Denim, the preferred freight payment system for freight brokers, is excited to announce its partnership and integration with ZUUM, a comprehensive transportation management system (TMS), software, and mobile app that enhances the efficiency and effectiveness of logistics companies.
By integrating ZUUM's solution with Denim's payments platform, logistics companies can now seamlessly process payments and obtain financing directly from the TMS dashboard without redundant data entry.
“ZUUM partners with the best-in-class efficiency enablers, and Demin is just that. As we forge into the market, bringing value, we are proud to have Demin next to us as an integrated partner. Collaboration is the only way to fix fragmentation. They have a great product, and we are ready to showcase it in our ZUUM App Store," said Mustafa Azizi, CEO and Founder of ZUUM App.
“Connecting the dots in a fragmented supply chain is a tremendous challenge. Our integration with Denim represents an exciting step forward in breaking down those barriers and driving our shared commitment to seamless, efficient logistics. With Denim’s robust payment platform embedded into ZUUM's TMS, we are enabling our users to maximize operational efficiency, mitigate errors, and elevate the overall logistics experience. It’s about blending the strengths of two innovative solutions to create something greater, something transformative for the industry," saidMatt Tabatabai, COO and Co-Founder of Zuum App.
The integration connects the entire lifecycle of shipments, from quoting and dispatching to payment and invoicing. With a simple click, job details from ZUUM are effortlessly transmitted to Denim, eliminating time-consuming and error-prone manual data entry.
"In today's market, efficiency is no longer a choice but a necessity for logistics companies. Every moment spent on manual data entry represents lost opportunities for revenue generation," said Shawn Vo, CTO and COO of Denim. "We are thrilled to partner with ZUUM to provide our clients with an integration that saves time, reduces errors, and strengthens relationships within the supply chain."
ZUUM and Denim share a common mission to streamline the supply chain, emphasizing collaboration and strategic partnerships. The integration brings several benefits to clients, including:
They say you should never let a good crisis go to waste, and freight brokers have taken that to heart during the pandemic. Amid the turmoil, many prioritized software and technology upgrades that could help them continue delivering for shippers and carriers. Now they’re reaping the rewards.
The supply chain has spent years fostering digital capabilities, driven by the mass migration of transportation management systems (TMS) to the cloud, an influx of venture capital, and the arrival of digital digital freight apps such as Uber Freight and Convoy.
However, the onset of COVID-19 made the benefits offered by the cloud not only irresistible — but essential. For example, the pandemic's continuous and unpredictable disruptions made it difficult for freight brokers to strategize. By adopting cloud-based TMS platforms, brokers have gained more visibility into their operations. They can record every shipment detail, often in real-time, and use that data to inform future loads and lanes.
Similarly, explicitly made for freight brokers, digital financial platforms grant increased financial oversight. Solutions like Denim put brokers in command of their cash flow with factoring for freight brokers and managed collections options. Automated invoicing streamlines billing for shippers, and QuickPay keeps carriers happy with timely payments. Increased visibility and better process control provide a competitive advantage for freight brokers in any economic environment. With insightful data, brokerages can act as strategic partners to shippers and carriers. The efficiency of digital platforms also makes connecting shippers and carriers simpler so that both parties get what they want from brokers. These aspects point toward the ultimate benefits of automated solutions for freight brokers, which include:
With the right freight broker technology, even startup brokers can compete with more prominent names in the industry in terms of service level and capabilities.
Over the last few years, the digital transformation of the supply chain has given rise to an entirely new category of brokers: digital freight brokers. The digital freight brokerage movement began with companies such as Convoy, Transfix, and Uber Freight, which use self-service digital marketplaces to match shippers with carriers.
While many shippers still prefer the contract rates and dedicated service of traditional freight brokers, the rise of digital freight options has had some interesting repercussions. Notably, conventional freight brokers have invested more in technology to continue outcompeting the new digital players. This trend is perhaps best illustrated by increasingly frequent partnerships between brokers and TMS providers. By tightly integrating their platforms, brokers and TMS providers can match the speed and convenience of digital brokerage options without losing the benefits of working with a traditional freight broker.
"The lines between a digital broker and an incumbent, more traditional broker are blurring…a year from now, they will be indistinguishable," said Tim Higham, CEO of AscendTMS, in an interview with Supply Chain Dive. As those lines continue to get muddier, freight brokers who made technology investments and formed vital partnerships early will have a significant advantage over those who held back.
