Automate the GL coding of Freight Invoices with KDL

Posted by George Muha on Nov 16, 2017 8:09:00 AM

GL_CODE.jpg

As a lead logistics company, KDL is forced to always be coming up with ways to help its clients to get better.  So we are always asking ourselves, "What burdensome task can we take away from our clients."  One area that has been a huge help is the GL coding of their freight invoices.

Given the fact that this is typically a VERY manual process for companies, there is usually a ton of cost savings by having KDL do this.  I'd like to give an example of how we typically automate this process for companies so you get an idea if we can help your company too.  

In a recent instance, one of our newer clients had two people at the level of manager and supervisor ensuring that over 10,000 freight invoices are properly GL coded every year.  These are two employees who's time and ingeniuty could be put to much better use than to such a mundane task - however due to the complexity of it, training a lower paid/higher turnover employee had its risks.  

For this company, every single freight invoice (across all modes: international, less-than-truckload, truckload and parcel) needed to reference a country code, a business unit, a warehouse and a direction for accounting purposes.  Given there are literally over a thousand references numbers this company uses to designate countries, direction of freight, product lines, vendors and warehouses, this was a very complicated and time consuming process - but one that could be streamlined with KDL's help.  

Since KDL processes, audits and reconciles freight invoices as one of their services, we can hard wire the GL logic within their system to auto-sort the invoices to the proper code.  All we need to know is the criteria defined on how to do this and whala, this manual process has been completely automated!  

To show how exactly we do this, here is an example of how the client mentioned above defines their general ledger codes.  *The info is altered to protect the client.  

GENERAL LEDGER CODE LOGIC

COMPLETE GL CODE FORMAT:                   DDD-NN-RRRR-BBBBBB
 
DDD = Country Code
  • 444 – USA
  • 777 – CAN
  • Destination address determines which code to use. 
    • CAN to USA will apply the 444 code. 
    • USA to CAN will apply the 777 code.
NN = Business Unit
  • Defines what type of product – used internally (Wire – 44, Sheet Metal – 55, Packing Material – 66, Finished Product – 99)
  • Client pulls this value by determining the Vendor Name and determining the code assigned to them. 
  • A list of all vendors are located in a separate document for KDL to look up.    
  • Example:  Shipment from ABC Vendor, code 21.  Client now knows this references a certain product. 
RRRR = Warehouse code
  • This is the Code found on another document that lists all of the 22 warehouses.
  • Using code for location that is responsible for the freight.
  • Consignee will always be responsible on inter-company transfers
BBBBBB – Direction Code
  • Inbound – 123456
  • Outbound – 654321
  • Inter-Company
    • If coming out of headquarter location – Use Code 456789
    • All Other – Use Code 987654
When KDL receives incvoices from the freight carriers on behalf of this client, we allocate the cost to each criteria of the general ledger codes.  The end result of this is the client spends virtually no time assigning GL codes because this is done automatically done by KDL.  
 
Instead, every week when they receive KDL's consolidated invoice for all shipments (including all of the data associated with each freight bill) they'll get a tab that has the costs already assigned to each general ledger code like in this example below:
 

PRESORTED GL CODE SUMMARY

GL Code Cost
4444-55-4321-123456 $262.21
4444-44-4567-123456 $443.69
4444-66-8765-123456 $1,800.22
4444-66-1234-123456 $4,038.78
4444-99-8765-123456 $77.22
4444-99-1234-123456 $616.42
4444-66-9876-987654 $537.42
4444-55-7890-987654 $320.76
4444-44-3214-987654 $29,216.44
44444-55-3456-987654 $6,750.09
4444-99-4567-987654 $6,817.87
4444-44-7890-987654 $4,407.19
4444-55-1234-987654 $12,917.14
   
Total $68,205.45

Why Manually Sort Your Freight Invoices When it Can Be Automated?

"We do it that way because that is the way we always have done it" just doesn't it cut it any more.  With service providers and technologies able to do things less expenisve, better and more accurately than you can do it, there are a lot of low hanging fruit areas in your company like this one that can be streamlined.  

Reach out to KDL today to learn more about how we can automate the general ledger sorting of your freight invoices...and maybe a bunch of other areas of your supply chain as well!  

Topics: GL coding freight, How to GL Code Freight Bills

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