A Guide to Broker-Carrier Agreements

As the global supply chain and local markets continue to recover from the COVID-19 pandemic, the need for clear and concise freight broker contract agreements is more vital than ever. Freight trucking services make up the backbone of the supply chain network and account for the bulk of regular and holiday goods transportation, especially now. As reported by PR Newswire, “The global local general freight trucking market is expected to grow from $111.84 billion in 2020 to $125.24 billion in 2021 at a compound annual growth rate (CAGR) of 12%. The market is expected to reach $170.8 billion in 2025 at a CAGR of 8.1%.” With this much potential growth and the added pressure that comes with it, freight broker carrier agreements can make or break trucking companies. This guide will explore the fundamentals of freight-carrier agreements and how freight brokers can make them successful within the ever-changing market.

What Are Broker-Carrier Agreements?

Broker-carrier agreements are essentially agreements between a freight broker and a trucking company that detail specific expectations and requirements for a particular partnership or arrangement. Without the right specifics in place, brokers get charged higher fees and don’t get paid on time, while carriers can experience delays and delivery processes that have not been defined and outlined. During market volatility, especially ahead of the peak season push, a balanced freight broker carrier agreement can help keep the supply chain moving as smoothly as possible. 

What Are the Top Sections Within Broker-Carrier Agreements?

An agreement of this type is a legal contract between two parties- the freight broker and the trucking company. As with all legal documents, several critical sections must get proper attention from all logistics and transportation parties. Here are the top portions of each agreement.

Basic Terms

  • Brokers, carriers, and other partners must be disclosed, including full name, company name, insurance information, and other vital information. This contact information must be shared and easily accessible by all involved parties.
  • Any agreement must have clearly defined start and end dates for the contract and include any rules or processes needed for terminating the contract early. Such parameters  will help avoid disputes and issues down the road if any problems or questions arise.

Scope of Services

  • The agreement must include details about when and where shipments will be made, where the cargo can and cannot go, and other similar geo-specific data. This level of detail is essential because any movement outside of these terms could be considered a breach of contract.
  • Sometimes extra tasks are included beyond simply driving cargo from point A to point B. The trucking company may handle loading or unloading, packing, cargo protection, or other tasks. If so, this is all defined and outlined in the freight broker carrier agreement.
  • Some carriers will subcontract other trucking companies to handle part or all of a particular shipment. If the broker or customer does not want to allow this, it must fall within the contract terms that no second-hand contracting is allowed for that particular agreement.

Rates and Fees

  • The contract terms agreed to by both parties must clearly outline specific rates and fees. These include basic shipping costs, fuel rates, handling fees, the share of customs and tax charges, and other expenses associated with that particular load or agreed shipment.
  • Freight broker contract agreements must also touch on payments and the process for resolving issues related to invoices and payments. When surprise fees and expenses occur, the terms of the contract will help all parties come to a resolution as quickly as possible.

Liability and Insurance

  •  Liability terms help define who is responsible for expenses related to lost or damaged cargo. In most cases, the freight carrier must guarantee the security of the shipment while in their care. Any damages and related expenses become the carrier’s responsibility.  
  • The insurance section of the broker-carrier agreement states that carriers must show proof of insurance before they load any cargo. Other essential coverage considerations include motor truck cargo insurance, workers’ compensation coverage, and required bonding and licensing.

Dispute Resolution

  • A well-balanced contact between freight brokers and carriers will include language dealing with dispute resolution. No contract agreement is final without clearly defining the process for resolving issues if either party believes something has gone wrong or a suspected breach of contract. 
  • Dispute resolution offers legal remedies for grievances between all parties involved in that particular contractual agreement. The term should be all-encompassing and touch on everything from third-party mediation to federal or state court processes assistance.

What’s the Benefit of Better, Easy-to-Use Agreements?

The agreement will touch on delivery terms, timelines, freight shipping modes, transport rates and fees, insurance and claim regulations, customs and border procedures, accident liabilities, shipping damage and loss, and more. Detailed freight broker contract agreements protect all involved parties and offer many benefits to all involved parties:

  • speed of onboarding and training is improved and streamlined
  • a clearly defined contact quickly leads to access to more carriers
  • diversity with load and transportation modes is greatly improved
  • all-around increase in access to better and more profitable capacity
  • less confusion about responsibilities between parties
  • better customer satisfaction with quality service and reliable deliveries
  • faster and more accurate resolution to conflicts, disruptions, and concerns
  • more power to secure the advantage against the competition
  • improved relationships between carriers, shippers, and trucking brokers
  • ability to move more diverse freight by accessing a variety of carrier services
  • capacity to handle custom orders and specialty freight safely
  • easier time overall with keeping rates in check and maintaining profit margins
  • less time to acceptance of loads and faster payments
  • improved ability for carriers to handle short lead times with less trouble
  • access to omnimodal capabilities and multiple transportation modes
  • less risk to carriers that have a broker that reliably pays on time and in full

Establishing and maintaining a freight broker carrier agreement significantly impacts every aspect of the modern supply chain.