Many exciting developments have come out of the supply chain's digital adoption trend, but this is just the beginning. Experts anticipate further developments, such as predictive algorithms matching carriers with loads and blockchain-based shipment tracking. Leading freight brokers are already investing in tech strategies to stay ahead of the curve. Not sure where to start with your technology shift? Begin by pinpointing key opportunities to scale, reduce costs or improve profitability for your brokerage. The chances are that an enterprise software suite exists to help you achieve your goals. If you're interested in learning more about how Denim can help grow your credit and help build your business, we'd love to talk.
All of the processes involved in freight billing, payments, invoicing, and collections can seem complicated, especially because there are so many different parties involved for freight brokers.
To have a successful brokerage, brokers need to have a deep understanding of how money flows between the various parties involved, including carriers, shippers, and your brokerage.
Freight billing for brokers breaks down into three core parts: Freight invoicing from carriers and to shippers, freight payments to carriers, and freight collections when brokers collect on payments from shippers. To best understand this process, let’s start with a few definitions of these terms.
Freight invoicing includes two invoicing steps, with the broker acting as the intermediary. First carriers will create and send invoices to their broker for loads, along with relevant paperwork like a POD and BOL. Then brokers will use this information to create a second invoice, which is sent to shippers with all of the relevant details.
Freight payments is the step where brokers pay carriers for their services. This can happen in a few ways, either immediately through a QuickPay service provided by a factoring company, or in 7-15 days depending on the payment terms agreed to by the broker and carrier.
Freight collections is the process of collecting payments from shippers for the services arranged by the broker. This includes the broker's fee and covers the cost of the carrier’s services, and is sometimes also performed by the broker’s factoring company instead of the broker.
In this article, we’ll dive deep into the freight billing process for brokers, and will break down everything brokers need to know about freight invoicing, payments, and collections.
The freight billing process for brokers is the process where money moves between the three parties involved: shippers, brokers, and carriers. The broker needs to pay carriers for transporting the shipper's goods, and must collect payment from those shippers - acting as the middleman between the two.
Here's a breakdown of how the process typically works:
Shippers and carriers tend to approach freight billing on slightly different timelines. For example, many shippers operate on net-30 or net-60 terms, meaning they’ll pay a broker’s invoice within 30 or 60 days. Carriers, however, often expect brokers to pay much more quickly on a net-15, net-7, or immediate basis.
For freight brokers, the freight billing process isn’t just about paying bills and collecting money owed. It’s also about smartly managing cash flow, so those periods between carrier payment and getting paid by shippers don’t disrupt business operations.
As you can see, there are a few challenges that might come up with this process as a broker. The biggest of which is cash flow management. Typically, carriers expect payments before shippers are willing to pay, which can strain the cash reserves of brokers who aren’t prepared, or don’t utilize a factoring service.
Brokers can also run into challenges with document collection and invoice accuracy, leading to unnecessary back and forth between brokers and carriers to correct documents. This is one of the big reasons brokers require a streamlined back-office operation to ensure their business runs smoothly.
Let’s dive a little deeper into freight invoices for brokers, which is the first step of the freight billing process in most cases.
Freight invoices are the bills issued by carriers to brokers, and by brokers to shippers. They include details of the shipment, additional charges or fees, and more. Freight invoices are the cornerstone of the freight billing process, and brokers will have to deal with them on both sides of the shipment: invoices from carriers and invoices to shippers.
Carrier invoices are the bills sent to brokers, sometimes referred to as a “freight bill” or “freight invoice”.
Carrier invoices include all of the details of the shipment, rates, and fees to be paid for the delivery of goods. The invoice includes important details such as the contact information of the shipper, receiver, and carrier, the purchase order or reference number, the dates of pick-up and delivery, rates, payment due dates, and more. Many factors help determine freight rate, including mode of transportation, fuel surcharges, haul distance, freight class, weight, and more.
Carriers’ invoices also sometimes contain what’s known as accessorial charges – fees for additional services provided aside from transporting freight from Point A to Point B. Some of the most common accessorial charges brokers may encounter include:
These are just some of the most common accessorial charges, if you’d like to learn more read about the top 6 accessorial charges every broker should know here.
Shipper invoices from freight brokers are the invoices sent to shippers after the load is delivered.
A shipper invoice is the bill you, as a broker, send to your client (the shipper) for arranging transportation services. The shipper invoice sent by brokers contains many of the same details as carrier invoices, such as the services rendered, costs, payment due dates, and more.
Shipper invoices typically include:
When a carrier has accessorial charges, they need to be added to the invoice brokers send to the shipper. Carriers will frequently have additional accessorial charges that get tacked on to the base rate of a job for unexpected services or expenses, and it’s important that brokers communicate clearly about these potentially unexpected fees.
