U.S. Bank on Monday unveiled a new extended term financing capability aimed at allowing shippers to more easily extend their days payable outstanding without delaying payment to their carriers.
U.S. Bank is one of the largest vendors in the automated freight payment landscape and a pioneer in the market. The bank automates the scheduling of payments and delivers transparency that promotes accurate accrual and better forecasting of freight spend. The bank said the new extended term financing would allow shippers and carriers to better manage their working capital without renegotiating contracts.
“Transportation is a cash-intensive business that demands timely payment,” said Rick Erickson, global director of Freight Payment Solutions at U.S. Bank. “With extended term financing from U.S. Bank, shippers can defer payment for 30, 60, or even 90 days, making their cash on hand go further, dramatically increasing the value of their freight spend, and giving them greater flexibility. To the carriers, the change is invisible; they will continue to enjoy accelerated payment. This combination of extension and acceleration benefits everyone.”
Extending payment terms is an important benefit of using freight payment systems, as shippers (particularly large shippers with lots of volume) seek to preserve cash for as long as possible.
According to American Shipper’s
2013 Transportation Payment Benchmark Study, more than one in three large shipper respondents saw value in stretching their payables, compared to one quarter of small and mid-size shippers respondents. The majority of respondents to the 2014 Transportation Payment Benchmark Study (due out later this year) said they will seek to extend payment terms this year and indicated they will do so via renegotiation, not through a financing tool or through a new freight payment system.