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Ensuring compliance with revenue recognition standards is a critical challenge for logistics and supply chain companies. In India, Ind AS 115¹ (aligned with IFRS 15) sets strict guidelines for when revenue can be recognised essentially only after control of goods or services has been transferred to the customer. For companies shipping physical goods, this means proof of delivery (POD) is not just paperwork, it’s proof that the delivery (and thus the performance obligation) is complete, allowing the seller to record the revenue.
In this first part of our two-part series, we explore why electronic proof of delivery (ePOD) has become indispensable for meeting revenue recognition compliance requirements and overcoming the limitations of traditional POD processes. We’ll discuss Ind AS 115’s implications, the pitfalls of paper-based POD, and how digital solutions are transforming the landscape. Stay tuned for Part 2, which will cover implementing ePOD solutions, integration with ERP systems, and a look at FreightFox’s ePOD platform.
Under Ind AS 115, revenue from a sale is recognised only when the seller satisfies its performance obligation by transferring control of goods or services to the customer. In practical terms for logistics and manufacturing firms, this transfer of control usually occurs upon delivery of goods. Consequently, having a proof of delivery, a document signed by the recipient confirming they received the goods in proper condition is essential² before booking any sales revenue. In fact, in supply chain logistics a company cannot recognise revenue without a valid POD. This makes timely and accurate proof of delivery a cornerstone of revenue recognition compliance.
Relying on traditional, paper-based POD processes often creates compliance headaches. Paper PODs can be slow, error-prone, and hard to manage.
Picture this: an FMCG company bills ₹50 lakh worth of products on March 30th to hit quarterly targets. The goods reach the customer only on April 3rd and yet the books show March revenue. This isn’t rare. In fact, listed FMCG companies in India often book up to 9% of their annual revenue in March alone, much of it in the last days of the quarter.
That timing mismatch is exactly the kind of risk Ind AS 115 was designed to prevent. Under paper-based systems, businesses cannot record revenue until the signed POD returns³ and is verified and if deliveries straddle quarter-end, recognition can slip or be prematurely booked, exposing companies to compliance and audit issues.
Moreover, manual POD handling is prone to errors and loss. Paper forms might be misplaced, damaged, or filled out incorrectly. For auditors and compliance officers, missing or illegible POD documents raise red flags. An unreliable audit trail for deliveries presents a risk to revenue recognition audits. Auditors require proof that every recorded sale has been successfully fulfilled. With paper records, retrieving and validating this evidence is labor-intensive and uncertain. There’s also the matter of freight audit: accounts payable teams must verify carrier invoices against delivery records. If PODs are missing or delayed, verifying that a carrier actually completed the service before paying them becomes difficult. Industry best practices advise that carriers should only invoice upon delivery with an attached proof of delivery⁴, to ensure all contracted services were completed before payment. Paper-based systems make this hard to enforce consistently.
Finally, traditional POD methods simply don’t scale well in today’s high-volume, fast-paced logistics operations. Companies now deal with thousands of deliveries across widespread locations. Collecting stacks of signed papers from every driver and storing them is cumbersome. It’s easy to see how logistics compliance can suffer when a critical process relies on shuffling paper, the risk of non-compliance with accounting standards or even regulatory document retention requirements increases.
Given these challenges, it’s no surprise that businesses are shifting to Electronic Proof of Delivery (ePOD) solutions. An ePOD is essentially a digital version of the delivery confirmation; it captures the same information (who received the goods, when, where, and in what condition) but in electronic format. Instead of a paper form filed away in a cabinet, the proof is stored in the cloud and accessible in real-time. Electronic proof of delivery can be obtained via mobile apps or handheld devices that drivers use to collect signatures, photos, or OTP (one-time password) confirmations from customers. Once the delivery is completed and confirmed digitally, the record is instantly transmitted back to the company’s systems.
Example of a digital proof of delivery interface on a mobile device, capturing the recipient’s signature and delivery details in real time. Switching from paper to digital POD ensures that delivery confirmations are available immediately and are stored securely for future reference.
Adopting digital proof of delivery offers multiple advantages that directly address the pain points of paper PODs:
With such benefits, it’s evident that electronic proof of delivery is a game-changer for logistics and accounting processes. It transforms POD from a bottleneck into a seamless, integrated part of the workflow. Many logistics and transport firms in India use ePOD as a mandatory step before issuing freight invoices, according to The Economic Times⁶, transporters often wait until PODs are submitted before generating billing documents. In summary, ePOD solutions provide the real-time accuracy and efficiency that modern supply chains need to stay compliant with revenue recognition rules like Ind AS 115 while also improving overall performance.
In Part 2, we’ll move from why to how; exploring how to implement ePOD, integrate it with ERP and GST workflows, and ensure audit-proof revenue recognition. We’ll also spotlight FreightFox ePOD in action, with real-world examples and best practices. Stay tuned.
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