The trucking industry is crucial to the national economy, transporting more than 72% of freight by weight. Outdated payment methods, however, hinder efficiency, prompting the search for faster, digital solutions.
A PYMNTS Intelligence report, “Fast-Lane Finance: Accelerating Payments in the Trucking Industry,” in collaboration with Ingo Money, explores how the industry is overcoming challenges, adopting new technologies and improving cash flow through quicker payment systems.
Roadblocks Impeding Payment Flow
The trucking industry operates in a highly complex regulatory and operational environment, which is complicated by the continued use of paper-based payment methods. According to the report, 65% of trucking companies manage at least seven different types of freight shipping, each requiring separate payment processes. These include trucking, rail and shipping containers, which involve distinct payment methods, creating additional work for accounting teams. The reliance on manual payment methods is problematic as it increases the risk of errors such as duplicate payments or miscalculated charges.
Manual processes can result in poor bookkeeping and compliance issues, with trucking companies risking penalties due to inadequate documentation. The slow pace of traditional payment methods hampers cash flow, damaging vendor relations and workforce morale, particularly for independent contractors facing payment delays.
The Road Toward Advanced Payment Systems
To alleviate these challenges, trucking companies are turning to more advanced payment technologies. Embedded finance solutions, including real-time payment systems, offer a promising path forward. By moving away from outdated systems such as checks and cash, companies can automate the simultaneous flow of payments to and from vendors and carriers. Real-time transactions, as opposed to the days-long delays of traditional methods like ACH payments, are more efficient and reduce the workload for accounting teams managing complex payment ecosystems.
The benefits of automation extend beyond payment speed. These advanced systems also streamline the process of managing logistics and documentation, preventing delays that can lead to cargo sitting idle on docks. Embedded finance solutions allow for seamless coordination between payment systems and operational processes, improving cash flow and reducing administrative costs. With inflation driving up costs and a shortage of drivers, efficient payment methods become crucial for maintaining smooth operations and ensuring the financial health of trucking businesses.
Improving Cash Flow Through Faster Payments
Innovative accounts payable (AP) systems play an important role in the trucking industry, particularly as companies seek to manage increasing volumes of payments. Consider 55% of transportation companies view AP platform innovation as a key goal. Among those who have implemented automated AP systems, 61% reported high satisfaction with the improvements these platforms bring.
Faster payments can significantly improve cash flow for trucking companies. Currently, many large corporate customers take up to 60 days to settle invoices, despite having 30-day payment terms, which creates cash flow problems for trucking firms. By accelerating AP processes, these delays can be mitigated, ensuring timely payments to truckers and reducing financial strain. As the demand for faster and more efficient payment methods increases, more companies are expected to adopt these technologies, with 72% of trucking firms anticipating a rise in payables in the coming years.
