Logistics and supply chain
Logistics finance that shows the margin on every contract, site, trip and shipment
A logistics business earns a thin margin on a large volume of small activities, and the margin disappears in the gaps between operations and billing. We cost each contract, site, vehicle and shipment from what it actually consumed and reconcile every activity to an invoice, so the business knows which work pays and stops giving away the work it does not bill.
Every activity, billed and costed.
Activity → invoice line → contract margin
At a glance
Shared sites, vehicles and supervisors are not allocated, so no contract or client has a real margin.
Margin by unit of work
Margin by contract, client and site.
6 trades
Each trade runs on different numbers, so each has its own page
Open the one that matches your business. Each sets out how the money moves, where it usually breaks down and what we would do first.
The economics
Why the numbers are harder here
Logistics revenue is built from thousands of small, measurable events: pallets stored, orders picked, kilometres run, shipments moved. Each is priced on a rate card, a per-trip freight or a per-shipment quote. Cost is mostly people, space, vehicles and fuel, often shared across clients and lanes. When shared cost is not allocated and activity is not reconciled to billing, the business sees its total margin but not where it comes from.
A large share of what many logistics firms bill is passed through to someone else: carriers, overseas agents, landlords, toll operators and manpower contractors. That inflates billings relative to margin, ties up working capital when the firm pays before it collects, and makes revenue presentation a real question rather than a formality. Small leaks per activity, multiplied by volume, decide whether the year is profitable.
The problem
Where visibility breaks down
- Shared sites, vehicles and supervisors are not allocated, so no contract or client has a real margin.
- Activities performed on request never reach the invoice because operations and billing run on separate systems.
- Pass-through costs are recharged late or below cost, so the firm funds its clients' freight and consumables.
- Costs of a trip or shipment arrive after it is invoiced, and margin is reported before it is known.
- Manpower supplied through contractors is billed on one record and paid on another, with compliance exposure in the gap.
Where we concentrate
How we focus the engagement
Margin by unit of work
- Profit and loss by client contract, with shared cost allocated on a stated basis.
- Site-level margin after lease, power, people and equipment cost.
- Cost per kilometre by vehicle and margin by trip and lane.
- Shipment-level margin with accruals for costs still to be invoiced.
- Start-up and onboarding cost tracked against each contract's remaining term.
Billing and cash control
- Activity volumes from operating systems reconciled to every invoice line.
- Minimum-volume shortfalls and service-level adjustments computed each billing period.
- Pass-through costs tagged at payment and recharged in the next cycle.
- Proof of delivery and other billing triggers tracked so invoices are raised promptly.
- Payments to carriers, agents and contractors compared with collections from clients.
Reporting
Reports worth receiving
- Margin by contract, client and site.
- Cost per kilometre and margin per trip.
- Activity performed against activity billed.
- Pass-through costs against recoveries.
- Working capital: receivable days against payable days to carriers and agents.
Common questions
Questions we hear in this sector
Our operations system already tracks everything. Why do we need finance work?
Because tracking an activity isn't the same as billing it, costing it or collecting for it. The leakage usually sits between the operations system and the accounts, and closing that gap is most of the work.
How do you allocate cost shared across clients?
On the driver that best reflects use — space or pallet positions for rent, labour hours or units handled for manpower, distance or trips for transport. The basis is agreed with you and applied consistently, so contracts can be compared month to month.
Do you handle customs clearance or transport permits?
No. Customs filings are made by a licensed customs broker or by the importer or exporter itself, and permits are obtained by your operations team. We maintain the accounts and reconciliations those activities feed into.
5th Quadrant performs costing, accounting, billing reconciliation, payroll and compliance-record work for logistics businesses. Customs filings are made by a licensed customs broker or by the importer or exporter, and statutory audit, tax-audit reports and any prescribed certification are performed by an independently engaged licensed professional, coordinated through 5th Quadrant. Full detail is on our Professional Scope page.
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