App-driven tech will accelerate payments to truck operators
Financial technology startup FreightRover has inked a $500 million deal with Crayhill Capital Management to provide accelerated payments to truck operators, a process that traditionally takes several weeks for processing.
FreightRover accelerates payments to truck operators by buying their shipping invoices at 99 or 98 cents on the dollar, known as factoring. Using the company’s app, truck drivers can be paid as soon as they log into their phones and record their shipments, said Carlos Mendez, principal at Crayhill.
“It’s a very challenging place for the little guys to access capital,” he said.
The service is relatively expensive, working out to an annual percentage rate of between 9.5 to 12 percent for the carriers. The technology allows operators to avoid waiting several weeks to get paid, reduces their paperwork and cuts the number of people they need to process invoices, said Eric Meek, FreightRover’s chief executive.
FreightRover will quickly be able to put the full $500 million financing package to work and then roll it over every 42 days, meaning the company could put almost $4.5 billion to work a year.
The 1,000 largest public companies in the U.S. took an average of 56.7 days to pay their bills last year, according to a study from consulting firm Hackett Group Inc., up from 53.3 days in 2016. That was the longest average payment term in the past decade, according to the study.
According to the U.S. Department of Transportation, there were just over 700,000 private carriers registered with the Federal Motor Carrier Safety Administration, and almost all of them operated fewer than 20 trucks.
FreightRover hopes the service will be attractive to small operators who want to get paid quickly and avoid investing in back offices to process invoices.
In addition to the invoice factoring, the FreightRover platform, which launched nationally in 2017, enables drivers to “self-dispatch” freight that fits their needs while improving communication with shippers and carriers, the company said.
Drivers can use the app to check available loads and better manage their day-to-day operations. When selecting the routes they want to drive, owner-operators can input their pay package information to view the expected net pay of each load.
All FreightRover users can access real-time load tracking information, check rates and appointment times, send messages and receive load status updates through geofencing.
The platform integrates with a shipper, broker or carrier’s transportation management system through an application program interface or electronic data interchange.
The app is available for Apple and Android devices.
“Our goal has been to create an intelligent and adaptable interface that’s able to fit the needs of any driver, carrier or shipper,” said Michael Pecchia, president of FreightRover.
Transportation One, a large and fastest-growing logistics company, signed up with FreightRover in August and is using the digital platform for online carrier quick pay, automated LTL rate return and invoicing, as well as a private freight marketplace where shippers and 3PLs post freight to their preferred carriers.
Transportation One selected FreightRover’s suite of tools to quickly add digital freight brokerage to its business model. The company plans to use FreightRover’s customizable platform as a tailored transportation management system unique to its operations to support faster growth and scalability.
Transportation One now will provide its customers with a private, proprietary freight marketplace branded to their business, as well as a carrier-facing portal for quicker carrier payments. In addition, the company will use FreightRover’s white-labeled SmartLTL to instantaneously gather rates from multiple carriers and simplify LTL shipment management.
“Utilizing FreightRover’s leading-edge features and leveraging its technology as the foundation to build our own robust platform enables Transportation One to become a digital freight broker that competes with the top proprietary solutions out there,” said Jamie Teets, chief executive of Transportation One. “We believe that investing in both people and technology will drive efficiencies and improve carrier and shipper satisfaction that will place us at the top of the industry.”