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A Transportation Blog

How To Find Good Freight Brokers

It’s a problem that many small or mid-sized trucking companies run into constantly. How can you find good freight brokers — ones that will pay a good rate, and pay on time? Every dispatcher knows the feeling: Scanning the load board and seeing a list of only unfamiliar or questionable brokers. And yet sometimes you have no choice. Your driver needs to get home, and he or she is in an area where there simply aren’t many options. So you take a load that you aren’t sure about.

There are many things you can do to find out about freight brokers. The load board might have some information about how the broker pays its bills. Or you might be able to piece together some authority or bond information about freight brokers FMCSA Licensing information. You might even ask around to see what other truckers say about a company. But load boards aren’t always able to put together complete information, and the FMCSA won’t tell you you days to pay. Asking around won’t always give you a reliable picture.

Transportation Funding Group Can Help

If you’ve looked around our website, you know we’re a factoring company. And you’ve seen that we can help you speed up your cash flow like we have hundreds of trucking companies over the years. But that isn’t all we do. Our goal is to do whatever we can to help our carriers be financially healthy. So we also try to provide useful credit information about freight brokers and shippers before a carrier moves a load.

Transportation Funding Group has more than 20 years’ experience with freight brokers large, medium, and small, and we can tell you what our carriers’ experience with a particular broker has been. And since new freight brokerages appear all the time, we’ve got the resources and research to investigate companies that we haven’t worked with before, and tell you whether it makes sense to accept a load or not. And if a carrier of ours moves a load for an otherwise good freight broker, but we’re still having problems collecting, we’ll do whatever it takes to get paid, and if that means putting together a bond filing against a freight broker, we can do that too.

So even if you aren’t sure whether you need cash flow help, give us a call. Though we are a factoring company, we’ll also help you with more than just improving cash flow.

The Importance of Reliable Credit Information

As you haul freight for various shippers and brokers you occasionally must decide whether or not to risk extending credit to a new customer (shipper/broker). Naturally, you want to get paid for hauling the freight, but dealing with unknown companies might leave you holding the bag. Everyone has heard stories of brokers (or experienced them firsthand) who promise “too good to be true” rates—and then rip truckers off after the fact.

So how can you minimize your risks?

The obvious first solution is to check new customer credit with a reliable credit reporting source. There are several solid credit companies that you can subscribe to in order to access credit information. Ansonia Credit and Compunet are both reliable trustworthy credit companies. Based on your useage, subscription fees can run $25 to $35 per report. Higher volumes generally command lower rates.

Another good source of information is credit data available from your factoring company. At Transportation Funding Group you may go online via our website and access credit information on more than 30,000 debtor files for free! You can look at how long we have been doing business with the customer, what their high credit has been, how quickly they pay their bills, and other key credit information that can help you make a smart credit decision.

Our carriers regularly call us to ask for help with credit decisions. If we need to order a credit report to supplement our credit information, we do that at no charge to our carrier.

TFG performs all credit follow-up with your customers: we make the phone calls and keep the money turning. This regular and ongoing contact helps keep your accounts under control. If a problem develops we alert you to that immediately so you can take steps to protect your interests. This up-to-the-minute credit information gives you added peace of mind that you have an outside third party looking out for your company. We can assist you with other credit follow-up steps which might include filing against a broker’s bond, among other things.

Since October 2013, the minimum limit for a broker bond was increased from $10,000 up to $75,000. This is a good change, especially if you do need to file on a particular broker’s bond. With a higher minimum, there’s a better chance that you can get paid on an invoice from a deadbeat broker.

The better credit information you have available to you, the less likely you will be to have credit write-offs.

The Question of Credit Management

Comparing the concerns that truckers have today with those of ten years ago can be interesting. As we cited in our last post, many of the problems are the same today as they were ten years ago. One area that was not elaborated upon, however, was the topic of extending and managing credit.

It’s one thing for a trucker to have secured good customers, have the correct rates calculated, and have drivers in the trucks (but it can be difficult, obviously, to secure these things all at the same time). And once you have these things in place, a trucker hauls the freight but then must wait 30, or more, days to get paid for the services rendered. How do you know you will be paid? How do you know how much credit to extend?

The question of credit management is one that gets far too little attention. Truckers must educate themselves regarding credit and employ the best practices to avoid credit problems. The faltering economy may be affecting your shipping customers and the brokers that hire you to move freight, and these companies may not be as credit-worthy as they were in the past. They could pose a serious credit risk to your company. Equip yourself so that you can minimize some of the risks of extending credit.

The first tool you should have is a good, reliable outside credit checking source. There are load boards that will rate a customer debtor’s past payment record. This is a good start, but load board information can be limited. Like a patient in the doctor’s office, you might need to get a second opinion. There are several valuable and reliable credit companies serving the trucking industry that provide you with a more in-depth look at a customer’s past payment habits. Ansonia Credit and Compunet Credit serve the trucking industry and for a reasonable subscription fee. These credit management tools, and others like them, can give you added peace of mind.

Another credit-checking tool: If you factor your invoices with a factoring company (like TFG), the factoring company often has a database of credit information that you may access in order to help you with your credit decision. At TFG we make this information available to you at no cost 24 hours a day.

Looking at today’s problems in the industry can help you focus on how you might improve your credit management operations. Better and more attention to credit management are only going to help your company.

There’s a new survey being conducted by the American Transportation Research Institute, which is attempting to identify the Critical Issues in the Trucking Industry for 2014. There’s still time for you to participate in the survey, which you can find here. You’ll be provided you with a copy of the results once the survey is completed. This is a good way for you to access information that can help you manage your company better.

If you have questions about credit management call us at TFG at 800-705-3863.

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