Communicating about these charges and billing for them separately ensures there are no misunderstandings between brokers and shippers. These additional charges should be clearly indicated and itemized on the invoice for the shipper.
When a broker is involved in the shipment process, there are two invoices issued for every shipment. The first invoice is from the carrier to the broker, and is a bill for the carrier’s services. The second invoice is issued from the broker to the shipper, and includes many of the details and information from the carrier’s invoice, plus additional information and fees from the broker for arranging the shipment.
After the invoices have been created and sent, the next step in the freight billing process is freight payments. This includes payments from brokers to carriers, freight bill factoring, and finalizing shipment details with the carrier before sending off an invoice to the shipper.
Freight payments are the payments made from brokers to carriers for the services the carrier provides. These payments are essential to stay on top of as a broker, because they are the building blocks of a good reputation with carriers. Top carriers are picky about the brokers they work with, and establishing a reputation for consistently paying carriers on time and quickly is crucial for brokers who want to grow.
The biggest way these payments impact your business is through your freight broker credit score. Brokers with good credit scores have an easier time getting financing, finding carriers who want to transport their loads, and getting the best rates from lenders - so it’s not something to ignore!
Following these payment best practices will help keep your brokerage in good standing and help ensure carriers, shippers, and other third parties are happy and paid on time, all while cutting down on time spent by your back-office:
As you can tell, it’s easy for the freight billing process to get overwhelming fast. Freight payment terms, invoices, and contracts can change dramatically from day to day and route to route. With all of this complexity, mistakes are bound to happen - especially with error-prone manual data entry. Here’s some of the most common pitfalls brokers fall into with freight payments:
Be sure to double-check for duplicate payments or incorrectly calculated charges on carrier invoices.
These errors are unfortunately all too common in brokerages, not because of any malice from carriers, but because manual calculations are frequently error-prone. As a broker, you want to ensure accuracy in the invoices you receive to prevent you and your shippers from overspending.
Ensure you're sticking to the payment schedules you've established with carriers. The different payment terms between shippers and carriers can be a huge challenge for brokers, leading to some brokers delaying payments to carriers.
This is a huge mistake. No matter how long it takes shippers to pay, brokers need to stay liquid enough to pay carriers on time. Otherwise, carriers may stop working with you; or worse, they may file against your surety bond, which will cost you additional money and could hurt your credit and reputation in the long run. This is why we often recommend brokers work with a factoring company to maintain cash flow and liquidity, even if they choose not to factor every load.
Maintain detailed records of all transactions to comply with regulations and provide transparency when needed.
Freight brokers also need to be sure they’re keeping good records of payments to carriers and payments from shippers. According to federal regulation — specifically, 49 Code of Federal Regulations part 371.3 — every party in a brokered transaction has a right to review records of those transactions. If carriers or shippers ask, a freight broker must be able to furnish information like the bill of lading, the details of all parties involved in the transaction, the amount of compensation received for brokerage services, and more.
Freight collections are the last step in the freight billing process, where the broker collects payment from the shipper. This often is determined by the broker shipper contract, freight payment terms, and invoice terms from the broker.
Freight collections is the process of a broker receiving payment from shippers for the transportation services you've arranged. Effective collections are crucial for maintaining positive cash flow and the overall health of your brokerage.
A collections process is critically important for brokering. This process ensure you have revenue when you need it, maintain positive relationships with shippers, and most importantly lets you meet your financial obligations to carriers. When handled professionally and clearly, a solid collections process provides a positive customer experience between your brokerage and shippers, leading to repeat business and a great reputation in the industry.
Due to the complicated and often burdensome process involved in invoicing, payments, and collections, many brokers opt to use specialized partners to streamline their freight billing processes.
Working with a financial partner can streamline the process for brokers, shippers, and carriers while avoiding the common pitfalls outlined above. For example, a platform like Denim offers automated invoicing, which can help brokers avoid duplicate and inaccurate invoices.
These tools also provide services like factoring and managed collections. With managed collections, brokers can also spend less time chasing shippers for payment and more time on critical business functions. Factoring services also give brokers a flexible tool to maintain consistent cash flow. Factoring allows a broker to sell unpaid invoices to a financial partner for immediate cash.
Many financial partners also offer carrier QuickPay options, which allow brokers to pay carriers faster. That efficiency, in turn, leads to better relationships with carriers. Reports show that as many as 60% of brokers don’t have easy, digital ways to pay carriers. Carriers prefer working with brokers that pay on time and reliably, leading to brokers with access to these tools getting their pick of the best carriers in the business.
