The factoring company OTR Solutions has put Seattle-based digital freight brokerage Convoy on its “Do Not Buy” list, indicating that it will no longer pay carriers for Convoy loads.
Small carriers and owner-operators use factoring companies to get paid immediately for hauling shipments: The factor buys the invoice from the carrier and collects from the broker later. The factor has to assess the creditworthiness of the brokers whose payments it’s buying, and that’s where the trouble with Convoy came.
In a phone conversation with FreightWaves, an official at OTR Solutions confirmed that this screenshot posted to the carrier Facebook group Rate Per Mile Masters on Thursday night was authentic:
(Image: Facebook / Rate Per Mile Masters)
The OTR official said that OTR asked Convoy to pay an outstanding balance down from $500,000 to $300,000, but Convoy said that it could not. Then OTR asked for financials as part of its standard procedure to assess the health of the company, and Convoy would not provide the information.
The OTR official explained that since the Surge Transportation bankruptcy, which listed more than a dozen factors as creditors, factoring companies have had no choice but to protect themselves against what he called “bad business.”
A week ago, FreightWaves reported that Convoy hired an investment banker to advise the company on strategic interest, including a possible sale of the business.
FreightWaves has requested comment from Convoy and will update this story.
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