What Other Documents Are Vital to Broker-Carrier Interactions?

A well-rounded broker-carrier agreement will also touch on other contracts and arrangements that can help with the relationship between brokers and carriers, which includes:

Load Specification and Tender

Also known as load confirmation, this part of the agreement aims to list all the load details for carriers. The load confirmation will list specifics, any safety or hazard concerns, special equipment required, specific services, customized or unique protocols, and anything carriers need to know to manage the shipment successfully.

Rate and Fee Considerations

The freight rate terms help keep shippers, carriers, and brokers on the same page about who is responsible for what expenses. It is an important part of contractual agreements which lists expected fee ranges while also detailing steps to take when addressing unexpected fees, surcharges, or damage claims.

Bill of Lading

The bill of lading (BOL) acts much like a receipt for freight delivery within freight broker contracts. It is generally issued by the carrier and given to drivers who handle the transportation details. The BOL is a legally binding agreement that offers drivers and carriers the details required for accurate and lawful transportation of any goods across any mode.

Of-Choice Contracts

Brokers, shippers, or carriers who have of-choice status might be subject to additional terms, requirements, payments, and considerations. A contract may necessitate committing to a specific load size and frequency.  An of-choice agreement might also give some carriers preferential treatment or personalized options that other drivers are not granted.

How to Assure Brokers You’re a Safe Carrier 

Recent evidence shows that attorneys will now go after brokers for negligent hiring of an independent contractor if there was any indication that the carrier was potentially unsafe. Even with all the advances in supply chain and logistics technologies, things still can go wrong, And the results can be devastating for brokers.

As highlighted by TruckingInfo.com, “In 2012, an Oregon jury returned a verdict of nearly $5.2 million, including punitive damages, to the family of a man killed by a commercial truck, in a case that may have involved the first punitive damages verdict against a transportation broker in a case involving a negligent hiring claim.” Brokers are subject to huge liability risk, and more and more liability lawsuits have been popping up as more carriers and brokers enter the marketplace. The more trucks on the road and the more carriers enter the picture, the bigger the liability risk surrounding freight broker carrier agreements.

Presenting a safe driving record, including certification for driving education and safety classes, can help carriers establish a long-standing claims-free reputation. Given a choice between nearly identical trucking companies, the preferred option will always be whoever is known for safe driving protocols. Carriers who demonstrate this safety-first mindset instantly gain a competitive advantage.

Take Care in Creating and Executing Broker-Carrier Agreements While Streamlining Freight Payment With the Right Partner

Even with the  best of intentions and extensive  preparations, accidents occur, loads are damaged, injuries happen, trucks wreck, and things go wrong. This ongoing risk is a significant concern for brokers as they, of course, want to make sure they are dealing with carriers who have a reputation for overall safety and who have a good driving record. When you need help establishing and managing broker-carrier agreements, it is vital to have a partner with proven experience and success with freight broker carrier agreement management. Create and execute the best freight broker contracts today with ComFreight. Request a demo of HaulPay today to learn more about how to maximize your working capital and interact more efficiently with freight brokers now with reliable agreements and contracts. 

The Fastest Way for Freight Brokers to Remove Most of Their Credit Risks

For freight brokers, clients that have an unreliable history or pose a threat to damaging the broker credit standing must be addressed immediately. Understanding the different ways to handle such clients and how to manage freight finance can help improve cash flow, shorten the payment clock, and reduce clients with high credit risk. Slow and unreliable clients typically try to extend the payment period, and in worst cases may never pay. If a company does work with an unreliable client, make sure to handle the payment issues quickly rather than later. Handling issues immediately can save profits. 

The Problem of High Credit Risk for Brokerages

Running a credit check on clients, including long-term customers, can help brokers avoid unreliable clients. Unfortunately, the high demand for services means many shippers will simply look for another carrier if you turn them down due to prior transgressions. As a result, brokerages must walk a thin line when trying to avoid upsetting shipper clients with faster-than-usual payment expectations. However, that doesn’t mean brokerages have to assume the risk completely, and that is why many companies have started thinking outside of the box in terms of mitigating the risks inherent with payment delays. 

