Bankruptcy erodes trust in independent freight payment vendors

Bankruptcy erodes trust in independent freight payment vendors

Bank-backed freight payment vendors are perceived to be more heavily regulated and thus a safer option with which to entrust millions of dollars. Photo credit:

There has long been a school of thought in the world of freight payment that shippers have two choices if they’ve decided to work with a freight payment and auditing vendor: go with a bank-backed vendor or one unaffiliated with a bank.

The choice can seem obvious. Bank-backed vendors are perceived to be more heavily regulated and thus a safer option with which to entrust millions of dollars of freight spend. Still, that hasn’t prevented a healthy portion of the market from working with non-bank affiliated vendors, mostly because of the lower costs involved.

The question going forward is whether those non-bank backed entities might be losing market share. It’s often the case that a single bankruptcy among smaller independent freight payment vendors leads shippers to retreat to bank-backed players. One such event earlier this year — the February bankruptcy of Florida-based IPS Worldwide — sent shippers scurrying to bank-backed solutions, sources told

IPS owed more than $100 million collectively to its clients, including Black and Decker, Alcoa Corp., and YRC Freight. IPS was acquired in July by a Belgian freight payment and audit services provider, Europe Management SPRL, for an undisclosed sum, taking over all of IPS’ 30 US customer contracts, according to a July Wall Street Journal report. The extent to which IPS’ creditors were compensated is not known.

The demise of IPS is not isolated. Two other independent freight payment vendors, Trendset and TransVantage Solutions, went bankrupt in 2013. Other bankruptcies similarly rocked the market at various points in the 2000s.

Each incident seems to provide the market with food for thought about whether their relationships are as solid as they thought, as well as whether any money saved going with an independent vendor is worth the potential risk.

“We have seen a pretty big recent shift in shippers only using bank-backed freight payment institutions,” said Hannah Testani, chief operating officer at New York-based Intelligent Audit, which provides audit and freight recovery, business intelligence analytics, and contract optimization services to shippers. “After the IPS bankruptcy this year, shippers understand their financial responsibility to their companies to go with a financially regulated bank.”

Shifting away from non-bank backed entities

Intelligent Audit tied up a partnership with one of those bank-backed freight payment providers, TriumphPay, in October 2018, in part because of a belief that shippers will migrate away from vendors not attached to a bank in favor of ones with a formal partnership with a bank-backed solution.

George Lorenze, vice president of North America business development at TriumphPay, said the market is evolving to one where freight payment services will need to rely on the safety of a bank-backed provider. He also said solutions need to cater to not just shipper needs, but those of carriers as well. That’s become more of an issue as shippers push payment terms with their carriers out to as far as 90 and 120 days, leaving carriers struggling with short-term cash flow problems to manage their operations.

TriumphPay offers options for carriers to get paid faster, for a fee on the invoice. “Being a bank helps,” Lorenze said. “We will pay your carriers — get them paid today — and we’ll do that with our cash. We can keep our cash on the balance sheet for 90 days. For carriers, it comes down to cash flow and liquidity improvement. That’s a huge driver of valuation on Wall Street, but small carriers need cash flow as well. It’s putting a lot of pressure on all size carriers.”

The market for early payment solutions for surface transportation carriers is about a 1 to 2 percent discount for next-day payment, Lorenze said. “Anything higher than that, you get into factoring territory. In our model, the carrier can pick which of their invoices they want to get paid quickly.” 

Lorenze said TriumphPay is even getting interest from container lines interested in its QuickPay solution as some shippers push ocean freight payment terms out to 90 days.

The partnership model could well be the path forward for independent invoice auditing companies to stay relevant in a market that’s coalescing around bank-backed solutions, as well as one in which shippers want more usable data from their payment vendors.

Testani said Intelligent Audit’s services are more focused around leveraging analytics to help customers become “smarter” shippers. “We feel like freight audit has become commoditized,” she said. “Everyone says they can do freight audit. Can they? Most still have $25 minimums because it’s so manual. Our shift has moved to taking our customers’ data, going through a data cleansing and normalization process across charges, addresses, and names and then through our [business intelligence] platform.

“What are they doing today and how can we help them deliver shipments faster to their consumers, at cheaper rates with less exceptions?,” Testani added. “Data can be overwhelming, but what we do a great job at is specifically showing our customers exactly what they can be doing to save money.”

Other vendors are helping shippers become more proficient at collecting supply chain data, using freight audit as a means to drive more strategic value in freight procurement and in scorecarding transportation vendors.

Consultants in the freight payment space often urge shippers to think about processes and controls rather than specific vendors. Even non-backed payment vendors have fiduciary responsibilities, so it’s often more about ensuring that funds allocated by shippers to pay specific carriers or third-party logistics providers (3PLs) are segmented by the vendor into individual accounts to which the shipper also has access. Experts also advise that shippers should ensure their funds are not being comingled with other customers.

Contact Eric Johnson at and follow him on Twitter: @LogTechEric.


TriumphPay seems to be just copying what US Bank has done for years.