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.

Brokers & Owner Operator Truck Carriers Should Have Freight Finance Options for Credit, But Fewer Fees

Learning the details of owner-operator financing, ranging from a freight broker credit check through managing the freight finance to free working capital to make more moves can be troublesome at best. In today’s age, the push for faster service and lower costs is absolute. As reported by John D. Schulz of Logistics Management, strong truckload roads coupled with an increase in GDP are creating year-over-year growth opportunities for brokers and owner-operator truck carriers. Unfortunately, there are only so many trailers and trucks available, and any delay in payment for services increases the risk to these companies. Ultimately, brokers and owner-operators need a better approach to freight finance. Let’s take a look at the problem of high costs for credit, why an expert is essential to navigating the industry, how a line of credit (LOC) can help, and a few other points of consideration.

The Problem: Fees for Freight Finance Can Be Exorbitant

The simple reality comes from the issue of an owner-operator financing bad credit among its brokers or shippers. If the cargo owner doesn’t pay, the trucking company loses profitability, and even if everything is paid on time, there are still the added costs of processing. In the worst-case scenario, the trucking company may need to pursue legal options for obtaining payment, and that’s an adverse effect because it digs into the working capital of the transporter. Additionally, the fees for financing can be extreme and vary widely based on the nuances within each contract. There is clearly profitability within offering owner-operator truck financing, indicated by a growing CAGR for this industrial sector, noted in a past blog. However, there’s also another reality. Larger carriers have access to more resources to keep their freight financing costs under control, but others, including those of mid-size stature, may simply have limited resources. In a highly volatile market, even the largest carriers may experience cash flow disruptions due to the unrelenting demand on the industry. As a result, it comes down to knowing what to expect and working with the right services for finance.

Freight Financiers Must Have Expertise in the Trucking Industry

Freight financiers are a dime a dozen, but they are not created equally. These companies could charge up to 30% or more for simply offering an advance on an expected payment. Moreover and without experience in trucking, these companies cannot conceivably maintain a financing presence. In other words, freight financing depends on knowing the details of all shipments, contracts and ways to ensure shippers pay on time and in full. By the same measure, the value of a broker credit check conducted by these companies can help your team identify shippers or brokers that have a history of delayed payments. How is that valuable?

Well, the creditworthiness helps your team plan for when a realistic payment will arrive. That’s essential to maintaining a positive cash flow and leveraging commercial truck financing for owner-operators.

LOC for Commercial Truck Financing for Owner Operators

Another option in freight financing is a line of credit. This is a resource that doesn’t rely solely on invoiced transportation but rather a combination of expected payments with the ability to use funds for virtually any need. This is an excellent way to augment financial stability through periods of uncertainty, such as when your competitors undercut your rates and when the market is shipper-favorable. 

Building Credit Starts With Short-Term Funding

The best way to build credit with owner-operators is to work with shippers and brokers that have a strong history of paying on time and in full. However, building credit can also begin with short-term funding solutions that consider the uniqueness of each contract and help your team maintain transportation needs through the immediate future. This ensures you are able to recoup your expenses while making a sizable profit with a faster payment window. Of course, that also depends on reviewing the fine print listed in each contract to ensure your team invoices all shipments properly. After all, an error on your end could lead to lost opportunities for profitability. And when things go awry, short-term funding can help you get over the hump.

Choose HaulPay to Finance Freight With Less Risk and Greater ROI

Today’s transportation industry is a living, complex organism, and like every animal on the planet, it requires regular energy—i.e., working capital in this metaphor—to live on and thrive. There are always going to be companies that have a poor credit rating and those that might put your livelihood at risk. However, you can offload those risks by choosing the right partner for your freight financing needs. ComFreight is that partner, and their solution, HaulPay, is exactly what you need. Request a demo to see how the HaulPay platform works. Learn more information on how to build credit as a freight broker or how commercial trucking financing for owner-operators works.