Jeremy Feucht | Truckstop.com
In the transportation industry one of the new buzz technologies is payment platforms. In this article we will discuss what a payment platform is, how they work and what questions you need to ask before selecting one if they are a good fit for your business.
What Is a Payment Platform?
Payment Platforms specialize in the movement of money and take the stress out of handling financial transactions. They specialize in the security of information while being able to bring efficiency and potential savings to the accounts payable process. While we would all like to be able to handle as much of our business in house as possible, there are times when outsourcing functions of the business just makes sense. Think of it the same way you would when recommending a shipper to use a brokerage firm.
How Do Payment Platforms Work?
First step is the broker will need to transfer their accounts payable information to the payment platform. The platform then transfers money to all of your carriers and factoring companies for freight payments. After funds have been released to the carrier or factoring company, the platform pulls funds via ACH from the brokerage firm. To create efficiencies, it is best if a broker is able to integrate their accounts payable system or transportation management system with the payment platform. This creates another layer of efficiency to aid both the carrier and broker.
Whether or not you choose to utilize a payment platform providing bank level security or better is your responsibility if you are storing a carrier’s information.
What Are the Benefits?
The biggest benefits are the efficiencies created for both carriers and brokers. These payment platforms enable the broker to focus on revenue-generating areas of their business. Using the right payment platform partner provides a path to take a nonrevenue generating part of your operation and change it to a revenue opportunity. Payment platforms also provide visibility to the carriers about their freight payments by utilizing a web portal and mobile technology. If you are a broker using paper checks to pay your carriers, the cost saving paired with efficiency makes a payment platform an attractive option. Issuing paper checks is one of the most expensive and least efficient ways to move money.
Payment platforms also give carriers flexibility to choose the length of their payment terms and the way they receive their payments. Payment platforms offer a competitive option to using a factoring company. This technology provides the same service a carrier is looking for when they engage a factor without many of the contractual obligations that come in the factor carrier relationship.
How Do Payment Platforms Help Reduce Fraud?
Payment platform companies should be equipped with bank-level security to protect both the broker’s and the carrier’s account and banking information. Providing this security is extremely important in this technology business environment. Whether or not you choose to utilize a payment platform providing bank level security or better is your responsibility if you are storing a carrier’s information. The compliance and regulation around protecting this information is getting more expensive and complicated all the time.
What Questions Should Brokers Ask When Choosing a Payment Platform?
Ask yourself these types of questions: Is this payment platform trustworthy? Who are they backed by? Do they know anything about the transportation business? How are they going to protect my information as well as my carrier’s information? What competitive advantages does the platform provide carriers? Do the terms benefit my company more than what is being used now? How else can it streamline my business? Make sure to look into multiple companies before coming to your final conclusion.
By asking the right questions and doing the proper research, brokers can find a suitable payment platform that offers terms beneficial for them and their carriers. Bottom line: Payment platforms offer a viable and efficient solution for both the brokerage and carrier communities.
The author, Jeremy Feucht, is a Regulatory Analyst with Truckstop.com in New Plymouth, ID. He can be reached at JeremyFeucht@truckstop.com or (208) 674-6367.