Tech In Focus: Credit monitoring

No carrier relishes the role of lender. The credit you extend to customers is interest-free, and often goes unpaid for 30 days and longer. Any delay in collecting freight payments disrupts cash flow – the lifeblood of business. To minimize the risk and uncertainty of their cash flow, many small carriers factor their receivables – a decision they sometimes regret.

Although it is difficult to predict the exact timing of when a customer will pay, credit scores are a reliable indicator of the ability and willingness of a customer to pay on time. But subscribing to a large credit reporting service such as Experian or Dun & Bradstreet (D&B) can be expensive. Furthermore, the credit reports they offer only provide general information; the payment schedule a shipper or broker uses for rent or utility bills often is entirely different than the schedule they use for paying freight bills.

That’s why many carriers use credit reporting services that were created specifically for the transportation industry – to get a more accurate and complete picture of how shippers and brokers pay their freight bills, and to project their own cash flow.

In addition to using credit reporting services to evaluate new customers and prospects, carriers also use these services to stay alert to any changes to the credit of their existing customers. If another carrier files a complaint against a shipper or broker for late payment or nonpayment of freight charges, this incident does not go unnoticed – or unpunished.

First Advantage Corp. (www.fadv.com) maintains freight payment records on more than 60,000 companies, says Greg Conklin, the company’s executive director of sales and business development for transportation. To help ensure the accuracy of its credit data, First Advantage collects information from 34,000 unique and active carriers.

First Advantage provides “days to pay” information for each company. It gathers this freight payment information using a combination of manual research and automatic uploads from carriers’ billing systems. “It is a very tough piece of data to get, to compile, and it has to be very exact,” Conklin says.

First Advantage offers its CompuNet Credit Report for $7.95; to see a sample CompuNet report, visit www.fadv/transportation.com. The report includes general business credit history from D&B and Experian for a complete credit assessment. Customers also can use a credit monitoring program called Credit Watch; if a company’s credit should decline, First Advantage sends an instant e-mail alert to the carrier.

Fast freight matching
Extending credit is not a decision that can be taken lightly, but it is a decision that must be made quickly, especially when searching for freight online. Thousands of loads and trucks are posted into load boards each day, and thousands of carriers compete for the same loads. If you were to manually order a credit report or check on references, chances are that a shipper or broker that is offering a load will find someone else before you are ready to sign a contract.

To enable a fast and trustworthy freight transaction online, the major providers of freight matching services have made credit reporting an integral part of their business model.

Internet Truckstop (www.truckstop.com) offers a program called Creditstop that features days-to-pay information for any broker or shipper that posts loads to its site. The company also incorporates a program from a general business credit reporting service. The monthly fee for unlimited access to Creditstop is $55.

“We have people that do nothing but monitor and review credit accounts every 90 days,” says Leigh Foxall, director of sales and marketing. Brokers or shippers that use Internet Truckstop must submit their days-to-pay information. To back it up, they also must submit four carrier references. Internet Truckstop verifies the days-to-pay information with each reference.

When a search for loads is performed, the days-to-pay information for each load is listed in a row alongside the other pertinent information about the load. After narrowing the search to a certain lane, carriers also can sort loads by days to pay to help in their decision-making process. If an unresolved dispute or complaint has been filed against the company, the days-to-pay value has an asterisk next to it.

Carriers can add customers to a watch list and receive immediate alerts if the days to pay changes, or if any legitimate complaints are filed against the customer. “We do mediate and help resolve a lot of issues like this,” Foxall says. “We change from information we receive every day, every hour. Our reports change – they are fluid.”

Fleets that use TransCore’s 3sixty Freight Match service (www.3sixty.transcore.com) have unlimited access to third-party sources of credit information such

as D&B and TransCredit, which provides the transportation-specific days-to-pay value. The credit score and days to pay are delivered next to the load information in searches.

“Our focus is to assemble this information in a way that is valuable and informative for our customers,” says David Schrader, TransCore’s vice president of freight business services. TransCore also offers an assurance program as part of its subscription; if a carrier is taking a load from a broker it has not done business with before, and doesn’t feel safe, the carrier can register the load in the program.

“The customer will receive payment from us if he is not able to collect,” Schrader says.

Credit reporting services that gather accurate, up-to-date information on the days to pay for shippers and brokers play a vital role in the industry. Although credit reports are no guarantee, they are a powerful ally in speeding cash flow.