For example,a common financial option to mitigate credit risk is a credit check, which can provide information such as payment trends, past payment records, prior bankruptcies, and any legal issues the company faces. To preserve the broker’s credit standing and worry less about clients not paying, non-recourse freight factoring can help. when the client fails to pay the invoice. The factoring company will lose out rather than the broker, which can relieve the stress from working with unreliable clients. If issues continue to happen, brokers must understand the damage high credit risk clients do for the business and cash flow.

Faster Payments Lower Risk

Brokers can use factoring services to offer carriers lower-cost options to receive payment quicker.  Some companies worry about how much freight companies charge paying too much for the service. When looking at the fees ranging from 1.5% to 5% from companies, MH&L states, “While 1.5% doesn’t sound like much, if you use factoring all the time, that 1.5% can represent an 18% annual interest cost. For example, if you factor $100,000 every month, then that is $1,500 a month in factoring fees. If you choose to do this monthly for a year, that is $18,000 in factoring fees to get $100,000 up front, an implied interest rate of 18%.” For the benefits received through freight finance, a small fee definitely is worth the outcome of improved cash flows.

Added Ways Brokerages Can Lower Credit Risk

Any company wants to avoid issues with broker credit or credit in general. A beneficial way to do this and provide other positive circumstances includes freight factoring. Factoring can provide logistics and technology to help look at data and analyze efficiencies while streamlining the process on a platform. Besides using flexible freight factoring to receive quicker payment without the credit risk, other options include:

  • Communicate clearly and concisely: Have a clear communication and understanding of expectations with companies to ensure understanding of payment times.
  • Know which shippers pay on time and in full: Having the knowledge of which shippers could cause a credit risk can allow brokers to avoid working with them.
  • Use data to manage freight finance goals: Tracking data across your shipper base, such as usual payment windows and the percent of on-time, in-full payments, will help you manage your freight finance needs too.
  • Shorten the payment clock with reliable options: Reliable options such as freight factoring can provide quicker payment for brokers and carriers.
  • Choose a quality factoring solution like HaulPay: HaulPay can replace manual payments, eliminate risk, and help manage credit.

Reduce Your Credit Risk With ComFreight’s HaulPay

No broker or carrier wants to worry about unreliable customers or credit risk if payments do not happen on time or in some cases, at all. There will always be some companies that have poor credit or might put the company at risk. However, using the right freight finance tools can provide benefits like help improve cash flow while reducing the payment clock. For any problems with payment, ComFreight’s HaulPay is the solution. To see the benefits, request a demo to see how the HaulPlay platform works and say goodbye to credit risks.

A Guide to Opening, Starting and Growing a Successful Freight Brokerage

The demand for freight brokerage businesses, both digital and traditional, seems to grow on a nearly daily basis. More and more shippers and carriers are turning to brokers to improve collaboration and capacity management across their supply chains. Digital freight matchers (DFMs) and freight brokerage service providers are becoming increasingly popular, especially in the wake of continued pressure from e-commerce sales and tight capacity restraints. This has opened the door for more people asking questions about how to open a freight broker business. 

Arrive Logistics further explained the value of freight factoring and digital load and shipping management in general: “The reason DFMs have become so popular is market opportunity and technological advances. Plus, there are few barriers to entry with relatively few capital risks — making it an attractive place for entrepreneurs to get their start. When there is over $700 billion worth of an industry pie available (and an estimated $50B in brokerage commissions every year), it’s natural that everyone wants a piece of that pie.” 

With digital load boards and innovative freight brokerage and logistical services, the entire process has become much more streamlined. Knowing how to start a freight brokerage company will make the process easier right from the start and will help open new doors of opportunity. Let’s dig in and see what you need to make it successful. 

What Is a Freight Brokerage?

How to open a freight brokerage requires an in-depth understanding of what a broker does. A freight broker serves as a middleman of sorts that coordinates and helps improve communications between shippers and carriers. Instead of actually accepting the freight and moving it from carrier to shipper, they bring the two parties together so they can handle the transfer of freight themselves. This eliminates delays and expenses and makes the entire process faster and more streamlined. They’re the ones making sure the handoff goes smoothly and also manages and tracks the shipments to ensure the freight gets to its final destination in a timely manner.  

As pointed out by DAT Freight & Analytics, many shippers do end up establishing contracts with trucking companies, which sets up terms for long-term relationships; in fact,  a significant volume of North America freight transportation is handled by freight brokers. Brokers speed up the entire process by eliminating the messy process of leaving things to the carriers and shippers directly to figure out. And with the pressure of e-commerce and digital shipping the need for faster collaboration is more important than ever before.

