Ever evolving tech is revolutionizing even the traditional activities and bringing an unorthodox way to do the same. Trucking industry could be counted as one such entity. Even today, most of the tasks are dependent upon slow and inefficient methods that end up making people lose most of their time and money.
Credit of money on time in the logistics and supply chain sectors plays a crucial role, which is known to have a pretty large window for payments. Chief commercial officer and lead developer of a fintech and freight company TruckCoinSwap (TCS), Philip Schlump talks about it and shows concerns.
According to Schlump, trucking companies and third party firms facilitating logistics account for one million or more within the United States alone. All these firms more or less are dependent upon banks for their payments. Being a former truck driver himself, Schlump knows the insight working within the trucking industry’s payment system.
Late Payment Settlement a Heavy Burden
TruckCoinSwap developer explained the lading bill for a truck generated when it picks up its load. Primarily it acts as a proof that the truck and the trucking company is now holding and responsible for the load. Just after the delivery, the lading bill automatically converted into a receivable account. However, the payment to trucking companies gets delayed by overall 30 to 180 days.
In hand cash liquidity could be a make or break factor for the industry depending upon its presence or absence. On an average 45 days of payment on hold is a big deal for trucking companies as well as drivers, which could be released on time and unload their burden.
To resolve the issue of payment on time, there comes factoring companies that ensure to make the settlement within 10 to 15 days. However, the usual charge on every invoice is 3% which adds up to 20% to 25% for a year. Although the system is comparatively faster and efficient it still lacks smooth and cheap operation.
Tokenization: a Potential Solution
Schlump argues the issue could be solved by bringing tokenization. His company TCS acts the same as a factoring company but with settlement services based on tokens. This would allow companies to receive payment at face value within bare minimum time.
In September this year, TCS also launched its native TCS Token intending to directly work with companies making them use the token and buy lading bills.
Given the transformation in terms of driving automation and GPS services, etc. decentralized finance within the trucking could also act as a crucial factor.
Source: https://www.thecoinrepublic.com/2022/11/07/resolving-trucking-industrys-slow-payment-settlements-through-tokenization/