Build Better Carrier Relationships With On-Time Payments

Shippers are living in challenging times. Carriers have more options, and arguably more power, than ever. This extreme market shift has put shippers in a unique position, grappling with unsustainable rates, capacity restraints, and unpredictable service. These often result in expensive spot transactions, delivery delays, and unhappy customers. Shippers have little to no leverage, which is an uncomfortable position to be in.

For the first time ever, the market is favoring the carrier.

Because of that, shippers are facing a new demand to keep carriers happy. One of the few controllable elements is on-time payment. Late carrier payments used to be a nuisance, or a negligible dynamic; now, in this new market environment, they are a risk that shippers cannot afford to take. Carriers are spoiled for choice, and if they are going to be paid late, they will take another ready-and-waiting option without batting an eye, regardless of negotiated contracts.

Increasingly, carriers are demanding faster payment terms, and shippers are having difficulty retaining capacity commitments from suppliers. This impacts shipper days payable outstanding (DPO) and working capital objectives, creating more financial risk.

Bottom line?

On-time carrier payments are imperative.

Shippers who can consistently offer faster payment terms to carriers become shippers of choice. But anyone from finance to accounts payable already understands the complexities of achieving on-time payments.

Shippers with global operations, managing thousands of payments to multiple carriers across multiple modes of transportation and regions rely on traditional payment systems that invariably leave gaps and delays. This means that the systems are broken and must be fixed before carrier churn becomes a reality.

Technology holds the answer.

There are four ways that automating carrier payments resolves the most common obstacles to making on-time payments:

  1. Reducing pressure and workload for internal AP teams
  2. Ensuring efficient payments to carriers
  3. Shifting payment reconciliation and fraud protection from shippers to a neutral third-party provider
  4. Improving relationships with carriers

Note: Trax Carrier Management Services is the best solution in the world, providing essential resources to support shipper/carrier relationships. Learn more here.

Reducing Pressure and Workload for Internal AP Teams

If paying carriers on-time was easy, this conversation wouldn’t even need to happen. The truth is, internal AP teams already know the bottlenecks, holdups, friction, and frustration of the traditional payment system. Thousands of times a year, if not a month, they face endless cycles in which the team loads, reconciles, processes, confirms, troubleshoots, pays, and then does it all again. A single extra weight, imbalance, or missing piece of information can disrupt what is already an ill-functioning system.

This isn’t the cost of doing business anymore. In fact, automated carrier payment systems can ensure efficiency, leveraging the power of clean and reliable data to provide clarity and actionable insights. Most shippers long ago outgrew manual processes; now, the technology and automation exist to support business operations at any scale.

Ensuring Efficient Payments to Carriers

Efficiency is the name of the game. It is what is meant by “on-time payment.” Carriers who have more choices than ever will not wait around for delayed payments. They don’t have to. To ensure efficient payments to carriers, freight audit and payment (FAP) systems are key. A refined FAP system will collect, cleanse and normalize invoice data necessary to meet both audit and business rule requirements. Reviews, adjustments, and verification can all happen automatically, generating accurate invoices. This in itself has been revolutionary in our industry, as invoice inaccuracies are a major source of late payment to carriers and revenue loss. 

A second way in which technology can offer an assist in accelerating payments to carriers is through new financing options. Knowing what must be paid isn't the same as having it on hand to pay out. We have a solution for that (more in a minute).

Payment Reconciliation and Fraud Protection

Building the infrastructure for payment reconciliation and fraud protection is a massive undertaking, not to mention maintaining it in perpetuity. Instead of that time and cost intensive route, many shippers are looking to third-party providers for payment reconciliation (often a function of FAP) and fraud protection. By using a trusted partner, internal stressors are relieved, and the list of what must be done, cross-checked, or reviewed can be shortened.

Improving Relationships with Carriers

“. . . .there are certainly things that shippers can do to become more attractive to the carrier community."
U.S. Express Chief Revenue Officer Justin Harness

Shippers are feeling the new world order of carrier relationships. Strategic changes are required to stay on top of carrier payments, but the benefits are manifold:

  • Carriers gain peace of mind, benefitting from the transparency and predictability of systems that enable on-time payments.
  • Using electronic methods and automation can reassure carriers that the shipper is aware of and adapting to the future, making them a viable long-term partner for growth.
  • Shippers are enabled to secure capacity more easily (and longer-term) and move freight reliably.
  • Operational efficiencies shrink timelines and streamline coordination, which impacts both internal and external stakeholders.

Annual and surcharge rates are rising, which puts a strain on shipper budgets. Getting a hold of all costs, and managing freight payments efficiently, is key to healthy business operations.

Becoming a shipper of choice doesn’t happen overnight. It does happen by paying attention to what carriers want, and providing it to them in a timeframe that satisfies their needs.

Supply Chain Financing for On-Time Payments

One of the overarching challenges to on-time carrier payments is working capital. Because of the variety of dates, systems, protocol, timelines, invoicing, and more, accounts payable personnel are often put in an impossible situation. Yes, on-time payments to carriers is essential to keep the service. But the money has to come from somewhere.

At Trax, we witnessed shippers in our network come up against this issue repeatedly, which is why we have launched an advanced, simple solution.


What is TraxPays?

TraxPays is the Trax Technologies solution for building better carrier relationships with on-time payments. Using Trax’s standard invoice payment services, TraxPays provides shippers with the ability to offload traditional AP responsibilities. Shippers simply fund Trax for all of the invoices and Trax disperses funds through a set of available payment options to each carrier. The carrier can then choose how they are paid, giving them confidence in the payment process.

TraxPays+ Shipper Financing

As an extension of TraxPays, TraxPays+ provides shipper financing, allowing shippers to improve their working capital without incurring debt, all while paying their carriers on time. This empowers shippers to confidently agree to carrier payment terms, which are getting shorter and shorter, in turn helping them become a shipper of choice in the eyes of the carrier.

TraxPays+ provides shippers with a window of time (30-150 days) in which they fund Trax. Trax will continue to pay carriers on time without shippers having to keep up. This alleviates the strain on working capital without incurring additional debt. Increasing working capital has a positive impact on the business, enabling it to overcome short-term cash flow challenges and providing the right resources at the right time.

This system of supply chain financing for on-time payments is made possible through our partner, Raistone, and you can learn more about TraxPays here.

On-Time Payments = Better Carrier Relationships (Everybody Wins)

Carriers aren’t accustomed to the power seat. The truth is, though the power-balance has shifted, carriers still want what they’ve always wanted: reliable, consistent work and timely compensation. Providing on-time payments results in better carrier relationships, which makes revenue more predictable and businesses more secure.

All of this is achievable if you break up with outdated payment systems and let TraxPays do the work for you. To get started, schedule a consultation today.

Trax Technologies

Trax Technologies

Trax is the global leader in Transportation Spend Management solutions. We partner with the most global and complex brands to drive meaningful optimizations and savings through industry-leading technology solutions and world-class advisory services. With the largest global footprint spanning North America, Latin America, Asia, and Europe, we enable our clients to have greater control over their transportation performance and spend. Our focus is on your success.