Factoring at Triumph moved sharply higher by the end of 2Q: CEO

By June, the number of first-quarter clients who were submitting invoices to Triumph for processing was at about 90% of the company’s average number in the first quarter. Graft said the recovery is “sustained” this month “and beyond could suggest a freight recovery that looks more like a V than an extended U.”

“Truckers had parked their trucks and were sitting at home while there was no freight,” he said. “Now there is freight and they’ve come back.” 

Triumph Bancorp has other businesses besides its factoring activities, which operates as Triumph Business Capital. Its platform for processing invoices coming out of the brokerage sector is TriumphPay. 

But despite its other activities, it doesn’t see factoring diminishing in importance to the company, Graft said. The company’s hope is that “our transportation business would grow disproportionately to the rest of the book.” Triumph also has a mortgage warehouse business that has had “a great run,” Graft said, “but we don’t see it growing on an absolute basis above where it sits today.”

(It wasn’t mentioned on the conference call, but Triumph grew in the factoring business earlier this month with the acquisition of Covenant’s factoring business.)

Graft said Triumph expects the margin in the factoring business to expand from the second quarter “irrespective of the rate environment over the next 12 months.” The average yield on a receivable in the second quarter was 15.48%. That was down from 16.13% in the first quarter and 18.73% in the second quarter of 2019. 

TriumphPay dollars processed up almost 300% from last year

Triumph Bancorp’s other primary activity with the trucking business is through TriumphPay. The processing platform for 3PLs is relatively new, having launched in 2017. Graft said that in the second quarter, TriumphPay processed 767,000 invoices, paying out funds to approximately 51,000 “distinct” carriers. The dollar value of the invoices it processed was $667 million, up 26% from the first quarter of this year and up almost 300% from the second quarter last year. 

Of what Graft said were the top 20 brokers in the country, three of them — unidentified — were on the platform. Five other 3PLs have submitted applications to get on to TriumphPay, and they are expected to come on to the platform in the next six to nine months, he said. 

The growth in the business is significant enough that TriumphPay is expected to have a run rate payment volume of $7 billion by the end of the year, significantly up from the $3.1 billion annual run rate it had recorded by the end of the second quarter.  

Graft said profitability at TriumphPay is expected to arrive by the second half of 2021. 

Although Graft conceded that much of the focus in discussions about TriumphPay has been on the biggest brokers, what he referred to as Tier 2 brokers “are currently coming on the system as well. We don’t talk as much about those.”

More articles by John Kingston

Love’s acquisition expands its factoring business

US Bank rolls out cafeteria-style payment system for carriers

Smartdrive releases new driver alert systems for bad weather and parked vehicles