Who Can Learn How to Start a Logistics Brokerage Company?

ANYONE! As demand for transportation and shipping services grows, and as capacity constraints become tighter and the logistics industry becomes more sophisticated, the need for innovative and collaborative services becomes more vital than ever. With the need for more freight brokers in the network growing every year, it is a worthwhile question to answer: who can start up their own brokerage business? 

There are a number of requirements to start a freight brokerage business and it is important to ensure your startup goes as smoothly as possible. As emphasized by Truckstop.com, if you are passionate about logistics, skilled at analytical thinking, enjoy solving problems, and have good skills working with people and data, then freight brokering could offer a great career opportunity for you. Freight brokers can do the bulk of their work from home, often set their own hours, and have the opportunity to make a lot of money. Read on to find out what steps need to be taken and get the answer to the question of ‘how to start my own freight broker business’.

What’s the Cost of Starting a Freight Brokerage?

A common question that gets asked when the idea of freight brokerages services comes up is: how much to start a freight brokerage? There are a number of things that can contribute to the initial costs involved of starting your own broker company. Cost of training, licensing and certification, and the cost of any equipment and tech that are needed initially are some of the biggest expenses you will need to plan for at the start. Other expenses will depend on the scale of your company, what freight you want to specialize in, what area(s) you are working and operating in, and many other factors that will need detailed planning and attention.

20 Steps to Opening, Launching and Growing a Successful Freight Brokerage

Starting a freight broker business is something that has become more common and routine, but it was not always this way. Entrepreneur points out that: “Brokers aren’t new to the trucking industry; they’ve been around since the industry itself began in the early part of the 20th century. Prior to the 1970s, however, regulations governing brokers were so restrictive that few firms were willing to even try to gain entry into the industry. But with dramatic changes in federal transportation policy during the 1970s, regulatory restrictions have eased, creating new entrepreneurial opportunities in the third-party logistics arena.” This continued growth and expansion of the freight transportation market and the growing demand for brokerage services means now is the time to take action if you are seriously considering starting your own brokerage company.

1. Get to Know the Industry — Train, Train & Train

You have finally decided to pursue a freight brokering career, but what kind of freight are you going to transport? Are you planning to accept anything and everything for the most part or are you more interested in specializing your services? If you limit your freight options, you need to be doubly sure you find carriers who can accommodate those specialized loads. If you choose to accept all types of loads, make sure you have a wide range of capacity options and carriers available to call on when you have tight capacity and high demands during peak shipping periods. There is no right or wrong way to diversify or specialize; you just have to do what is right for you and your long-term brokerage plans.

2. Select a Structure & Register Your Business

Be aware of timelines and other delivery constraints that the market may be placing upon you as a broker. How will you manage delays between money being paid and when money is received? How will you cover initial operating expenses and fund the first year of operations as you get established with clients and carriers and vendors? You will need to carefully plan and structure your business to fit your niche market, your target customer base, and your initial size and capabilities. Growing from there will depend on your planning and execution once your freight broker company is registered, licensed, insured, and operational.

3. Get Your FMCSA Number

One of the early steps that needs to be taken when setting up brokerage services in the United States is to contact the Federal Motor Carrier Safety Administration (FMCSA) to apply for a motor carrier authority. This document certifies you are starting a freight factoring brokerage company and serves as a statement of intent and proof of ownership and recording of the company. 

4. Obtain DOT Insurance and a Surety Bond

Insurance and security bonds are also required for starting a trucking brokerage company. They help ensure the broker is prepared for the tasks ahead and helps provide some initial protection against losses and damages. Awhile ago the federal government increased the mandatory freight broker bond and now it comes in at around $75,000. It is quite a daunting number for anyone interested in this line of work, but there are assistance programs, grants, and other ways to fund this expense to make it easier for more people to acquire the DOT insurance and freight broker security bonds.

5. Select a Process Agent for Each State

Essentially, a process agent is a representative to whom court papers may be served should there be any legal action or lawsuit brought against a broker or carrier that you are working with. Brokers must designate a process agent in each state where they offer services, so for many brokerage companies it becomes easier and ultimately more affordable to get blanket coverage for the entire U.S. or for entire regions of the country rather than going state by state.

6. Get Cargo Insurance to Protect Freight Under Management

While specified cargo insurance policies are not typically required by the FMCSA, most companies look for this coverage when searching for a broker to handle their freight and transportation needs. Many shippers and carriers will not allow a broker to represent them and assist with their business practices without reliant cargo and general liability insurance. 

