U.S. Bank, one of the nation's largest providers of automated freight audit and payment services, said today it has begun offering extended payment terms to shippers without changing the existing time frame for paying motor carriers.
Minneapolis-based U.S. Bank, which receives funds from shippers and then pays their carriers from those funds, said it is the first provider to give shippers more time to pay their freight bills without delaying payment to their carriers. Under the new program, shippers can defer payments for up to 90 days, while carriers will still get paid under their normal terms. U.S. Bank allows shippers to pay to contracted terms, which are normally 30 days, while it usually pays carriers in less than four days from the time its invoice is approved. The new process is expected to be "invisible" to the carriers, U.S. Bank said in a statement.
Rick Erickson, U.S. Bank's global director of freight payment solutions, said large shippers pushed hard for the program and have subsequently embraced it more than their small to mid-size brethren freight. Erickson told DC Velocity at the NASSTRAC annual conference today in Orlando that big companies are aggressively seeking to extend payment terms across all aspects of their enterprise as a way of better managing their working capital.
Until now, transportation, which is a cash-intensive business, "has been an untouched area" for these efforts, Erickson said. He added that the program could work just as effectively for smaller shippers.
U.S. Bank collects a small fee for its services under the new program. The bank's main objective in launching it is to solidify its relationships with both sides, Erickson said.
