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Best-Practices-Air-Cargo-Receivables-Management_blog_v2Today’s market challenges require fast and accurate revenue accounting to support tactical operational and business decision making. Some of the challenges that arise with air cargo receivables are the need to quickly and accurately identify receivables, reduce airline revenue leakage, and minimize the need for manual intervention.

Many airlines continue to use paper-based invoicing solutions, which require significant manual intervention on the part of agents. The agents collect freight charges from shippers for payment to the carriers. Carriers then produce invoices to their agents for these sales. Each carrier receives a report from, or prepares an invoice to each agent individually. This can create several problems for airline financial departments, including slow sales revenue collection, labor inefficiencies, lost invoices, and sub-optimal cash flow. The sheer number of invoices and reports must be checked and consolidated, and payments have to be made individually. The situation creates an administrative burden to both carriers and agents.

To address these issues, IATA created the Cargo Accounts Settlement System (CASS) - an electronic settlement system designed to simplify the billing and settling of accounts between airlines and freight forwarders. At the end of 2014, CASS was processing in 96 operations, serving over 500 airlines, general sales and service agents (GSSAs) and ground handling companies. The on-time settlement rate was 99.99%, settling a combined $33.4 billion.

CASS replaces paper invoices with electronic ones, and it significantly reduces expensive and time-intensive functions. Because of CASS’s widespread adoption, the economies of scale permit the deployment of cutting-edge information technology to make the process as efficient as possible. CASS also standardizes and automates invoicing procedures and forms, creating a single industry standard for invoice documents. At the same time, it minimizes the need for multiple payments by consolidating them into a single transaction. Agents pay a single amount representing all payments due to all carriers, while carriers receive only one payment that consists of payments from all agents.

Currently, many agents and carriers send and receive sales and invoice information in multiple formats, requiring them to re-enter the data in a format that their system can handle. CASS eliminates this data entry duplication by allowing agents and carriers to use their own systems to send and receive invoice information in a single standardized and electronically readable format. This simplification helps reduce the amount of errors and remittance regularities by minimizing manual intervention. The result is enhanced financial control and improved cash flow.

Today, CASS is a worldwide system covering over 78 countries, with further expansion plans. Having said that, CASS does have some limitations. For example, a CASS pilot program has not yet been implemented in either North or South America, although IATA has plans to expand the program in the next year. In addition, many agents worldwide have not yet implemented the CASS program, making the system less valuable than it could be when it has achieved greater participation. The system also does not process charter transportation sales. Collection of a charter price and payment of commission is undertaken directly between the airline and its agent.

Carriers and agents in jurisdictions in which CASS has not yet been deployed or which carry air cargo that is not covered by CASS are not without other options, however. For airlines and agents that cannot switch to CASS but still want to experience the advantages of an electronic invoice and receivable system can use solutions such as Mercator’s RAPID Cargo which can provide competitive insights based on revenue data, reduce revenue leakage, and improve efficiency through increased process automation. RAPID Cargo also interfaces with other industry standard applications such as CASS, making it easier for airlines that want to switch to a CASS program in the future.

CASS represents a significant step forward for air cargo receivables. Users benefit from paperless distribution of cargo invoices, electronic payments, reduction in time to issue invoices, and strengthened cash flow forecasting.  RAPID Cargo interfaces seamlessly with CASS to ensure that payments match the receivables. And if there is a delay in payment, interest can be applied and a complete statement of account is generated.


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