Trouble getting carriers paid correctly and on time? You’re not the only one. Many brokers are simply unaware of the various payment processing options available to them and may feel stuck with an option that just doesn’t fit their brokerages’ needs.
Let’s get down to the basics. We’re breaking down some of the most common payment choices and the benefits and drawbacks of each so you can make the best decision for your business.
Money Matters
In freight, timely and correct payments to carriers are critical. They are vital to building solid and reliable relationships with the carriers you depend on to keep business running smoothly. A missed or late payment can erode the trust between broker and carrier in a major way. At the end of the day the carrier has a relationship with you and not the customer, so the option you choose can really make or break those partnerships.
So Many Options – Which One Works for You?
Here are a few of the typical ways brokers process payments in the industry.
Invoice Factoring: If you don’t have those types of funds, you may choose to go with factoring companies like OTR Solutions. They offer a valuable alternative by purchasing your unpaid invoices at a percentage of their total value, so you get cash upfront.
Pros: You get immediate working capital without needing prickly traditional loan qualifications. Factoring companies handle the collections, giving you a break on the administrative side. Another benefit of using OTR Solutions is that you can access flexible credit limits to help grow your business, so you can seize growth opportunities with the usual financial barriers. Cons: Incurs fees, reducing the overall profit margin on loads. You’ve got to depend on the factoring company for managing receivables.
Business Line of Credit: A flexible option that allows brokers to draw on a line of credit to pay carriers, depending on their cash flow needs.
Pros:Flexibility to draw funds as needed.Potentially lower interest rates compared to high credit card rates. Cons: You’re going to need pretty good credit, which may limit access for newer brokers. Can lead to tricky debt issues if you don’t manage things carefully.
QuickPay Options: If you’re looking to speed up carrier payments, QuickPay is a service offered by some factoring companies. While some factoring companies may offer same-day payments, the time frame can vary, with payments sometimes taking up to five days.
Pros: Attracts carriers who desire immediate payment.Build up a reputation as a broker making fast payments, making you a competitive option. Typically, QuickPay comes with higher fees, which may increase revenue. This is pretty great if you’re managing large volumes of transactions where slight fee increases mean a substantial boost to total revenue. Cons: Usually involves a fee, costing more than traditional payment terms.May require brokers to have built up a reputation with a factoring company.Operating a QuickPay service requires careful management to ensure that payments are free from errors. This can add to your administrative burden.
Emerging Trends in Payment Processing
As we move toward a more data-driven and automated future, it only makes sense that payment processing should follow that trend. Today’s freight broker should also look at managing transactions with the use of smarter, more technologically advanced options.
Epay Manager Powered by OTR Solutions is one of those dynamic solutions that dramatically cuts down the time to complete payment cycles by automating what used to be manual tasks.
Epay Manager is a back-office automation solution that enables teams to easily collect and process carrier invoices, manage disputes, schedule carrier payments, and bill customers in one centralized platform for AR and AP teams.
Integration with TMS: Epay Manager plugs right into your existing TMS, pulling data directly for creating invoices. This saves time and reduces errors associated with manual data entry. Audit Proof Invoicing: By harnessing real-time shipment data from your TMS, each invoice is not only accurate but also audit-proof. This system facilitates smoother transactions by allowing carriers to accept rates and upload delivery documents directly to the invoice, significantly reducing disputes and speeding up the payment process.Electronic Invoicing: Ditch the paper, you’ll save trees and accelerate your payment cycles, which will boost your cash flow significantly. Plus, this allows for multiple forms of financing, making it customizable to each carrier’s preference.Enhanced Security: With state-of-the-art encryption and a robust firewall, Epay Manager ensures all your transactions are secure, giving you peace of mind.
If your focus is on deep integration with existing systems, minimizing administrative tasks, and enhancing operational efficiencies with automation, Epay Manager may be the winning option for you.
