Northwest Profits from Enhanced Automated Billing

Northwest Airlines Enhances Cargo Billing To Strengthen Its Leadership Position

The Challenge
Everybody likes to get paid, but for Northwest Airlines Cargo division (www.cargo.nwa.com), it was a long and difficult process. Getting invoices out the door took between seven and 10 days. "By the time the customer received our invoice, it was as much as two weeks old," states Patrick Thao, Manager, Cargo Agent and Settlement. "This made it difficult for our customers to pay within our terms and resulted in significant cash flow delay to Northwest."

Northwest, the largest cargo carrier among U.S. combination passenger and cargo airlines, has a demanding operation serving more than 4,500 customers and distributing 10,000 invoices representing 36,000 air waybills monthly.

Thao, charged with shrinking the Days Sales Outstanding knew the critical need was to transition customers away from using paper invoices to using electronic invoices. Such a shift would reduce costs and improve delivery time.

That objective proved easier in concept than in reality. The first effort was to send electronic invoices on disks or magnetic tapes to NWA Cargo’s 20 largest customers, but this approach struggled because these customers required invoices in six different formats. Northwest then approached a leading bank about its electronic clearing house but the bank offered only electronic billing. Northwest appreciated that some cargo customers would embrace electronic billing - but many others would still require paper billing. Billing flexibility was vitally important since cargo customers required their invoices in various formats:

• Paper, for customers with traditional accounting practices
• Email, for smaller customers with online capabilities, and
• File Transfer Protocol (FTP), for larger customers using Internet access.

The Solution
NWA Cargo selected the services of API Outsourcing, Inc. (www.apifao.com), a leading billing and accounts payable automation solutions provider to the Transportation and Distribution industry. "API’s billing solution supported both paper and electronic billing," related Thao. "This leading-edge solution was designed to be flexible yet sophisticated, and cost-effectively address our business needs."

"It was absolutely vital that the solution allow Northwest to shorten the time required to get invoices out," declared Thao. "API redesigned our invoice, added a bar code and a remittance stub. These steps make invoices easier for customers to understand and result in fewer disputes."

"API’s commitment is to print and mail paper invoices within 48 hours," Thao beams, "but it usually happens overnight. Additionally, electronic invoices are distributed by email and FTP." These invoices include direct Web links to the air waybills allowing customers to readily and independently verify their charges through comprehensive access to all back-up supporting documents. "Several major customers were shown the capability," Thao states, "and they raved about it! They said this makes NWA Cargo the preferred cargo carrier since no other airline has this capability."

Benefits
There are fewer customer service calls now because customers have access to supporting documentation, and when calls do come in, the NWA Cargo staff resolves them more quickly online. Northwest agents can see in real-time the online electronic invoice and back-up documentation that the customer is currently viewing.

"The pressure of getting invoices out quickly and accurately is gone," adds Thao. "Now staff can focus on the value-added work of billing analysis to ensure the timely receipt of money."

Working with API, NWA Cargo has plans for valuable future functionality. One such feature is for Northwest to permit customers to dispute billing charges online and resolve them effectively. An online flag to Northwest agents would alert them to review the charge and respond to the customer online. Another enhancement offers an online payment capability. Customers would easily authorize Northwest to debit their accounts for exact dollar amounts on specific dates. "Many customers are not comfortable with authorizing blanket automatic payments due to the lack of control. With this enhancement, customers could authorize specific electronic payments by amount and with total audit control," notes Thao. NWA Cargo is also evaluating the expansion of API’s services to cargo shipments with international origins.

Net Results
High satisfaction with API’s services begins with the Cargo customers and extends to NWA Cargo executives. "We started slow, but now are going faster because we are more confident. We aggressively want the competitive advantage from transforming this process," declares Betsy Sagnes, Director Northwest Cargo Accounting.

"We are the only domestic carrier offering electronic invoicing with the linking of air waybills. API services helped reduce our Days Sales Outstanding, staff time, and overall cost associated with invoicing. The use of electronic invoices over paper has doubled over the last year. Through these services, Northwest is able to strengthen its relationship with cargo customers and ensure we remain the leader in a highly competitive market."

About Northwest Airlines
Northwest Airlines is the world’s fifth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world’s most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents.

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