Finally, financial partners like Denim provide best-in-class analytics, reporting tools, and compliance support, giving brokers valuable insights into financial data at a glance while ensuring compliance with regulatory requirements.
Mastering the freight billing process is essential for the success of any freight brokerage. By understanding and optimizing your invoicing, payment, and collections procedures, you can:
Efficient freight billing isn’t just about moving money – it's about creating a smooth, professional experience for all parties involved. By implementing the best practices outlined in this guide and considering partnerships with specialized service providers, you can transform your freight billing process from a back-office burden into a strategic advantage for your brokerage.
When freight brokers efficiently manage the freight payment process, they can help shippers see better value for their money, ensuring carriers get paid on time, and establishing reliable cash flow needed to keep growing their business.
To learn more about automating your freight payments, contact us today. If you’re interested in learning more about how Denim can help grow your credit and help build your business, we’d love to talk.
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The gap between delivering freight and getting paid shouldn't be significant. Luckily, you can get paid instantly by using freight broker factoring.
Keep your business running on the capital you've already created. Stop relying on buffers created from credit and loans. Focus on running your business and, ideally, growing it, instead of chasing down payments, leaving you light on resources when opportunities do arise.
Freight broker factoring has been around for decades and has helped many freight brokerages grow instead of stagnating.
While 40 days is the standard amount of time to get paid in the freight industry, selling your invoices to a factoring company allows you to get paid immediately.
Sure this is convenient, but what's the cost to your business? Most companies that specialize in factoring for freight brokers charge a flat rate per invoice factored, usually between 2-5%.
The terms of your factoring agreements depend on the outcome of your application, but here are the high-level steps:
When you get a bank loan, you might put up collateral in the form of AR or other business assets. This allows you to retain ownership of assets while simultaneously selling the invoices to a factoring company. Factored accounts are removed from receivables in exchange for the ability to bill the client directly.
The transaction simply replaces AR with cash in the bank, or off-balance sheet financing. One big benefit of using a factoring company as a freight broker is that you won't incur a monthly interest expense, unlike a bank loan.
Factoring allows you to reduce your total balance sheet debt while also lowering your debt-to-equity ratio.
There are many benefits of factoring for freight brokers. Here are just a few:
Mega brokers don't suffer cash crunches, they simply keep moving, often steamrolling smaller brokers in the process. Carve out a chance to compete with these big brokers with factoring. What is the total cost of operational pauses? You can't take on new work, your current clients suffer, and in the long run, your reputation suffers. Not to mention you're not at your best as a company when you're constantly stressed over your AR.
To build a reputation and maintain it as a freight broker, you need to stay competitive. The more value and better experience you can provide, the more likely you'll be to get referrals. You will live or die by these in the freight industry.
QuickPay
With factoring for freight brokers, your carriers get paid quickly without being charged a fee. The easier you make life for your carriers, the more of them that will come back. Get up to 95% of your invoices paid out just a day after submitting them.
Increase Value
Why should carriers work with your freight brokerage over the others? Starting out, you need to develop a unique value proposition, even if it's only offering a shred more than your competition. The truth is that the freight brokerage industry, and logistics in general, is extremely competitive. Everyone knows how to offer the fundamentals, including factoring. The question is—will you do so in a way that stands out?
Less Paperwork
Paper shuffling around getting invoices paid is not only a waste of time, but it can also be costly labor. Eliminate labor that you can give to an outside team and recoup much more than the factoring fee in many cases.
Free Credit Checks For Shippers
If you can find a factoring provider like Denim who does free deep dives into shippers, you’ll prevent a lot of unqualified customers from slowing you down.
No two freight brokerages are the same and therefore, they have different financing and payment processes. Because of this, it’s important to have flexible financing options. At Denim, for example, you can choose which invoices you want to factor. In addition, we also have a feature coming soon where you can choose when you get paid to either save on factoring fees or get paid sooner if you need the capital.
Denim specializes in freight broker factoring because most factoring companies focus on carriers. Why work with a factoring company that doesn't completely understand your unique needs as a freight broker?
You don't just produce or ship; you connect the two parts of the supply chain. Without you, loads are delayed and customers are unsatisfied, leading to damaged reputations over time. We understand the value you provide, which is why we cater just to factoring for freight brokers. Our factoring solutions are made by brokers, for brokers.
As a freight broker who wants to be paid quickly, who do you go with to provide your factoring? Here are some things to consider when choosing a factoring partner (spoiler alert: a lot more goes into this partnership than just trying to get the lowest rate):
The logistics sector is a tight-knit community so if you’re not sure which factoring company to choose, you can consult others who have been in a similar position to see who they chose.
