As an international freight forwarder, you understand how important it is to have an efficient transportation management system (TMS) in place. At a minimum, your TMS should come with the ability to generate invoices and record payables against each file so you can keep a close eye on job & customer profitability. Many TMSs also come with a fully-functioning accounting module that can manage your entire company’s finances.
Sometimes, however, you need to manage your accounting elsewhere. You may be part of a larger organization that uses an external system, or you may find that a third party package gives you added features that make the extra complexity worthwhile.
Financial integrations can be some of the most challenging. Timing issues, the criticality of accurate data, and the complexity of finance in international freight can cause an accounting system project to quickly go off the rails.
Here’s a few tips to get you started and make sure you stay on plan and on budget.
1. Choose the right accounting system
Before you can integrate your TMS with your accounting system, you need to make sure you have the right accounting system in the first place. Look for an accounting system that can handle the volume and complexity of your business. In international freight forwarding, you’ll have specific needs that not all systems can support. Make sure the system you choose supports multiple-currencies and the ability to tag all transactions back to an individual file or job number. If you operate multiple offices and manage your staff to local profitability, you’ll need to consider whether the accounting system’s reporting features handle generating local P&L statements.
Next, you should have a clear understanding of the system’s ability to handle work-in-progress (WIP) and accrual accounting cleanly. With many international transactions, you’ll be generating cost and revenue across multiple accounting periods. If this process is not intuitive, you’ll create an operational nightmare. Purpose-built accounting modules within freight forwarding packages handle this smoothly and efficiently, so if you’re transitioning to an off-the-shelf package, make sure you clearly understand how this process works before you commit.
2. Standardize your data
Clean data makes for clean integrations. Sometimes, when you’re working in one system, you can make a bit of a mess with master data like customer master records & charge codes. At the end of the month, you can clean up, or just sort out the details in the reports. For example, if you have one office that always bills detention with a passthrough charge code and another that makes two offsetting entries using a AR & AP charge code, the net effect is likely the same.
When it’s all in one system, you can overlook these inconsistencies because the information is surrounded by the context of the TMS. When you move to a third-party tool, it can magnify these differences because its reporting modules may not align to the way you did business in the past.
Put in the up-front effort to make sure that all office and customer teams are working consistently and from a written SOP for operational accounting activities before starting to build out your new accounting system.
3. Use an integration platform
The costs of getting things wrong with accounting systems can be extreme. Improper reporting to your board, bank, or other stakeholders can erode trust and cause major restatement headaches. Using a professional designed accounting integration platform (like Chain.io) de-risks your project. Not only are third-party systems built with redundancies and checks not often found in internally developed one-off solutions, but they also come with best-practices built in since they’re used by many companies.
The more you can automate through your platform, the easier it will be to maintain over time. Look for manual reports and monthly updates that you might be doing by hand. Doing these across two systems isn’t twice as hard, it’s also 10x as risky. When you do manual data entry across systems you lose checks and balances as well as overloading your already-busy team.
4. Consider your stakeholders
Beyond your accounting and finance team, also consider the impact to your operations and your customers.
- Will operations have access to the accounting system, or will they continue to see financial information in the TMS? If so, will it be updated frequently and will relevant data flow back so they have a full picture of open receivables and whether a vendor has been paid?
- Will they be able to issue job related payments for local issues, or will this need to go through the accounting team?
- Where will you set up new customer records? All of this should be considered before you select a new system so you can be sure that you aren’t creating an ops nightmare.
Also consider your customers.
- Can they see their open invoices on your website today? Will that continue?
- Do you provide any reporting that relies on AR or AP data, and will that data still be available or do the reports need to be re-written in the new accounting system?
- If so, does the accounting system have enough job related data or are you going to need an additional external reporting package that syncs both systems to support your customer facing web-portal?
5. Use a professional project manager
Building an accounting integration means capturing requirements from executives, auditors, finance, accounting, operations, and customers. All of these parties need to stay in-sync across many months. You also have to hit your date. Accounting cutovers are generally set to align with year end, and missing can have massive impacts in cost, workarounds, and even potentially scrapping the project.
It’s unlikely that your accounting team has the bench strength or project management expertise to spearhead this initiative. A relatively small investment in a professional project manager will pay dividends when your project delivers on-time and on-budget.
Getting Started with TMS Integrations
We know that financial integrations can be some of the most challenging - data arrives in countless formats and accuracy is essential to your operational success.
At Chain.io, we convert and route your financial data to any file type in any location for better visibility, reporting, and analysis for your team and your customers. Our platform enables you to integrate your TMS with any accounting software using our pre-built adapters, so integration projects take less time than with internal teams or generic iPaas platforms.
With an integration between your TMS and accounting platform, you’ll set your team up for success and differentiate yourself from competitors. You’ll make room for growth and eliminate friction, and most importantly, you’ll allow your team to focus on what matters most: your customers.
To learn more, read our 7 Tips for Successful Supply Chain Integrations or book a meeting with one of our supply chain experts to talk through your integration needs.Learn MoreLet's Talk