Corpay Reduces Bad Debt Expense 20% by Targeting Larger Fleets
Summary
Corpay is pursuing different projects in different regions as it works to grow its fleet payments business.During the second quarter, the corporate payments companys international fleet business performed exceptionally well, while its North American fleet business presented a drag on growth, Corpay CEO Ron Clarke said Wednesday (Aug. 7) during an earnings call.The international fleet segment saw low double-digit growth in both Australia and the United Kingdom, while Brazil saw extremely strong revenue growth of 20%, Corpay Chief Financial Officer Tom Panther said during the call.Overall, the companys vehicle payments segment saw 5% revenue growth during the quarter, compared to a year earlier, according to a Wednesday earnings release.In its North American fleet segment, Corpay has shifted its focus from small accounts to larger ones that are more stable and creditworthy, Clarke said during the call. By doing so, it has reduced bad debt and improved retention and sales growth.Panther said that Corpay saw a 20% year-over-year decline in bad debt expense, almost all of which was due to the companys shift to a higher-quality customer portfolio.Today, 80% of the North American fleet segments digital sales are now made up of accounts with five cards or more, meaning they have larger fleets of vehicles.The evidence is building that there is demand for our new products and that this larger prospect segment sales can be grown, Clarke said. So, thats happening. On the back of these trends, were outlooking North America fleet to grow revenue organically in Q4 and get back in the plus column.In the U.K., Corpay has expanded its pay-by-phone parking app, making it a multipoint solution consumer vehicle payments app that now includes the ability to buy insurance and search for fuel stations and electric vehicle (EV) charging stations, Panther said.The company will extend that apps capabilities further in the third quarter by adding Corpays vehicle maintenance and repair network.Its early days in terms of customers transacting on the app, but weve made good progress and we are excited about the opportunity, Panther said.In Brazil, Corpays core fleet product is its toll-related solutions, which continue to grow, Panther said. The company also saw a 24% year-over-year increase in fuel transactions, a threefold increase in insurance policies sold, and 40% increases in both Zapay users and revenues.Zapay offers a digital mobility solution that enables drivers to pay vehicle taxes, registration and tickets.Panther said the Zapay growth is all organic, as we are in the early stages of cross-selling the product.