When choosing a factoring partner for your freight brokerage, it’s great to see success stories from similar brokers. We have many amazing success stories from freight brokers just like you. They share their stories and how factoring helped them grow their business.
Like success stories and referrals, reviews are a great form of social proof as you research different factoring companies. We are proud of our 4.8 star average on TrustPilot.
As we mentioned, freight brokers have unique needs and should look for a factoring partner that understands their line of work. You will have different needs than carriers looking for factoring.
Recourse and non-recourse factoring are the two most common types of factoring. Non-recourse factoring means the factoring company assumes most of the risk of non-payment by your customers. This can be misleading because non-recourse does not necessarily protect your company from all risk. There are usually strict stipulations associated with non-recourse factoring, and the situations in which you are not responsible for customer non-payment are extremely specific.
When considering your factoring partner, you should decide how much of an advance you would like while you wait for your invoices to be paid in full. Denim offers 90% advances to our clients.
Some factoring companies for freight brokers will require monthly minimums, which can be hard to reach for smaller brokers. At Denim, we don’t require any factoring minimums and you can choose which invoices you want to factor.
Flat and variable fees are common. Variable rates fluctuate with your demand. For example, if you assign volume flex variable rates, you'll pay less the more you sell. Rates can also be tied to prime rates, meaning you'll pay more when your factoring company pays more.
At Denim, we are passionate about providing freight brokers with the most flexible, easy-to-use, and convenient factoring solutions. Not only do we offer competitive factoring solutions, but our dashboard is cutting-edge and includes business metrics that every freight broker should know about their brokerage.
Want to learn more about factoring with Denim? Sign up for an account today or schedule a demo to experience the whole platform!
Most freight brokers have probably heard of the term “freight factoring” or “invoice factoring” before - but many aren’t quite sure how the process works, even if they use freight factoring themselves!
If that’s you, don’t worry: you’re in the right place.
Properly utilizing freight factoring can be one of the easiest ways for freight brokerages to improve cash flow, operations, and maximize growth opportunities - and we’re here to show you exactly how to implement it in your business.
It’s very common, and generally considered best practice, for small and medium brokerages to use freight factoring. Still, any. Factoring helps brokers avoid floating the difference between paying their carriers and receiving payment from client invoices out of their own pocket.
Factoring isn’t just used by small and medium-sized brokerages. In fact, 58% of all freight brokers use invoice factoring to manage their cash flow (1). Not only that, but the vast majority (71%) of freight brokerages with more than $2 million in monthly revenue use invoice factoring (1).
Want to learn why the best in the industry use freight factoring to manage their payments? You’ve come to the right place. Welcome to the Ultimate Guide to Freight Factoring.
Freight factoring can be a confusing topic, especially when you’ve got a business to run and don’t have time to dive into the nitty gritty. It doesn’t help that several terms are often used interchangeably but can have different meanings depending on the context.
Freight factoring is essentially an easy way for freight brokers to get access to short-term funding by selling uncollected invoices to a factoring company. This helps brokers cover costs between the time they deliver goods to the customer and receive payment for that shipment. With invoices often being paid 60-90 days after they’re sent, factoring can be a godsend to brokers that need cash immediately to pay their drivers.
In 2000, freight brokers managed just 6% of the trucking industry. By 2023, they were handling over 20% of all trucking freight. However, the freight recession that hit in 2023 has squeezed margins, with large players like Surge and Convoy going bankrupt. In this dynamic market, maximizing cash flow is crucial.
After 17 months of falling rates, signs of stabilization are emerging. The Cass index indicates we may have hit bottom, and Landstar reported revenue per load increases in Q2 2024. With a possible market rebound on the horizon, freight brokers must strengthen their back-office and finances to handle new opportunities.
Freight broker factoring is an easy way for brokers to collect cash upfront for all of their invoices, without waiting for 30, 60, or even 90 days for their customers to pay their invoices. This allows freight brokers to quickly and easily pay their carriers using QuickPay, and gives brokerages far more flexibility and reliability in their finances.
If you’re trying to grow your brokerage, freight factoring can give you access to the working capital you need to succeed in a competitive environment. Some factoring companies also help with automating your finances, invoicing, payments, and more - saving brokers many hours per week.
Freight factoring does have a cost associated with it, which is taken out of the final payment on your invoices. This is usually between 1-5% of the total invoice(4).
Here’s a brief overview of how the process works:
Freight factoring in one form or another has been around for a surprisingly long time. There are references to the financing of trade since ancient Babylon, which was written into law in the Code of Hammurabi back in 1755 BC (5).
