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Innovation In Action

For Cargo Network Services (CNS)

Leveraging technology to improve collection efficiency

The Background
CNS, a subsidiary of the International Air Transportation Association (IATA), is dedicated to the entire air logistics chain and provides a unique set of business solutions that meet the requirements of the air cargo industry in the USA.

The Challenge
CNS was incorporated in 1985, following the deregulation of the U.S. aviation industry. This subsidiary of the International Air Transportation Association (IATA) is dedicated to the entire air logistics chain and provides a unique set of business solutions that meet the requirements of the air cargo industry in the USA. CNS serves as a key gatekeeper by requiring air cargo agents, forwarders or intermediaries to meet a set of financial, operational and compliance standards.

Discussions with CNS and the airlines revealed that the invoicing and billing process is a critical pain-point. Carriers were looking for ways to further leverage the technology inherent in the air cargo solution.

CNS wanted to provide customers with an Internet-based invoicing and payments service so as to cement its close collaboration with airlines, air cargo agents and freight forwarders who exported freight from the U.S., and to take advantage of the growing market demand for a paperless service.

The Solution
CNS and Citi developed an electronic billing and payments solution that significantly enhanced the company's existing service, CASS-USA.

With the new solution, the airlines transmit their waybills via electronic file delivery to CNS's data center. CNS then consolidates the invoices and sends them to the airlines' customers: cargo agents and other companies consigning goods by air. These companies approve the invoices, with adjustments if necessary, and authorize their banks to pay. Payments are sent to CNS's Citi bank account, either via paper checks processed through a lockbox or via wire or ACH transfers electronically. Citi then loads the remittance information to the e-billing platform and creates payment files. Finally, files are disbursed electronically to the airlines' banks along with the remittance detail information.

There are many benefits of Citi's e-billing and payments solution for CNS. For airlines, invoices are delivered instantly instead of spending several days in transit. The increased visibility of approved and paid invoices has improved the predictability of cash flows. In addition, the solution's standardized dispute codes and rebilling capabilities have reduced disputes between airlines and agents. As a result, days sales outstanding (DSOs) have been slashed by an average of ten days, creating dramatic savings for the airlines.

For cargo agents, invoices can be reviewed and approved electronically. Standardized dispute codes and rebilling capabilities have reduced the number of disputes — and accounts payable staff required — saving an estimated USD13 million a year.

The Result
Citi's invoicing and payments solution for CNS has transformed the air freight bill payment processes. It's shortened DSO by at least ten days and reduced air carriers' invoice presentment and collection costs by 18%. It has also streamlined freight forwarders' invoice review and approval process. And it has reduced dispute rates by 45%, creating more transparency and trust in the billing process among airlines and forwarders.

The Citi solution was initially deployed in 2003. Since that time, more than 1,200 freight forwarders and 86 airlines have used the system to connect, interface and settle payments. Over 15 million air waybills/invoices have been settled via the system (over 2.8 million in 2008 alone). And more than USD18 billion in payments have been processed and settled through the system (more than USD5 billion in 2008).

As a result, days sales outstanding have been slashed by an average of 10 days, creating dramatic savings for the airlines.