Freight Settlement

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 Scenario: Build, Execute, and Settle a Shipment

Multi-stop: End Use

Business Modeling Order Management Transport Planning Shipment Execution
Orders Shipments Tendering

OTM Status OTM Status Shipments Events

Modify Shipments Visibility

Settlement

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 Objectives

After completing this lesson, you should be able to:

• Explain the difference between freight payment and
customer billing
• Explain the freight payment process
• Create, match and approve an invoice
• Allocate shipment cost

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 Freight Payment

Freight Payment
Buy shipment - transportation services purchased
from the service provider
B C
Physical Transport Carrier 2
Carrier 1 Carrier 3

A D
Invoices
Shipper
Financial
OTM
AP Payment to
Vouchers System Carriers

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 Customer Billing

Customer Billing
Physical Transport
A B Sell shipment - transportation services sold to customer
B C B C
C D Carrier 2
Carrier 1 Carrier 3
Sold Transport
A D A D

Invoices
3PL
Financial
OTM
Vouchers AP Payment to
and Bills System Carriers

Bill to Customers
(e.g. vendor or retailer at A or D)

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 Freight Payment Process

Shipper
2. Match invoice
to shipment

1. Create
3. Approve invoice
Invoice
OTM
Carrier

5. Send payment 4. Send Voucher for

to carrier for the approved amount
approved amount
Shipper's Accounts
Payable System

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 Create an Invoice within OTM

There are two ways you can create a payment invoice

directly in OTM. You can:
• Manually create an invoice through the Payment
Invoice Manager.
• Create an invoice from a buy shipment.

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 Manually Create an Invoice

You manually enter an invoice into OTM via the Payment

Invoice Manager.
• Required information when creating an invoice:
– Consolidation type
— Standard: invoice for a single shipment
— Consolidated: invoice that combines the charges for
multiple shipments
– Service provider alias qualifier and value
– Invoice date
– Date received

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 Create an Invoice From a Shipment

You can base your invoice on data in the desired buy

shipment.

The shipment action Create Invoice copies the following

data:
– Header data
– Involved party data
– Stop information
– Shipment cost information (one shipment cost record
equals one invoice line item)

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 Manually Match an Invoice to a Shipment

• If you created your invoice from a shipment, OTM

matches your invoice to that shipment.
• If you manually created an invoice, you run the
Manually Match Invoice action to select what shipment
this invoice matches.

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 Manually Approve an Invoice for Payment

After you match the invoice to a buy shipment, the invoice

needs to be approved in OTM prior to sending payment
data to an external system.

To manually approve the invoice, you use the Approve

Invoice action.

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 Manually Unapprove an Invoice for Payment

After you approve an invoice for payment, you can

unapprove an invoice.
• When you unapprove an invoice, OTM:
– Checks if the voucher was sent to the external system for
payment.
— YES: OTM creates new voucher with negative amounts to
offset the original voucher.
— NO: OTM deletes the voucher.
– Sets invoice status value to
APPROVED_NOT_APPROVED.

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 What is Allocation?

• Allocation divides the cost of a shipment among the

order releases down to the line item level.
– Your company might allocate transport costs to different
departments, business units, or cost centers.
• Allocation is often done as part of the freight
settlement process, but not necessarily.
– You can allocate whether you use other areas of freight
settlement or not.

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 What is Allocation?

You can run the Allocate Cost action for shipments,

vouchers, and bills.
• The action divides the cost on the shipment, voucher,
or bill based on for example:
– Weight
– Volume
– Piece count
– Distance carried
– Dimensional weight
– Weight carried distance
– Direct distance
– Weight direct distance
– Or any combination of these

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 Example of Allocation by Weight

Allocation by Weight

Pickup Delivery Delivery

Order 1 Order 1 Order 2
Order 2
Total Shipment Weight = 40000 LB
Total Shipment Cost = 800 USD

Order 1 = 32000 LB Order 2 = 8000 LB

Allocated Cost = $640 Allocated Cost = $160

Item 1.1 - 30000 LB Item 2.1 - 6000 LB

Allocated Cost = $600 Allocated Cost = $120

Item 1.2 - 2000 LB Item 2.2 - 2000 LB

Allocated Cost = $40 Allocated Cost = $40

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 Demo Overview:
Matching, Approving, and Unapproving an Invoice

This demonstration covers the following topics:

• Manually matching an invoice
• Manually approving an invoice
• Unapproving an invoice

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 Practice Overview:
Creating, Matching, and Approving an Invoice and
Allocating Costs
This practice covers the following topics:
• Viewing the shipment status
• Creating an invoice in the Payment Invoice Manager
• Matching your invoice
• Approving your invoice
• Viewing the statuses associated with your invoice
• Verifying the creation of a voucher and viewing the
statuses associated with your voucher
• Allocating the shipment cost

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 Summary

In this lesson, you should have learned how to:

• Create an invoice for your shipment
• Match the invoice to your shipment
• Approve the invoice
• Allocate the shipment costs back to the orders you
originally created

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