It’s likely that some form of freight factoring and short-term financing has been around for as long as trade and banking have existed. The needs of those who transport goods haven’t changed much in the thousands of years since - even if the speed of transportation and communication has.
Freight brokers back then needed ways to finance travel, new purchases, and other expenses while they waited for previous investments to pay off - just as they do today. This created a need for short-term financing, which has evolved into what we now know as freight factoring.
Freight factoring and supply chain management evolved as transportation and new methods of shipping goods evolved.
In early history the pyramids of Giza, built nearly 4,500 years ago, may be one of the earliest examples of a large supply chain (6).
It wasn’t until nearly 2,000 years later, around 200 B.C., that long-distance and intercontinental supply chains were created, with early examples including the Silk Road and the Indian Ocean Spice Route (7).
In the early 18th century, during the industrial revolution, larger, faster, and more reliable ships were created that quickly sped up global trade.
Trade financing has evolved alongside the evolution of transportation and new methods of shipping. In the early 1920s, some shipping companies sold secured bonds to the public as a way to finance their endeavors and future investments. The expansion of production and new technology in the 1900s forced supply chains to improve quickly to meet demand.
In the 1930s, RFID (radio-frequency identification) was invented first to track and identify friendly planes during World War II. The same system was later adapted to be rewritable, and started seeing wide commercial use in the 1970s - and is now used for tracking shipments, locks, credit cards, toll roads, and more (8).
The Japanese created what we currently know as “just-in-time” (JIT) inventory management, which was first developed by Toyota’s manufacturing plants (9). The process was so successful that it later inspired Lean Manufacturing in the U.S.(10), and has become widely adopted across the supply chain today.
While some forms of supply chains and supply chain management have been around for hundreds of years, the term wasn’t widely used until the 1980s, when it was coined by Keith Oliver, a consultant at Booz Allen Hamilton(11).
Modern financial institutions have allowed for significantly faster (and less expensive) financing, which has led to the explosion of modern shipping companies across the globe.
In its modern form, freight factoring is in some ways still similar to ancient forms of lending. Freight brokers sell their invoices to a third party, who will provide upfront access to cash that the brokers need to pay their expenses. The factoring company will then collect on the invoice 30, 60, or 90 days later and collect a small fee when paying out the remainder of the invoice to the broker.
This gives brokers access to financing to pay their carriers and other expenses almost immediately (sometimes within a day or two), without pulling on their own cash reserves to cover the costs while they wait for customers to pay the invoice.
Most factoring companies will have several options for your invoice collections & payments, including recourse freight factoring, non-recourse freight factoring, QuickPay for your carriers, and more. These options provide brokers with freight financing flexibility depending on their needs and current demand.
There are some pretty obvious benefits of factoring for brokerages, especially for growth brokers who are looking to expand their business. It provides quick access to cash that the broker would otherwise have to pay out of pocket to their carriers, ensures carriers are paid quickly, and improves overall cash flow. This of course keeps carriers happy, on the road, and delivering reliably.
On top of these more visible benefits, there are a few aspects of factoring that are incredibly beneficial to brokers, but aren’t apparent at first glance.
These include:
These benefits - along with some of the other financial tools some factoring companies provide - give much-needed flexibility and scalability to brokers who are looking to grow their businesses.
Your freight factoring company of choice can have a major impact on growing and scaling your brokerage. They’ll provide everything you need to get access to financing in the short and long term, and provide a myriad of other services and benefits if you choose the right one.
The freight factoring process is relatively straightforward - giving you access to cash upfront while your factor collects on your invoices when they’re due. Many factoring companies have slightly different processes, but the process generally includes the following steps.
How Factoring Works:
Other services provided by factoring companies:
Factoring companies like Denim can also be a smart solution for other financial needs - not only providing financing options that scale with your business, but the tools and automation needed to keep your business running efficiently.
While there is generally an application process to factor your invoices with a factoring company, it’s a relatively quick and easy process. Most companies approve applications within a day, and will often require significantly less information compared to other forms of financing.
Some factoring services require more than others, but there are generally a few criteria they’ll ask for or review when you apply.
This includes:
Sample invoice:
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The rate you’re quoted for factoring can vary based on the type of agreement you have and other fees your factoring company may charge.
Rates are generally determined based on the creditworthiness of your clients and your business, the volume of invoices you factor, current prime rates, and more depending on the factoring company you choose. Some offer tiered rate programs which decrease the rate you pay as your volume increases, while others tie rates to prime rates.
Most factoring rates are between 1-5%(4), with rates increasing when brokers choose to use non-recourse factoring. These rates are the base factoring fee that your service provider charges, and may not be the only costs associated with factoring - more on this below.