7. Evaluate Your Financing Before Starting a Trucking Brokerage Company

Cash flow and lines or credit will be very important as you set up and grow your brokerage company. Most brokers do not have large cash reserves when starting, so other forms of finance options are critical to getting things up and running as quickly as possible. Getting a line of credit from a bank can help and they can give you access to funds while also providing reputable backing and support when negotiating early on with customers and partners. Once the funding is in place, you can officially begin operating as a freight broker.

8. Also Sign up for a Freight Factoring Solution That’s Fee-Lite and Built for Brokerages

Brokerage management and transportation management systems (TMS) and similar platforms and tools can make freight brokerage easier, especially for beginners. Having a collaborative platform that can handle data collection, analysis, and distribution can make a world of difference for freight brokerages. Often, a low-cost cloud-based system, while more limited, is sufficient to build the business. As the business grows and expands, and customer loyalty improves, and profits increase additional tools can be brought into the mix. And the option to upgrade the entire network when necessary is also an option that is worth keeping in mind when building your freight factoring platform initially. 

9. Purchase Trucking Equipment, If Asset-Based

All brokerage companies need some level of equipment. For some it might be simply computers, electronics, and organizational tools. For others it might also include trucking equipment, vehicles, and more tangible items that get used out on the road. Ensuring you have the right tools and equipment to handle your specific niche market within freight transportation can help give you a competitive edge and also help you stand out as a leader among shippers and carriers alike. Setting yourself up as a broker for trucking business requires having the right equipment and tools and there is no getting around this critical step in the setup. 

10. Purchase Office Equipment and Upgrade Your Internet

Along the same lines, wherever you set up your base of operations needs to be furnished and adequate for your needs. There should be ample space and equipment for every team member you have working under you. New office equipment and tools need to be set up and utilized to ensure smooth onboarding and efficient training occurs. Likewise, you must ensure you have fast and reliable internet. 

11. Find Shippers and Carriers

The best way to connect loads to trucks is through a load board. Online load boards like Truckstop.com provide access to thousands of trucks and drivers You can also use the boards to research cargo rates in the shipping lanes where you intend to operate. The more hauling jobs you broker, the faster your business grows. As you work with more satisfied customers on both sides of the industry, your ratings will improve. Shippers and carriers also use Truckstop.com to vet and identify quality brokers, giving you an edge for growing your business. 

12. Choose a Freight Analytics Solution

Data collection and analysis is vital for any brokerage company, especially when first starting out. Taking the time to plan out viable freight analytics solutions is a necessary investment you will need to make for your brokerage company. Ensuring you can collect, analyze, review, and apply data as efficiently and quickly as possible will help you gain a competitive edge, especially in volatile markets.

13. Set Rates Based on Actual Market Dynamics

Markets are volatile and always changing, so it is important for freight brokers and logistics managers to be flexible with rates and service offerings. RFPs, bids, transactions, and collaborations must be up to date and reflect actual market dynamics and trends.  FreightWaves points out that “freight forecasting is the skill of analyzing current and future freight market conditions. Knowing how much capacity is available in the market now and will be available in the future is important for winning rate bids and maximizing margins.”

14. Create and Finalize Carrier Contracts

Knowing what is and is not working is critical at any time for freight brokers and managers, but especially so when money is tight.  Customers may still be leery of the new guy in town and the cash flow may not be where it needs to be quite yet. Simply matching loads to trucks will get the job done on paper, but in reality, it is going to take a more personal touch to truly be successful as a freight broker. Personal relationships, tailored contracts, and optimized freight management isn’t just about price; it is about building a team of shippers and carriers that can be brought together to satisfy capacity requirements.

15. Sign up for Free Load Boards

With everything going digital these days with freight brokerage management and services, you cannot afford to lose capacity and customers because you cut corners and try to get by with cheap internet services. It is always a worthwhile investment. With good internet services you can quickly and easily access load boards and platforms that can help you locate capacity and match carriers and shippers right away from day one. You can always expand and add on new load boards, dashboards, and management systems as you grow your customer base and profit margins.

16. Automate Your Quoting Process

Different freight transportation specializations may require separate certification and filings, so be sure to check and ensure you are covered legally for the load types you want to manage. Automating the process of managing and tracking RFPs and bids can help save time and free up team members to handle more vital services for the brokerage company. Automating processes can also save money, reduce the number of claims received, speed up invoice factoring and payments and ensure rates stay fair yet profitable.

