International freight forwarders play a crucial role in global supply chains, but growing concerns about payment terms reveal significant financial pressures and risks lurking beneath the surface. For these logistics intermediaries, payment cycles have evolved from routine operational processes to vital financial lifelines determining business survival.
The COVID-19 pandemic dramatically amplified these challenges. When global transportation networks faced unprecedented disruption in early 2020, soaring fuel costs and reduced air cargo capacity created a perfect storm. Surging demand for medical supplies further strained forwarders' accounts receivable management, prompting many to implement strict prepayment policies—particularly for high-risk pandemic-related shipments.
Post-Pandemic Financial Realities
By 2022, as pandemic restrictions eased, the International Air Transport Association's Cargo Accounts Settlement System (CASS) reevaluated deposit requirements, forcing many forwarders to increase capital reserves. This policy shift compressed payment terms across an already competitive landscape while market volatility created increasingly complex customer credit profiles—exposing forwarders to greater liquidity risks.
Airfreight expenses remain particularly burdensome, with individual shipments often costing tens of thousands of dollars. Small clients require meticulous bill-of-lading scrutiny, while large clients face mounting financial pressures. Monthly accounts receivable can balloon into millions per client, where even minor documentation errors may erase profit margins.
The Cash Flow Imperative
In this environment, forwarders must rigorously manage payment cycles to maintain operational viability. Many startups and small operators struggle with the capital intensity of freight operations—an industry where cash flow problems and bad debts routinely erase hard-won gains. Annual financial failures among logistics firms underscore these systemic vulnerabilities.
The industry's heightened focus on payment terms reflects profound concerns about financial exposure. To improve collection efficiency, forwarders are deploying diversified receivables strategies—especially for small and medium clients—while prioritizing cash flow management as both a defensive measure and competitive advantage in an era of tightening margins.
