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.

The Loading Life: How Freight Brokers Can Find Carriers Fast

freight brokers

Shippers use freight brokers because of their expertise in the field of logistics. Freight brokers know what carriers can meet the shipper’s transport needs. And brokers have the tools to find carriers fast.

The logistics industry has a lot of moving pieces. Shippers, carriers, and consignees all need brokers to coordinate their interactions. And there’s no time to waste!

Logistics are crucial to U.S. commerce. Without a fast-moving shipping industry, the business would come to a grinding halt. Discover ways that freight brokers can find carriers fast.

Try Cold Calling

Once you find the name a freight carrier you’d like to use, it’s easy to find a phone number in a business listing. Many carriers have adopted technology for tracking, but relationships are still developed on the phone. Email and web forms are typically not the preferred methods of communication.

When you call a carrier, don’t try to sell yourself as the best broker they’ll ever work with. It’s good to describe your needs, such as where you’ll need to move freight, the size of the loads you need to be transported, and the frequency. Most in the logistics business will be impressed with action, not grand promises.

Show an interest in how the freight carrier currently transports their freight. Get ready for a lot of carriers to turn you down. But sometimes it’s just the luck of the draw. You might hit a carrier that has a need to fill.

Build Personal Relationships

The transportation industry is very much a business of relationships. You’ll need to build a solid reputation if you’re going to be a successful broker. You’ll need to have a good rapport with shippers, consignees, and carriers.

It’s not just about getting your carriers some freight to move. They’ll want you to share their values. And not just “corporate values.” 90% of trucking businesses have six trucks or less. Truckers want you to have the same values they grew up with. And nothing will get you more business like doing great work for your current customers.

Carriers are going to talk to one another. Establishing s referral system is a great way to generate new business. Come up with a single sheet that explains your program and send it to shippers.

Find Leads with Everyday Products

Most products surrounding you at the moment spent time as freight and were transported on a truck. Office furniture. Delivered by truck. Cars. Delivered by truck.

The device you’re reading this on? Truck. Just look up the products you use every day. Find out where they are manufactured and how they are delivered.

An easy way to find carriers is to think about the items that you’ve ordered yourself. Review bills of lading, tracking numbers, or other shipping info to find carrier names. By doing so, you can find local carriers that contract to national networks, expanding your options.

Give Internet Search a Shot

More and more carriers have started recognizing the value of having a web presence. The reason for the slow adoption is that many carriers are small businesses or independent contractors. There are internet load boards to find a near unlimited supply of qualified carriers.

Work with great carriers. If you’re going to build a network of the best carriers, you’ll need a reputation of working with the best. Do you have policies with carriers setting expectations for deliveries? Are you ranking your carriers’ performance over time?

Create Your Own Detailed Systems

When you have a shipper request, can you quickly locate carriers you’ve used in the past for the shipper, consignee, or cities involved? Can you pull up a bill of lading that shows performance data on the delivery? Having quick access to this data can help you select a carrier fast.

Some shippers require carriers to have a certain safety record. They may ask to see a copy of the terms and conditions you have set up with the carrier. Having this information will give you a huge advantage over other freight brokers.

Know Your Freight

You’ll really need to know your freight if you’re going to convince carriers to haul for you. Some carriers prefer certain kinds of freight. Sometimes equipment can be more suited for other goods. You’ll have more success with a carrier if you can describe the type of freight.

And even more, if you can discuss how it compares to products they are currently transporting.

You’ll also be able to qualify your carriers easier and faster. You’ll know who’s sure to be on time for critical freight. You’ll know who has the best record for fragile shipments. And you’ll know who offers the most competitive rates.

Master the Ins and Outs

Along those lines, it will benefit you to become a master at setting uploads in advance. If you ask a carrier to transport freight into Albuquerque, you’d be smart to already have a load set up to come out.

Carriers don’t want to be stranded in a city with no way out for days at a time. Every day the truck sits empty is money lost. Carriers will want to work with you if you promise a quick turnaround. Drivers want to get on to their next destination or on their way home back to their families.

The logistics industry can be called the lifeblood of U.S. commerce. The human body transports oxygen and nutrients throughout the body using the blood. Just like businesses send goods throughout America using freight carriers. The brain regulates and keeps the circulatory system running smoothly. Similarly, freight brokers help organize shipments and carriers.

Remember the Other Transportation Methods

Truckload motor carrier services are a common arena for freight brokers. But there are other shipping methods out there. Some parts of the country are well served by air freight and rail.

If you keep these other shipping options in mind, you may be able to find a carrier faster. You’ll also develop relationships with even more carriers.

Find Carriers Fast

Brokers must know how to coordinate the needs of shippers, consignees, and carriers. Because critical issues can come up at any time, freight brokers must be ready to respond quickly.

The logistics industry relies on freight brokers to ensure that shipping goes smoothly. Brokers need advanced tools to find carriers fast and coordinate delivery. Sign up for the ComFreight Logistics Marketplace for free. Find empty trucks and carriers now!