The Fragmented, Chaotic Current State of Auto Transport Payment Processing

Payment processing is a critical detail in the auto transport industry that can make or break businesses. Everyone from carriers, shippers and brokers in auto transport depend on easy, visible and reliable payments to keep operations running smoothly. 

The industry’s payment landscape, however, is far from standardized — leading to payment uncertainties, delays, frustrations and operational inefficiencies. 

In part one of our two-part Q&A series with Super Dispatch’s principal product manager, Vin Yuldashev, we dive into the world of payment processing, exploring the challenges carriers, shippers and brokers face while looking into the solutions needed to improve the process. 

Can you describe the current state of payment processing in the auto transport space?

Vin: Payments in the auto transport industry are highly fragmented. Honestly, our industry operates like the Wild West in this arena. There is no standard or uniform method for processing payments, which poses significant challenges for everyone in the industry. Efforts have been made in recent years to improve the situation. There are now tools and systems in place, but they’re only making a small dent in standardizing the industry’s varied payment processes.

What are the primary pain points industry players face regarding payments? 

Vin: The biggest issue carriers, shippers and brokers face is cash flow. For carriers, running a company involves significant upfront expenses including fuel, insurance and maintenance costs. These are fixed costs that really eat into profits. That’s why it’s so important for carriers to get paid on time and as fast as possible. For this reason, carriers prefer immediate payment upon delivery, or Cash on Delivery (COD), allowing them to quickly cover their expenses. 

Shippers and brokers wanting to move their loads fast often offer COD payments. However, COD payments come with added risks for shippers and brokers, too, such as potential damages or issues with the load that aren’t discovered until after payments are made. 

Brokers, in particular, have to balance their payments to carriers with the payments they receive from their customers. This creates a situation where brokers often prefer longer payment terms to manage their cash flow effectively. For shippers, particularly dealerships, challenges often lie in the operational aspects of cutting checks and managing the accounting side of payments. They often want to close transactions quickly but face internal hurdles in doing so efficiently.

But payment terms and methods vary greatly across the industry, especially with larger shippers and brokers that handle thousands of vehicles a month. These bigger players often dictate the terms, which can result in longer payment periods of 10, 20 and even up to 30 business days. 

This can be a tough reality for carriers, especially the smaller ones, as they are often at the mercy of these larger companies and have limited negotiating power with payment terms. 

Visibility is another major pain point. Carriers are often left in the dark about when, or even if, their money is on its way. This breeds chaos and uncertainty across the industry.  

Take a carrier not knowing if their payment is on the way for example. They’ll send emails or make a call to check on a payment’s status. Shippers will often respond by taking a screenshot of bank transfers to prove a payment was sent. This may not seem like a big deal, but even the simple process of sending and responding to such inquiries eats into everyone’s time. It’s an inefficient, back-and-forth process that further complicates an already fragmented system.

What do carriers, shippers and brokers want when it comes to payment processing?

Vin: Ideally, carriers want to be paid as soon as they deliver a load, without having to worry about delays or whether they will get paid at all. They want full visibility into their payments so there’s no question about where it’s coming from and when it will arrive. And sometimes they’re willing to pay for faster payment. They’re letting go of 2-5% to get paid quickly. On the other side, brokers want to pay carriers on the medium to fast side. They want to close out transactions while still ensuring they get paid as well. Shippers also want to process their payments quickly, but can run into issues with disjointed departments and antiquated processes. 

In the end, everyone wants a payment system and terms that satisfies all parties involved and ensures timely and transparent payments. 

It makes sense that convenience is a big priority…

Vin: From experience, drivers and carriers normally prefer electronic payments. They don’t want to wait for checks to be cut and mailed. There’s too much risk and waiting involved. And if a shipper says they’ll send a check and don’t, it can ruin a relationship between partners. An electronic, almost instant, payment system is especially important to smaller carriers who don’t have the support of an accounting team to send out invoices and follow up on their payments. 

What challenges do companies face when transitioning to a payment system?

Vin: Every organization runs their accounting and bookkeeping differently. Accounting departments often have their own established way of doing things, and may not want to change their processes to accommodate smaller transportation department needs. 

For example, while the transport department might need to pay a carrier $200 quickly, the accounting team is focused on larger transactions like buying and selling cars, which are a bigger part of their day-to-day operations. Changing their accounting practices just to get payments out faster to carriers and adopting a new system can be a significant challenge.

Clearly trust also poses a challenge…

Vin:  Definitely. Carriers need to trust that they’ll be paid on time and shippers need that the system will handle payments properly. A carrier might wonder, “Will I actually get paid in five days?” If they don’t, they’re left trying to figure out how to collect payment. Building that trust and accountability to make sure both parties follow through is a big issue. That’s the biggest challenge in adopting any new payment system is ensuring accountability and trust. 

In your opinion, what does the future of payment processing look like for auto transport?

Vin: Technology is the future of payment processing. The goal is to move toward a system where payments are more transparent, faster, secure and guaranteed. In the very near future, I think we’ll see more real-time or instant transactions that enable carriers to get paid immediately based upon a load being delivered. Real-time tracking capabilities and geo-fencing already make this a possibility. These technologies can help ensure that a real load has been picked up at a real location and dropped off at a designated area within a geo-fenced area. This will be what helps companies move toward more automated, transparent and quick payment systems. 

Part One Final Thoughts 

From critical cash flow issues to inconsistent payment methods, payment processing in the auto transport industry is fraught with challenges. For carriers, getting paid quickly is crucial to sustaining their business, while shippers and brokers must balance their own financial needs. 

Up next in part two of our Q&A series with Super Dispatch’s Vin Yuldashev, we explore how innovative solutions like SuperPay are addressing these issues, helping carriers, shippers and brokers build both stronger partnerships and operations. 

Read more here about how brokers like Secured Transport got hours back everyday just by using Super Dispatch’s SuperPay.