Supply-chain services · Logistics and supply chain
Managed supply-chain services priced on outcomes you can measure
A supply-chain services firm sells results: parts at the line on time, returns processed in a day, freight bought for less. We tie every service-level penalty, gain-share and payout to the contract that triggered it, so revenue and margin reflect what each contract actually delivered.
In one paragraph
Some firms sell supply-chain management as a service: in-plant logistics and line feeding, kitting, reverse logistics and returns processing, freight procurement platforms and control-tower services. Unlike contract logistics, pricing is tied to outcomes, service levels and savings rather than to space and trips. Much of the work happens on the client's premises. Platform businesses must also decide whether they are selling freight or a matching service, a question founders and finance heads meet early.
Founder or chief financial officer
The economics
How the money moves in this trade
Contracts often combine a fixed fee with variable charges per unit or transaction, penalties for missing service levels and a share of savings delivered to the client. Revenue in any month depends on measurements such as line stoppages, turnaround times or freight savings. Operations produce those measurements and the client agrees them later. Teams frequently work inside the client's plant or warehouse, where the client may be the principal employer for contract labour purposes.
Platform businesses that match shippers with carriers must decide whether they act as principal for the freight or as an agent earning a commission. That decides whether revenue is the full freight or only the margin. They often pay carriers quickly to keep supply, while shippers pay on credit, so growth consumes cash. Technology and onboarding spending per client is significant, and recovering it depends on the client staying beyond the initial term.
The problem
Where the numbers usually break down
Penalties and gain-share are booked when agreed, not when earned
Service-level penalties and savings shares are recognised only when the client signs off, months later, so monthly revenue swings without reflecting performance.
Platform revenue is presented gross without a basis
Full freight value is reported as revenue on every load, whether or not the platform controls the service, which makes growth look larger and margin look thinner than either is.
Carrier payouts outrun shipper collections
Carriers are paid within days while shippers pay in weeks, and the float is funded from equity without being measured against growth.
On-site manpower cost is not reconciled to the contract
People deployed at client sites are billed on headcount while payroll, overtime and statutory dues run on separate records, with compliance exposure for both parties.
Onboarding cost is not tracked against the client
Integration, process design and set-up cost for a new client is expensed as it occurs, and nobody knows how long a client must stay to recover it.
What we do
The work, and the result each part produces
Service-level and gain-share accruals
Performance measured monthly against contractual service levels, with penalties and savings shares estimated and accrued.
Monthly revenue reflects the performance delivered that month.
Principal or agent assessment
Each revenue stream assessed for whether the firm controls the service, and presented gross or net on a documented basis.
Revenue and take rate can be defended to auditors and investors.
Payout float tracking
Carrier and vendor payments compared with client collections by account, with the cash tied up in float reported.
Growth is planned with its cash cost in view.
On-site manpower reconciliation
Deployed headcount, attendance, payroll and statutory dues reconciled to client billing for each site.
Billing, payroll and compliance agree at every client site.
Client onboarding cost recovery
Set-up and integration cost tracked per client against the margin earned since go-live.
The payback period on each client is known.
Contract margin reporting
Revenue, penalties, gain-share, direct cost and onboarding recovery reported by contract.
Renewals and new bids rest on contract-level economics.
Where we start
The first steps of an engagement
Contracts, SLA data and payouts
We ask for each client contract with its service-level and gain-share terms, the monthly performance data operations produces, carrier payout and client collection records, and site payroll.
Penalty and gain-share recompute
Service-level penalties and savings shares for recent months are recomputed from the contract formulas and compared with what was billed, agreed and booked.
Monthly accruals and float view
Penalties and gain-share start to be accrued monthly from performance data. Carrier payouts are tracked against client collections by account.
Contract economics report
The first report shows revenue by contract after penalties and gain-share, gross billings against net revenue, cash tied up in payout float, and onboarding cost still to recover.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Service-level performance against contract, with penalties accrued
- Gain-share earned and agreed
- Gross billings against net revenue and take rate
- Cash tied up in payout float
- Onboarding payback by client
- Margin by contract
Who it suits
Written for, and not the right fit for
- Your business is mainly warehousing and transport priced on space and trips; our third-party logistics page covers that.
- You need a statutory audit or an assurance report for a client on its own; those are signed by an independently engaged professional.
- Firms providing in-plant logistics, kitting, reverse logistics or managed procurement of freight.
- Freight and logistics platforms that match shippers with carriers.
- Growth-stage firms preparing for an equity round, venture debt or a large enterprise contract.
Services
Services this work draws on
MIS and financial planning
Reporting built around the questions you actually need answered.
Explore service ↗Fractional CFO services
Senior financial leadership on the days you need it, not a full-time hire.
Explore service ↗Payroll and labour compliance
Every payroll cycle reconciled, with the statutory workflow attached.
Explore service ↗Finance technology and automation
Systems configured around your process, not the other way round.
Explore service ↗Costing and profitability
What each product, line and customer really contributes.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
How do you accrue a penalty the client has not confirmed?
From the same performance data the client will use, under the contract's formula. When the client's sign-off arrives, the accrual is trued up. That's far more accurate than recognising nothing until then.
Our investors look at gross merchandise value. Why change revenue?
You can still report gross value as an operating metric. Revenue in the accounts has to follow whether you act as principal or agent, and investors' diligence will test it, so it's better settled early.
Is a fractional CFO enough for a business like ours?
Often, at the growth stage. The work that matters most — revenue recognition, float and contract economics — needs senior judgement more than headcount.
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