Airline Cargo

How automation in revenue accounting boosts air cargo revenues and operational efficiency

How automation in revenue accounting boosts air cargo revenues and operational efficiency

Automation improves operational efficiency by accelerating the processing of repetitive tasks and reducing the risk of human error. From the revenue accounting standpoint, automation also improves revenue recognition through improved quality audits and faster invoicing, accounting, and reconciliation. Let´s explore six key areas where automation generates significant improvement in air cargo revenue accounting.

1. Quality audit 

Detecting and correcting errors post invoicing is costly. It's time-consuming and requires a lot of effort between the stakeholders to resolve discrepancies resulting in the unproductive use of resources. Worse still, it can generate friction with customers that can impact the business relationship in the long run. Addressing issues as they occur is a more effective way of managing the process before it becomes increasingly resource-intensive and potentially confrontational as time passes.

If a pattern is used to resolve exceptions, then configurable business rules can be set-up to automatically detect and address them. Flexible and highly configurable business rules are the basis of robotic process automation which helps detect and correct invoicing errors. This accelerates downstream operations, improves revenue performance, governance, and reporting.

A quality management process should encompass the following:

  • Identifying quality audit issues
  • Determining the volume of issues and their impact
  • Prioritizing issues in terms of revenue impact and time to fix using 80:20 rule
  • Establishing a position and developing a response
  • Monitoring continuously

2. Auto generation and e-mailing of invoices 

Invoice generation and e-mailing are important yet repetitive tasks that can be automated. Such resource-intensive tasks can be set-up to run overnight so as not to interfere with day-to-day operations. They can also be fully integrated with the auditing process with appropriate notification to the privileged users should any anomalies be detected.

One of the biggest challenges for an airline using legacy systems is to determine revenue on a daily basis. Generally, flown processing is triggered weekly or monthly, which makes tracking daily revenues challenging as airlines must rely on projected revenues. One way to overcome this is to trigger proration and process flights daily through a scheduled and automated process to provide management with accurate revenue performance. This comes with the added benefit of reducing associated manpower costs.

3. Tracking and settling invoices on-line

In today's digital landscape, users want to view invoices, raise objections, and initiate processing instantaneously. Modern systems with online cargo management system go a step further in assisting issue resolution by allowing records to be viewed online before billing. This allows billing records to be corrected prior to invoicing, helping avoid resource-intensive back and forth exchanges post-invoicing.

Integration with payments platforms, like Pay Cargo, can automate and accelerate the debiting and settlement processes as soon as a shipment arrives at destination.

4. Auto-approval of Charges Correction Advice (CCA) 

Sales teams are responsible for setting rates but the nature of their jobs means that they are often on the move. Timely approval of rates is important as it impacts billing and revenue. So, a regional approval process is more agile than a centralized one.

Automating the process enables CCAs to be routed directly to a group for approval if within set tolerance limits. Should the amount be above a set threshold, the system can detect cases and re-route approval to a higher authority. Overall, automation accelerates the approval process enabling correct and faster invoicing.

5. Processing third-party invoices 

Unlike an ERP system which provides a consolidated snapshot of a company´s financial health, a revenue accounting system is primarily responsible for invoicing. Close integration between both systems delivers a seamless data flow to provide an overview on company finances. For advanced capabilities, these systems should also integrate with regulatory bodies to automatically process third-party invoices, with a manual over-ride provision.

Automating this process involves business rule configurations that clearly set out parameters and conditions for resolution i.e. acceptance or rejection. A resolution pattern helps set-up appropriate rules while a manual over-ride should only be allowed when the system cannot resolve a case on its own. Zero-touch accounting would be a dream come true and must continue to be the final goal.

6. Triggering accounting and posting to financial system 

Typically, accounting is triggered as a separate process that is not linked to invoicing or revenue processing in legacy systems. There are also airlines that interface invoices and flown information to financial accounting systems that trigger general ledger (GL) entries at a consolidated level.

Ideally, the end-to-end process should integrate invoicing, revenue recognition, and GL entries so there is one to one relationship. This is possible with modern systems through business rule configurations across different accounting functions like sales, revenue processing, interline, and settlements. This helps determine process completeness and ensure accurate reporting. Moreover, consolidated posting to an airline´s financial system can be automated through a scheduled job or data exchanged through web-services. The seamless flow of data between systems improves end-to-end process transparency and reporting.

Getting set-up for revenue accounting automation

A four-step process along with a modern revenue accounting system can help airlines along their "zero-touch" revenue accounting journey:

1. Identify mundane and repetitive tasks where human intervention doesn´t add differential value

2. Quantify the operational and revenue impact caused by exceptions and automate based on the impact

3. Prioritize and plan to automate processes that will give you greater returns by broadly following the 80:20 rule where 20% effort resolves 80% of the issues. Be careful here because there could be cases where significant effort is needed to resolve 20% of exceptions that cause maximum revenue impact

4. Monitor automated processes to ensure objective alignment and continuously enhance performance.

Author Info

With over 15 years IT experience in the air cargo industry, Manoj James is currently Principal Consultant for IBS Software´s iCargo accounting product line and pre-sales activities.

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