Paving the Future Way: The Importance of Deep Integrations with Factors and Carriers

As the freight industry and its many carriers face continued uncertainty, open payment networks stand out as a solution to create deep integrations between factors and carriers, ultimately enhancing invoicing, defending against fraud and providing more real-time insights to all parties.

BY MELISSA FORMAN, PRESIDENT, TRIUMPHPAY

Truck drivers face a lot of problems on the road: record-high diesel prices, spot rates significantly down from record highs, a slower freight market at the end of 2022 without the normal seasonal lift, long holiday hours away from families, and a driver shortage that’s been plaguing the industry for years. The freight industry is also fractured and beset by fraud at all levels.

On top of all of that, most drivers have to wait up to 30, 60, or 90 days to get paid for their deliveries, an archaic payments system that doesn’t deal with the realities of today’s economy. So many things can change due to the supply chain, inflation, or consumer spending within 60 days that it’s impossible to prepare for, for any business. Spot rates falling hurt truck drivers’ margins even more, as they are often hauling freight at a loss, further cutting into drivers’ profits. That’s why the relationship between factors and carriers is more important than ever during this stressful time for the freight industry.

Factoring is a fast and efficient way to get drivers paid more quickly and to keep freight moving. But more can be done to connect the factor with the truck driver, the lifeblood of America. As the freight industry moves into the future by accelerating its adoption of technology, longer pay periods and the risk of fraud can be reduced. By using data verification as the source of truth for live load data, technology can help alert factors and carriers to any fraudulent and doctored invoices, as well as incorrect bank account information. But this can only be achieved by the factor and the carrier integrating with each other beforehand through an open payments network.

Open payments networks offer visibility into invoicing and auditing of freight load data for all involved parties. Network participants can be alerted ahead of time to invoices that do not exist, invoices that don’t match listed amounts, or different bank account information. Keeping factors and carriers connected through the network allows both parties to share data with each other to construct a more efficient, safer and easier payments process. Another benefit to open payments networks is that as more participants join the network, the data it collects becomes more accurate as it gains comparison points. Factors and carriers can use this to their advantage and gained even more insights into their operation in real time.

Improving the Back-Office

Factors and carriers can face several back-office issues preventing them from completing their primary jobs quickly and efficiently. Most carriers and factors still have to submit and subsequently verify invoices through emails and phone calls, creating manual touchpoints that take up several hours for workers. Many scaling businesses, as a result, continue to increase headcount to handle the outsized volume of paperwork.

In addition, it takes time to integrate systems and technology, and more than 90% of carriers run fewer than six trucks. These small businesses change ownership, banks and operating procedures all the time, and factors have to account for changing carrier dynamics. In many cases, new carriers may only operate for six to nine months, especially during such a tense time in the industry as we’re facing today, making individualized integrations unscalable. Factors can stay ahead of changes to carriers and their operations if they’re synchronized already with their payments systems.

Factors do a lot for carriers already, providing quick cash to cover most expenses on invoices and supporting carriers credit and collection processes. This helps carriers maintain stronger cash flow and strategize their business expenses. Carriers are focused on moving freight, and factors help them do that more frequently. But both carriers and factors can utilize technology to speed up their invoicing and auditing processes.

By participating in an open payments network, carriers and factors can help contribute to a safer industry with less risk. Imagine a web of interconnected carriers and factors that help the network grow stronger and more resilient to outside sources as more connections are added. Open payments networks work because connecting disparate systems at the source of truth prevents fraudulent activity, as the network can identify suspicious activity or flag any unusual invoices.

The Way to the Future

Factoring of the future will be indispensable as an important partnership between factors and carriers. The way to ensure that this relationship stays healthy is by creating a deeply integration between the carrier and the factor to bring them both the most accurate data and speed up communication between their payment systems. By connecting at the source, factors and carriers can reduce risks to their bottom line and protect their businesses by dealing honestly with each other and facilitating efficient, secure and fast communications.

The freight industry needs to change and adopt technology much more quickly than it has over the past several decades. Through an open payments network, carriers and factors can enhance their invoicing and create a safer and more resilient freight industry.