Disbursement management is part of the post-fixture process. Disbursements are the payments of expenses that are incurred during a vessel’s port call. For example, port and agency fees. Disbursements must be accurately forecasted, planned for, and made on time and in compliance with regulatory requirements. Delays in payments can cause operational delays to the vessel.
Accurate disbursement forecasting is a vital part of financial planning as mismanagement of these payments can significantly impact cash flow and the overall profitability of a voyage. Disbursement payments have traditionally been completed manually. A paper-based invoice would be sent from the agent to the operator, forwarded to appropriate departments, and once approved, signed off. As with many manual processes, it’s time-consuming, prone to human error, and often results in late payments. Various stakeholders trying to follow a paper trail means that it’s embedded with uncertainty and there is little transparency.
In April 2023, a case of a vessel being detained by agents due to unpaid disbursements at Rosario, Argentina, hit the headlines. The ship owners claimed the charterers did not pay the agents, resulting in the agents demanding $59,869 USD. The charterer still made no payment and the vessel was arrested in New Orleans. The agents continued to demand payment with additional fees of $30 USD per hour set.
Digital solutions can lend a hand by moving the disbursement payment process from manual paper-based to electronic and automated. Software that automatically calculates, checks and pays disbursements not only eliminates manual time-consuming tasks but ensures that these payments are made on time and reduces risks.
Late disbursement payments can be financially catastrophic. Here’s why:
1. Operational Delays
The vessel may be detained or unable to access services it requires, such as pilotage or tug assistance. If the vessel cannot enter or leave a port, its entire voyage will be delayed.
2. Late Fees May Apply
In many aspects of life, late payments incur a penalty charge. Shipping is no different.
3. Reputational Damage
A vessel that is detained due to untimely payments doesn’t look so good. Relationships between owner, operator, charterer, and agent can be put under strain. Furthermore, the owner or operator may experience widespread reputational damage and face hurdles in securing services in the future, or may even face higher payments.
4. Non-Compliance
Lack of timely payments can cause the vessel to be in breach of the charterparty. If this escalates, the vessel could be arrested and only released once substantial payments have been made. If the courts are involved, the reputation of the vessel is further affected.
5. Financial Burdens
Late payments not only cause administrative headaches for those involved but also put additional financial strain on the stakeholders.
There are several solutions on the market today that can do this; Wilhelmsen Ships Service, Marcura and Veson Nautical are just a few. DA-Desk by Marcura has been widely rolled out among many shipping players. The platform offers an end-to-end digitalised service from agent appointment to voyage closing, including payments and integrates directly with your Voyage Management System (VMS).
For a more detailed insight and understanding of the topics discussed in this article, please refer to our report created in partnership with Marcura, Navigating New Financial Seas. This comprehensive guide demonstrates how digital solutions can optimise shipping operations from the pre and post-voyage fixture stages, through to the voyage itself, to ensure financial success. The full report can be downloaded below.