When making a decision about a factoring company, be sure to read the fine print. Some will advertise low rates or risk-free financing, without being very upfront about their costs.
Here are some important fees and requirements that are sometimes hidden in the fine print of factoring agreements:
If a factoring company is charging any of the above fees, or has unfavorable terms like these in your contract, be wary of low advertised rates.They may have lower rates than alternatives, but will often eat up the value of your invoices through additional fees and restrictions.
At Denim, we’re proud to offer clients factoring with no additional fees or long-term contracts. We know your business depends on knowing exactly how much you’ll receive from each invoice, which is why the only fee we’ll ever charge is our base factoring fee. Schedule a demo to learn more.
Choosing a factoring company is an important step to growing any brokerage, but it can be a challenging decision.
At face value, low base rates and high advance rates are advertised to brokers, but there are a few other things to consider.
Here are the top questions freight brokers should ask before picking a factoring company:
Check out this full list of essential questions every freight broker should be asking their factoring company.
Growth-focused brokers may also wish to consider the other financial services provided by a factoring company. Choosing a Factor that can scale alongside your business and provide other financial insights may be essential in future-proofing your company. According to KPMG, one of the largest consulting firms globally, investment in holistic supply chain technology will be an essential strategy in 2023 (12).
This means that growth brokers looking to get ahead should focus on providers that incorporate more than just factoring into their services. Without end-to-end visibility into your analytics, customer credit, or back-office optimization, your brokerage may be left behind.
When entering into a factoring agreement, there are two common types of factoring you’ll encounter: Recourse Factoring and Non-Recourse factoring. These factoring types have some benefits and drawbacks that you may want to consider depending on your risk tolerance and financial situation.
Recourse factoring is a form of freight bill factoring where the factor pays the broker upfront for any invoices, and then attempts to collect on those invoices when they’re due. This provides the broker with working capital to pay carriers fast, and the factor collects a fee for floating the difference. If the customer defaults on the debt, the broker is responsible for paying back the factoring company.
Full recourse factoring may seem riskier for the broker, but it does have several advantages over non-recourse factoring. The most important of which is a lower factoring fee - since the factoring company is taking on less risk, they’re able to charge less for factoring and pay brokers faster.
Recourse factoring is also a great choice for brokers who have long-lasting relationships with their clients, and are aware of their payment history. If you already know your clients pay on time, recourse factoring is less expensive and gets you paid faster.
Non-recourse factoring means that the factoring company assumes the risk of default by the broker’s customers. While this sounds less risky on the surface, it does come with a few caveats.
Often brokers are only protected by non-recourse factoring in very specific situations such as the bankruptcy of the client. This can cause brokers to get the worst of both worlds: higher fees and responsibility for defaults that aren’t the result of bankruptcy.
Non-recourse factoring will also limit a broker’s customer base, since the factoring company is assuming all of the risk. This means they’ll frequently decline to factor invoices for customers who have less than perfect credit, leaving the broker on the hook.
Learn more about recourse vs. non-recourse factoring here.
What are Factoring Discounts?
Factoring discounts are ways brokers can save on their rates, improve their cash flow, and adjust their funding based on their unique needs. There are generally two types of factoring discounts: time discounts and volume discounts.
Some factoring companies may offer one or both of these discounts to their clients, depending on the number of invoices factored and the speed at which the client needs to be paid.
Time-based factoring discounts reduce your rate based on how quickly your brokerage chooses to receive the advance for your invoices. These discounts offer a decreased rate to brokers who need a smaller amount of their invoices paid upfront. For brokerages that can delay the need for an advance on their invoices, time-based discounts can help cut down on fees if they don’t need the capital immediately.
Volume-based factoring discounts are decreases in your rate based on the volume of invoices your brokerage factors. These factoring discounts provide increased cash flow and a lower rate for larger brokers who process a lot of invoices.
Factoring discounts give brokers some control over their rates and help reduce fees as your brokerage scales. Learn how you can save money on your factoring fees with Denim.
With freight factoring, your funding is based on goods that have already been sold and delivered. This allows factoring companies to provide an advance on your invoices for significantly lower rates than other kinds of financing.
Business loans from the SBA have significantly higher rates, with a minimum of 2.25% + the prime rate, meaning a loan in early 2023 would cost you between 10-12%. A business line of credit can be even more costly depending on your creditworthiness, and can have rates as high as 16%-27% (13).
Compare this with freight factoring rates of 1-5%, and it becomes obvious why many brokers choose to factor over other methods of financing.
