A Freight Payment System (FPS) is a specialized tool for freight brokers that streamlines the process of paying carriers, credit checking customers, invoicing freight charges, and reconciling payments between shippers, carriers, and other parties involved in the transportation of goods. Freight Payment Systems are one of many key components to a robust freight tech stack.
The emergence of Freight Payment Systems has leveled the playing field for freight brokerages. Once the domain of only larger entities, Freight Payment Systems are now being used by freight brokers with a growth mindset – such as SmartBrokers – that need an integrated digital system to compete in today’s marketplace.
Key functions of a Freight Payment System
A FPS streamlines and automates manual tasks throughout the full life cycle of a load, including:
- Customer credit checking
- Flexible financing options including factoring, cash, lines of credit
- Invoice receipt and verification
- Invoice audits
- Carrier payments, scheduled based on term agreements and with a QuickPay option
- Detailed reporting on financial aspects of business
What are the benefits of a Freight Payment System?
Freight brokers with a growth mindset and eye on the continuous evolution of the logistics industry know how to intelligently leverage their FPS to optimize and streamline business operations. There are several benefits to using a FPS, including:
Improved carrier relationships
A carrier dashboard reduces the number of check calls a brokerage receives by enabling carriers to track the progress of their payments and ACH receipts. By providing accurate, timely payments to carriers, a FPS can help to improve relationships with these important partners.
Increased efficiency with automation
Freight brokerages should be focused on building and maintaining relationships, not chasing down invoices and fielding daily (sometimes hourly) calls from carriers looking for payment. Automating manual financial tasks reduces the time and effort freight brokers spend on billing & invoicing, payment processing, and financial reporting. This helps businesses save time and money, and frees up resources to focus on other revenue-generating aspects of the business.
Enhanced business visibility and reporting
Freight Payment Systems provide real-time information on financial transactions and balances, giving freight brokerages better visibility into the financial health of their business. With all financial transactions stored in one centralized location, it becomes easier to report on financial activity allowing for more efficient record-keeping, compliance reporting, and awareness of the health of the business. Freight brokers are able to make more informed decisions about their business strategy and identify key areas for improvement.
Integrated tech stack
Avoid switching between multiple systems, and make life easier on you and your team to track and manage data. Freight Payment Systems often integrate with other software solutions, such as accounting software and transportation management systems, to provide a more seamless experience for managing business tasks. .
Freight Payment Systems include robust security features to protect sensitive financial information and prevent unauthorized access. Brokers can store important data, such as carrier banking information, in a single location eliminating the security risks associated with maintaining this information in-house. Freight Payment Systems ensure the safety of financial data and a freight brokers’ book of business, and reduce the risk of fraud or other security breaches.
Flexible financing options
Freight Payment Systems provide flexibility to brokers when it comes to selecting the best financing option for each load. Freight brokerages can toggle between self-funding a load or factoring. When using a FPS, brokers are in full control of their finances without limiting terms and contracts.
Who uses a Freight Payment System?
Freight Payment Systems can benefit freight brokerages of all sizes whether they are managing 10 or 100,000 loads a month.
Scaling freight brokerages on the cusp of hiring back-office staff, like accounting or invoice managers, are uniquely positioned to implement a FPS into their freight tech stack. A FPS can reduce the number of headcount needed to manage invoicing, payments, and manual document upload. Brokerages can instead redirect that employee headcount to revenue-generating roles and activities.
How Long Does it Take to Implement a Freight Payment System?
Ultimately, it will depend on a freight brokerage's current technology stack, the number of loads and carriers, and the type of financing being used.
Most Freight Payment Systems require an application including MC numbers, owner information, articles of incorporation, and banking setup to facilitate payments. The application can take 5-10 minutes.
The application is then reviewed by the Freight Payment System for several factors including business liens, violent crimes, and active MC in good standing with FMCSA. This process can take 1 to 2 business days depending on when you send in the application.
Once approved, freight brokers are invited to schedule a 30 minute call to set up the dashboard and walk through the first job submission.
For larger freight brokerages looking to integrate their systems, it can take an additional 1-2 days to sync and populate the data across platforms.
In all, implementing a FPS depends on the complexity of your technology stack and size of operations. Most freight brokerages can implement a FPS in under a week with little disruption to business.
Freight Payment System: Your Key to Being a SmartBroker
As the logistics industry continues to adopt technology, a FPS is an essential tool for almost every freight broker.
From enterprise freight brokerages to growth brokers, a FPS will help with:
- Save time on manual processes with automation
- Reduce human errors and security risks
- Access to flexible financing from factoring to self funding
- Financial reporting and business health visibility
- Make data-driven decisions
If you are in the market for a FPS, a representative can walk you through Denim's platform and financing options.