with Freight xChange to expedite and simplify payments.

 

Powering a New Way to Pay

The white-labeled platform features of Freight xChange also extend to PayEngine.  Through PayEngine, shippers/3PLs get extended pay terms.  Carriers can select from 24-hour pay all the way up to their standard pay. The PayEngine platform is intuitive and user-friendly.  You can see all of your invoices in one place and it’s accessible from the Freight xChange platform.

 

Working Together for You

With both Freight xChange and PayEngine, the digitization of freight seems less daunting and more exciting than ever.  Freight xChange gives you the easy of access to capacity, from building, to tracking and finalling.  PayEngine makes sure you get your money where it needs to be, without interrupting the flow of your business.  This powerful team gives you the peace of mind you deserve, so you can get back to focusing on the important thing; keeping your freight on the move.