In October, CEO Jim Swift shared our transportation industry analysis with the Transportation Revenue Management Group at their Fall Conference. It was great to connect with many customers at the event and the conversation resulting from the analysis was fascinating.
For those who are unfamiliar with the Cortera Credit Exchange, the source of the analysis, it is a collaborative network of companies who contribute accounts receivable data each month. The payment and purchase behaviors are combined with other information sources such as industry trends, public records and news. A powerful combination which provides predictive insight into the opportunity and risk within their portfolio of customers as well as other companies within the network.
This information is then updated every day to help network members monitor changes in risk across these companies through daily alerts and comprehensive monthly reports. Customers define strategy and create scoring models by appending other data sets and attributes. Information is accessible through an online platform, Cortera Pulse, as well as API integration and batch processes. The Cortera Credit Exchange uniquely tracks the importance of industry-specific transactions and how those trends impact business processes over time.
Industries behave differently from one another, so we segment and track them individually. Similar to how consumer credit companies categorize your purchases, the transactions of each network contributor are classified into one of 45 industry categories. Examples include spend in materials, operations, shipping, etc. The Cortera Credit Exchange contains over $1.3 trillion in B2B spend across all industries. The fourth largest category in our network is Transportation. It has over $250B in annual transactions.
To better understand the various dimensions within an industry, each one is refined into segments. The Transportation industry has eight segments; supplies, leasing, truckload shipping, fuel, rail, LTL shipping, services, air cargo, and rail. Why? Because not all segments pay, or get paid, the same. It is important to understand these behaviors to avoid a disruption in operations and cash flow. The difference in behaviors can vary greatly, which is why there’s such a margin between the spend in each segment. The chart below shows how the largest segment, truckload shipping, accounts for $70,000,000,000 of the $250B, while air cargo accounts for just $10,000,000,000.
These insights become actionable when used to make credit decisions, whether it’s opening a new credit line with a first-time customer, adjusting the credit limits across your portfolio, or collecting payments.
Cortera updates two scores regularly to assess credit-related risk of companies. The CPR Score rates recent payment behavior and the Cortera Score predicts future payment delinquency. The Cortera Score is a statistics-based, predictive score, measuring the overall credit worthiness of a business. Comparable to the FICO score for consumers. Together, these scores have powerful implications on the financial health of individual companies, and can be reviewed regularly in order to make any necessary adjustments.
For a copy of the Transportation analysis, email firstname.lastname@example.org.