Choosing a Freight Bill Processor
As freight payment processor IPS Worldwide heads to bankruptcy court, shippers are reminded how important it is to be diligent when choosing a freight bill processor. Stanley Black & Decker learned it the hard way, alleging in an interview that IPS "diverted, stole or otherwise misappropriated" its funds and owed the company an estimated $41 million.
When selecting a freight bill processor, look for best-in-class providers that:
- Never co-mingle clients' funds with their own operating cash.
- Will not use client funds for any purposes other than to pay carriers.
- Have their financial statements audited by a reputable public accounting firm annually.
- Confirm the soundness of their internal controls by having a SSAE 18 (Statement on Standards for Attestation Engagements No.18) Type II and an ISAE 3402 (International Standard on Assurance Engagements 3402) Type II performed annually and share their auditors' reports with prospective clients.
- Have a significant (approximately $50 million) employee dishonesty bond in place.
- Have no or minimal debt.
- Are Privacy Shield Framework certified to ensure compliance and commitment to data privacy. Shippers with European Union data should look for freight processors that are GDPR-compliant or working toward compliance.
In addition, shippers should ask their carriers about freight payment vendors that make payments to them. Carriers can identify those who make payments according to the shipper's instructions and those who do not.
Carriers are also a good source of information as to the quality of the vendor's audit and how well the vendor responds to their inquiries.
—Harold Friedman, Data2Logistics