17. Choose an Accounting Software

With digital freight brokerage and management practices, it is vital to have a firm understanding of accounting processes. Knowing how to start brokering freight loads accounting backing is a critical piece of the freight transport puzzle. Embracing technology and automation can help streamline this process to save time and money by reducing errors, speeding up routine processes, and removing human oversight for a smoother and more efficient accounting process. From invoicing and freight payment processing to ROI reviews and profit-loss analysis, accounting software makes it all faster and easier.

18. Leverage Analytics to Understand Your Performance and Needs

The opportunities to mechanize workflows in a freight broker business have never been as diverse and applicable as they are today. From technology that is specially designed for administrative tasks, like Robotics Process Automation, all the way to dashboard and matching tools that bring carriers and shippers together, there are analytical tools that can help with every aspect of freight management. Industry experts have highlighted one key freight brokerage service that impacts every aspect of internal growth and performance and that is real time data analytics and application.

19. Track Your Pay Cycles to Improve Cash Flow

Broker managers and logistics directors at DFM Data Corp highlight the importance of tracking pay cycles and cash flow when someone is becoming a freight broker: “Every transaction will bring in some revenue and if the load is priced for margin, you will make money on paper. Unfortunately, this won’t turn into cash overnight… While traditional banks offer these lines, they have little experience in freight.” It is recommended by most freight brokerage professionals to take the time to find a financial provider and adviser that is familiar with financing and working capital management in terms of trucking and freight transportation. 

20. Market Your Brokerage Business With Blogs, Social Media, and Downloadable Content

Marketing yourself and your company in an effective and digitally-minded manner can help expand your market reach and can get your freight broker startup in front of more shippers and carriers. Connecting with potential customers and staying engaged online with current clients will be easier with effective, informative, and tailored media content. Embrace digital processes and tools, outsource content creation, utilize marketing services, and social media professionals to maximize the digital footprint of your company.

Get on the Path Toward Success With the Right Tech

The increasing popularity and request for freight brokerage amenities has grown at an amazing rate over recent years. This unprecedented growth and expansion has put extreme levels of pressure on the freight transportation market as well as shippers and carriers and brokers. The growing demand for brokerage services means more people are considering taking steps to set up their own brokerage company. 

Choose ComFreight’s HaulPay to Help Answer How Do I Start a Freight Broker Business in Today’s Market

Brokers help improve supply chain logistics and speed up the freight transportation process by facilitating fast and easy partnerships between shippers and carriers. With the pressure of e-commerce and digital shipping, freight brokers are becoming more important than ever! Find out how to start a freight brokerage business today with a reliable partnership with industry pros. Make your brokerage successful by surrounding yourself with the right solutions and talent, including ComFreight’s HaulPay. Request a demo of HaulPay today to start the process of becoming a truck broker. 

Accounting Best Practices for Freight Brokerage, Logistics and Transportation Companies

Freight accounting and freight finance are terms that refer to the tracking of expenses associated with the transportation of goods from one location to another in the supply chain. This financial balance between costs and profits lies at the heart of all companies that leverage supply chain technologies to streamline the management of shipping and transportation. According to an article by the Indeed Editorial Team, “Ensuring companies and customers receive their goods safely and timely is an important part of helping businesses operate efficiently and successfully. Organizations must track and analyze the costs associated with transferring goods. Freight accounting allows companies to understand their expenses better and identify areas where they may be able to cut costs.” This blog outlines the critical steps to take to ensure effective transportation finance management within the supply chain.

Connect Your Data Streams

Most supply chain networks operate multiple data streams and continually work to compile data into usable metrics. Connecting all data streams and organizing information into a single collaborative platform makes it faster and easier to transform the data into actionable insights. 

Audit ALL Invoices to Catch Errors

Every invoice ideally needs to be audited, even those for smaller clients. While large invoices seem like a natural focus for brokerage accounting and auditing, smaller clients also deserve a double-check with a quick audit. Errors that get passed over on small invoices can quickly add up, especially if they happen repeatedly on a monthly or weekly basis. Additionally, auditing helps to ensure your revenue and profit margins are always above reproach. 

Eliminate Shippers That Do NOT Pay

If audits and invoice checks show that shippers routinely do not pay invoices, it is often better to simply not do business with them any longer. This provides  opportunities to find better shipper partners , and perhaps save time and money as well.

Know How Long Your Shippers Take to Pay

If shippers always pay late or have to be chased down and repeatedly hounded to secure payments, it is best to cut ties with them. They likely are eating up more finances and resources to keep tabs on them than what they are worth constantly. Brokerage services and routine auditing checks can help identify these shippers.

