FreightRover, a company working to accelerate B2B payments to truck operators, has secured $500 million in financing to fuel its factoring operations.
Reports in The Wall Street Journal (WSJ) on Wednesday (Sept. 26) said Crayhill Capital Management provided the investment. FreightRover will use the funds to bolster its invoice financing services for truck operators that wait to get paid from shippers. The company offers an app for truck drivers, which can allow access to funding as soon as they input information on their shipments.
“It’s a very challenging place for the little guys to access capital,” said Crayhill Principal Carlos Mendez in to the WSJ.
According to reports, FreightRover will be able to roll the $500 million over every 42 days, allowing the company to rotate $4.5 billion in financing every year.
Factoring can be a controversial industry, thanks to high interest rates. In FreightRover’s case, annual percentage rates are between 9.5 percent and 12 percent for carriers that need financing, but may find that favorable to waiting several weeks to get paid. Reports noted that the company also digitizes this process, making it easier for truckers to operate.
Reports noted that, across industries, large firms take longer to pay their suppliers. The 1,000 largest U.S. firms analyzed by The Hackett Group took an average of 56.7 days to pay their suppliers in 2017, an increase from 2016.
In this climate, the trucking industry is dominated by smaller players, with nearly all of the 700,000 private carriers registered with the Federal Motor Carrier Safety Administration operating only a handful of trucks, reports noted. The demand for trucking services is on the rise, however, with shippers struggling to find trucks and willing to pay more for trucking services.
This market climate does place some leverage on the side of the trucker, Mendez noted. “If a trucker has a choice between companies, and one pays faster than the other, they’ll go for the quick pay option,” he told WSJ.