How The Maritime Industry Can Manage Their Expenses

During ship operations, maritime companies incur several operational expenses. These include crew, fuel, port expenses, maintenance, and repair costs. Maritime companies must also ensure that they comply with regulations across maritime zones and that employee expense claims are checked and paid on time. 

Tracking and managing these maritime expenses can be time-consuming and quickly spiral out of control without the correct software. In this article, we'll explore the benefits of expense management for maritime companies based in Singapore and the Philippines.

Why Managing Maritime Expenses is Important

Companies in the maritime industry have operations that span continents, with employees traversing the globe and docking in countries with different currencies and regulatory environments. Maritime companies must keep track of employee expense claims to avoid cumbersome, delayed processes that frustrate employees and finance teams. 

Expense management for maritime companies can become tricky to handle without proper accounting and budget management. Maritime accounting teams must consider expenses unique to maritime operations, including dry dock costs, maintenance expenses, and port charges. Without a detailed overview of upcoming costs and bills to pay, maritime companies can quickly lose revenue due to human error and oversights.

Challenges Maritime Companies Face in Managing Expenses

Operating vessels across the world leaves maritime companies facing several challenges when trying to manage their expenses effectively, including:

Fuel Costs

Fuel or bunker costs are among the most significant expenses, with fluctuating prices, geopolitical events, and supply chain disruptions. The IMO 2020 sulfur cap raised the price of compliant fuel, which was passed on to maritime companies. Companies must optimise routes and invest in fuel-efficient technologies to keep costs down. 

Maintenance & Repair Expenses

Maritime companies must maintain regular maintenance to ensure the safety and efficiency of their vessels at sea. This includes dry-docking, hill cleaning, and machinery repairs, which help avoid costly emergency fixes and downtime. 

Port Fees & Terminal Charges

Docking, pilotage, towing, and storage costs vary significantly between ports. Southeast Asia lacks standardised fee structures, with each port having its own set of tariffs and operational costs that maritime companies have to factor into their budgets. Congestion and delays in busy ports can also lead to detention charges. 

Insurance & Liability Costs

Maritime companies must insure their vessels, cargo, and crew. Due to geopolitical tensions, insurance premiums can increase suddenly, and companies may have to use less optimal routes to secure their cargo and crew. 

Regulatory Compliance Costs

Maritime businesses must comply with international and environmental regulations when operating at sea and docking. Regulations, including IMO, MARPOL, and SOLAS, necessitate additional operating costs. Compliance with new national regulations in Singapore and the Philippines may also require fleet upgrades and further reporting.

Currency Exchange Fluctuations

Operating globally means dealing with multiple currencies, which can lead to financial losses due to exchange rate volatility. Companies must also deal with complex cross-currency and cross-border employee salary payments.

Strategies for Managing Maritime Expenses

There are several methods of expense management for maritime companies, including:

1. Centralised Record-Keeping: Maritime companies should use software to centralise their records in simple software that ensures compliance readiness. Documents like invoices, receipts, purchase orders, and payment proofs should be in a secure digital location, making audits stress-free. 
2. Automated Financial Reporting: Effective maritime accounts software should automate weekly or monthly financial reporting on expenses unique to maritime operations, like dry dock costs. The reports should include actionable insights to improve decision-making and budgeting.
3. Automated Approval Workflows: Using expense management software, maritime accounting teams can streamline approvals and verify all transactions using automated workflows. This automation will reduce delays and improve compliance by facilitating quick access to document trails for audit.
4. Multi-Currency Payroll: Maritime companies must simplify the process of paying their employees in SGD, PHP, and dozens of other currencies. Expense management software can provide them with real-time exchange rate integration rates and automated payroll calculations to ensure accurate crew payments globally and compliance with global tax and labour regulations.

Summit Expense Management Software for Maritime Companies

Summit's Vendor Invoice Management and Employee Expense Management offer solutions to everyday maritime expenses in centralised, intuitive software that can integrate into your existing accounting platforms like Xero.

They eliminate the need for employees to submit paper receipts, ensure a digital audit trail, and reduce the risk of errors and fraud. Your team can create customisable approval workflows, facilitating timely reimbursements.

Summit's automated real-time reporting also gives your accounting team greater visibility into your spending patterns. You can compare spending on a monthly or yearly basis to see which areas require more investment and others that are taking excessive resources to enable smarter decision-making. 

If you want to try Summit's expense management software to gain better control of your expenses, contact us to talk to one of our representatives. We will schedule a free demo and are always more than happy to answer any questions you have about our products.