Take Advantage of Multiple Financing Options

Freight accounting also focuses on ensuring management considers all financing options. With suitable freight financing options in hand, supply chain managers can provide the best services and ensure shipping options are available when and where needed.

Leverage an App-Based Factoring Solution

Technology continually drives the digital transformation of supply chain logistics, making day-to-day management and operations much more streamlined and manageable. Taking advantage of freight factoring-based resources that leverage apps, AI technology, mobile communications, and real-time monitoring features can help improve financial monitoring and auditing, and bolster freight accounting services as well. 

Remember to Consider Fees and Total Costs When Choosing a Factoring Solution

When it comes to proper freight factoring and brokerage accounting services, fee and expense monitoring continually become a vital part of cost management. Demurrage fees, drayage expenses, customs, international taxes, and special handling and shipping expenses must be considered when choosing the right freight financing solutions. 

Evaluate the Full Context of Shipping Execution

All typical shipping execution and processing aspects need to be considered part of the freight brokerage and monitoring process. This includes ease of handling, shipping and timeline adherence, timeliness of payments, and other vital financial considerations. All of this is best done before accepting a load to verify the profitability and practicality of the shipment. 

Carefully Consider ‘Freight In’ Types of Freight Factoring

Freight in’ refers to a transaction where the buyer covers the freight costs. The fees for transporting the goods fall to the buyer, and the buyer assumes all the risks involved in moving the freight. This option stays popular when it comes to transportation financing.

Carefully Consider ‘Freight Out’ Types of Freight Factoring 

‘Freight out’ applies to a transaction where the seller covers all freight expenses. The seller looks at these expenses as part of their business and budget alongside all other fees and costs. This option often shows up during freight finance planning. 

Put These Best Practices to Work With the Right Solution

Freight accounting and freight finance continue to be vital components for the modern supply chain network. All companies that rely on the supply chain network today can benefit from these best practices and tips for freight factoring. Request of a demo of HaulPay to see how you can put a world-class freight factoring and finance solution to work in your accounting department today.

5 Tips to Maximize 3PL & Freight Broker Revenue & Profit Margins

As a freight broker or 3PL, few topics carry the weight of freight finance and freight broker margins. Freight finance is simply the process of getting paid for loads moved sooner than the typical shipper payment schedule. Unfortunately, there are very real risks that your shippers may take longer than usual to submit payment, payment may not be in full, and other issues could arise. That’s why more 3PLs and brokers are turning to companies who can aid brokers & 3PLs with cash flow that can alleviate these concerns. Moreover, as explained by Truckstop.com, “The fastest way to increase gross margins is to work more efficiently. Using load boards, analyzing rates, and posting loads for preferred carriers all increase the efficiency of that process. More efficient freight brokers earn more.” And while that’s valuable advice, there are five core considerations to take that will help maximize your profit margins on every load. 

1. Diversify Your Lane and Modal Mix to Improve Your Freight Broker Profit Margin

The first consideration is all about branching out beyond your typical shipper-client profile. Diversity in your lanes and modal mix will help reduce your direct transportation costs. After all, knowing when to outsource is part of the hallmark of a great broker or 3PL. Knowing when to consolidate, switch freight to another mode, and how to eliminate all backhauls—all while continuously optimizing every leg of shipping—creates diversity that will go a long way toward increasing freight broker profits. 

2. Accept Tendered Load With Rates Based on Current Market Dynamics

The next consideration is to think about current market dynamics. When a shipper tenders a load to your company, it’s easy to accept it immediately, especially if the load is easiest to pick up and transport. However, this is a carrier market, and in some areas, the pendulum is more closely aligned to shippers. Without considering the unique market dynamics in play in each O/D pair, it’s difficult to understand your true 3PL and freight broker margins.

3. Target Lanes With High-Profitable Needs

The next core aspect of increasing profitability is the simplest: target lanes with high-profitable needs. Now, this is more complex than simply targeting lanes with the least capacity. After all, not every move is as profitable as others, especially when dealing with high-value cargo. Instead, consider the full picture, recognizing the ease of loading/unloading, the risk of dwell time, whether the load will result in added emissions (such as increased cooling), and other factors. This will help to maximize your profitability by keeping an eye on the indirect costs associated with each move. 

4. Eliminate Empty Backhauls

Another consideration is to eliminate all empty backhauls. With added pressure and demand for more capacity, there’s no reason to face empty backhauls. Some shipper, somewhere, has a need for your capacity, and rather than traveling empty, try to find loads within a given radius that fall within your predefined parameters for accepting a tender. 

