Importers, do you trust that your freight payment and audit vendor will actually pay your carriers with your money? According to an article in American Shipper (February 2015)*, shippers need to be careful of unscrupulous vendors who pool their clients’ monies to fund their own businesses – and neglect to pay the carriers.
Many shippers use the services of a freight payment and audit provider for the obvious advantages:
- Payment accuracy
- Reduced headcount
- Supply chain management analytics
Unfortunately, some shippers fail to inquire whether their vendor prohibits the co-mingling of different shippers’ funds. And here’s the danger:
“When vendors co-mingle funds, it becomes nearly impossible for any individual shipper to maintain visibility into its payments to carriers – that is, until a carrier is not paid on time, and that shipper is alerted to that fact by the carrier. The failure to pay carriers on time on behalf of their shipper customers is generally the first warning sign….
It takes time-consuming, expensive forensic investigations to unspool the details of failed vendors who co-mingled funds. And shippers are the ones who eventually take the financial hit.”
Bottom line: Thoroughly vet any potential freight payment and audit vendors. Ensure that your funds will be maintained in a separate account into which you will have visibility… and continuously monitor the activity in that account to ensure legitimacy.
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