Airfreight companies are continually facing challenges, whether it be geopolitical instabilities, economic pressures, or volatility in demand. Yet, despite continued pressures, deal volumes in the transport and logistics industry appear to be on the up. According to research from BDO, transaction volumes in the sector in Q4 2023 reached a peak of 27 deals, compared to 21 in the previous quarter.
A recent example includes the sale of Bolloré Logistics to CMA CGM. The sale of the logistics company that handles around 390,000 tons of airfreight is a successful example of a logistics company transitioning to a multi-entity business.
With research suggesting M&A within the sector could be on the rise, we could see more airfreight businesses operating as multi-entities in years to come. While becoming a multi-entity business is an impressive show of business success, managing financial operations post-M&A can be a challenge.
The process of integrating disparate financial systems, processes, and ways of working from different entities can be complex and time-consuming. But streamlining these systems is business critical. With disjointed finances, companies will struggle to maintain regulatory compliance, obtain valuable insights, and fulfil the needs of all key stakeholders. This is particularly pressing post-M&A.
Using technology to streamline finances
Introducing the appropriate technology is paramount to the financial stability of multi-entity organisations. These companies should be reviewing their existing finance software to determine whether it provides the necessary level of support. Legacy systems tend to be disjointed, requiring manual data entry which allows for limited financial visibility. Conversely, more sophisticated finance software solutions are programmed with a multi-entity module that automates financial processes and makes reporting much easier.
One of the key drivers for businesses introducing any software system is removing the risk of human error in operations. For one team of people, or in some cases just one individual, multi-entity accounting can be a big challenge. Having to enter and process data for the entire organisation is a labour-intensive and unenjoyable task.
It can also be very dangerous to a business’s finances. However, by introducing a supportive tech-enabled system, the risk of error is minimised, and the finance team’s valuable time is freed up to focus on the tasks important to them and business revenue.
Improving the invoice process
By nature, airfreight companies entail regular expenses. Whether it be fuel costs, aircraft maintenance, crew salaries or airport fees, the finance team processes a daily flow of invoices.
Worryingly, this behaviour tends to be linked to cash flow management problems. If invoicing is delayed or inaccurate, cash flow can be disrupted, and financial planning can be impacted. To mitigate this risk, freight companies must introduce automated invoicing and billing processes. With automation comes more accurate processing and reduced time spent on admin tasks that don’t contribute to business growth or job satisfaction.
Reporting across the business
Most businesses understand the importance of financial reporting before and after the M&A process. However, it can become challenging post-M&A if the infrastructure is not in place to support it. A system that allows entities to share real-time data with uniform classifications is required for the finance team to have a full view of operations. With this system comes a centralised platform that holds all financial data across the company. It eliminates the need for manual data entry and allows the team to produce either business-wide or single-entity reports.
Enabling access throughout the business
The finance team of multi-entity freight companies require access to data from across the company to evaluate group performance and identify any concerns. Traditionally, this involves combining data from siloed systems, a process that is both complex and costly as it requires multiple software licences. Therefore, when choosing finance software, multi-entity companies must prioritise systems with customisable user access controls. This ensures that team members can retrieve all necessary data from across the organisation efficiently. Moreover, with the rise of hybrid working arrangements, customisable remote access has become even more critical.
With all this in mind, it’s time to review financial processes. Whether it’s an airfreight company considering M&A or a company that has already made the transition, the importance of effective finance software should not be underestimated. If freight companies want increased visibility, streamlined processes and manual data entry eliminated, cloud-based interoperable finance software is a must-have.