5. Know When to Say “No”

The last consideration is hardest for most 3PLs and brokers to apply, but it has grown easier as the market has been favorable for carriers for nearly 18 months. 3PLs and brokerages need to know when to say “no.” Offering more money for a load is great, but what’s the real cost if you have to travel empty? Have you thought about the potential emissions’ impact? Do your drivers really feel comfortable driving extra without any real meaningful impact to profitability? Now look at that last question, and think about this. Most carriers have five or fewer trucks, so empty miles are likely to amount to lost revenue for the driver, not just a carrier in the realm of logistics. It’s that reality that forces 3PLs and brokerages to think about whether it’s really worth the effort and time for a less-profitable load when there’s another option that may be better for freight broker margins.

Maximize Brokerage and 3PL Profit Margins With Better, More Efficient Freight Finance Options Through HaulPay

Freight finance is always a delicate subject. Without the right freight finance tools at your disposal, maintaining a positive cash flow while moving freight will be difficult at best. And your troubles will carry over into increased hostility or unwillingness to move freight for shippers that routinely take too long to complete payments. However, taking these considerations now will help your company, whether a freight broker or 3PL, maintain better working capital, get the funds needed for today, and seek out more profitable loads.  Improve shipping execution by leveraging the above tips and putting the power of ComFreight’s HaulPay to work. Request a demo to see how the HaulPay platform works.

5 Suggestions to Improve Freight Sales & Grow a Freight Broker Business

Creating new value as a freight broker can be challenging, but during times of disruption, the opportunity for freight sales to secure new shipper-clients and expand carrier negotiations is vast. With all the interest in adding high-value shipper-clients, it’s important to know a few suggestions that will help improve freight sales and grow the brokerage. Let’s take a closer look at these five suggestions and how they help your company unlock limitless scalability through combined, collaborative freight finance, including transportation factoring.

1. Choose the Right CRM Software

The first suggestion and how to grow your freight broker business is the simplest; your organization needs to choose the right customer relationship management (CRM) software. The right CRM software is essential to ensuring your communications are intact and follow a natural progression through the sales funnel.

2. Get Real-Time Insights Into Freight Market Volatility

Another critical step in trying to figure out the best way how to grow a freight brokerage business rests with data. Brokerages need real-time data and analytics insights into freight market volatility. This allows brokerages to see where shippers and carriers alike are struggling the most. As a result, they will be better positioned to come into the relationship and be able to add value on both a shipper-and carrier-side. Furthermore, real-time data insights into freight market volatility naturally implies that brokers will be able to secure capacity at competitive rates without over or undervaluing transportation.

3. Centralize Communications With Your Team and Prospects

It is easy to assume that centralizing communications with your team and prospects should naturally fall under CRM software. However, in today’s world, centralized communications can be much more than meets the eye. For instance, the various transportation management systems (TMS) used by carriers and shippers need a unifying characteristic, such as a freight broker software that offers integrated freight payment management. By unifying the data streams and keeping communications in context and real-time, brokerages will be better equipped to improve freight sales and grow the business.

4. Take Advantage of Network Connections at Software Providers, and Train Your Team

Training is also vital to increasing sales and promoting growth in your brokerage. As reported by Supply Chain Game Changer, “Although industry experience is one staple of being a successful broker, those who are able to maintain a profitable business allocate some of their time toward continuing education. Freight broker training schools operate throughout the country as well as online, allowing brokers to gain deeper insights into the business, the industry, and best practices.” Efficient training is also widely available a customer’s resources, including carrier-or shipper-initiated training modules to ensure your team knows how to navigate differences between TMS platforms and even load boards. It is the combined network connections of services providers that can help you train your team and keep them ready for the next wave of disruption.

5. Streamline Freight Financing Processes

The final suggestion to improving the freight financing process is easier to imagine with keeping the above issues in mind. Unifies data, centralized communications, and collaboration naturally imply a need for streamlined freight financing. That is possible through an them that it, advanced program that can compile transportation and load data to effectively reduce the payment clock for carriers. After all, carriers that are paid in a timely manner are more likely to accept tenders from both brokers and shippers. Furthermore, improved freight financing will naturally lead to cash flow improvements within the brokerage, less confusion among carriers regarding pay dates, and an overarching ability to do more with less by reducing cash flow issues.

Grow Your Freight Broker Business With HaulPay in Your Tech Stack

There are many ways to grow your freight business, and technology is swooping in to save the day. It’s time to put the power of technology to work as you look for ways how to grow a freight brokerage business and increase freight sales. Reach more shipping prospects by eliminating the hassle of lengthy freight payment processes. Request a demo to see how the HaulPay platform works.