Factoring also won’t lock your business into monthly recurring payments like a bank loan or line of credit.
Loans from banks, the SBA, or private investors also often require some form of collateral. This could mean putting up your trucks, equipment, or office space as a guarantee against your loan. Since factoring is based on your existing invoices, generally no additional collateral is required, and approval is based on your customer’s creditworthiness, not yours.
Factoring also gives brokers an easy way to reduce debt on their balance sheet while simultaneously lowering their debt-to-equity ratio.
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Smart brokers can take advantage of freight factoring in a wide range of markets, and it can be a useful tool to withstand economic turmoil. Easy and inexpensive access to funding can and should be a part of any broker's growth strategy, regardless of the economic climate.
Factoring in Down-Markets
With the recent news of slowdowns in manufacturing, decreases in shipments, and trucking conditions falling to record lows, it’s more important than ever to stay on top of your finances. Maintaining cash reserves needed to manage carrier settlements and meet payroll is essential to surviving any downturn (14).
Factoring can be one of the tools in your toolbox to weather a recession. It allows you to access capital when you need it, giving you opportunities to take advantage of spikes of demand when they occur.
With most factoring companies there’s also no upfront cost or long-term commitment - you can sign up today, and only use it when you need it. Traditional forms of financing can lock brokers into fixed payments that might be challenging to keep up with if demand begins to slide.
During a downturn, it’s also important to consider your client’s reliability. Some factoring companies will perform credit checks and vet your clients to ensure they’re able to pay, and don’t have a history of defaulting on vendors. For example, at Denim we provide free unlimited credit checks for all customers, so you can be confident that invoices will be paid on time.
Without a way to monitor customers’ history, some brokers can end up working with customers with a bad history of repayment. During an economic downturn, it’s critical that brokers work only with customers who are financially able to cover their obligations and pay their invoices on time.
Factoring During Up Markets
Easy access to capital is an essential tool for growing a freight brokerage during an up market, which is why freight factoring can be a useful tool when the economy is on an upward trend.
Without access to capital, your business may not have enough cash on hand to capitalize on new demand as the economy improves. Consumers generally spend more during economic uptrends, which in turn means more goods need to be manufactured, shipped, and delivered to fulfill this demand. For example, in 2017 when the economy had been growing for several years in a row, the ATA trucking tonnage index rose by 3.7% - the largest annual gain since 2013 (15).
The data clearly shows that when the economy is growing, so are trucking revenues. This is why it’s so important to have access to capital when needed. New customers are more likely to need new routes or additional deliveries from carriers during a growing economy. Without fast access to inexpensive capital, some brokers may lose this business to other more established 3PLs.
Freight factoring is one of the tools growth brokers should employ to remain competitive when the economy rebounds. With the right tools and access to funding, brokers can build and grow relationships with new carriers and customers during economic upswings. Easy access to funding also allows brokers to take on new jobs in niches they might otherwise avoid during downturns.
Factoring on its own has a wide range of benefits, which are compounded when used in conjunction with automation.
Automation is quickly becoming an essential part of managing a broker’s back-office, and brokers that ignore these changes may be left behind by the competition (12). Carriers and clients are beginning to expect QuickPay, automatic payments, and prompt invoicing provided by automation.
Automated factoring improves your company’s efficiency, allowing for streamlined invoicing, billing, and payment processing. This can significantly cut down on the time required to manage your accounts each week.
With automated factoring and back-office support, your brokerage can expect:
The hours saved from automating your freight factoring will likely pay for the factoring fee on their own. Carriers, customers, and staff all benefit from the accuracy and efficiency of automated freight factoring, making it an easy decision for most brokers.
When a broker is considering changing from one freight factoring provider to another, they go through a process called a ‘buyout’. The process allows brokers to switch from one factoring company to another that better fits their needs, without losing access to funding in the short term.
If your current factoring company is charging excess fees, or doesn’t offer features like QuickPay or other financial enablement services, it might be time to consider switching to a new freight factor.
Here are some questions to consider if you’re thinking about transitioning to a new factoring service:
Before switching factoring companies, you’ll want to review your existing contract and be aware of any cancellation fees, contract end dates, or other terms related to canceling your contract.
The buyout process can vary depending on who you choose for your new factoring company. At Denim we take care of the vast majority of the process on your behalf. After you’ve notified your previous factoring company that you’ll be canceling and agreed on a buyout date, Denim takes care of the rest. Here’s what the process looks like:
Freight factoring is one of the easiest ways for brokers to get ahead, grow their business, and become known for fast and reliable payments, which is why it’s critical that you choose the right factoring company.
At Denim, we’re proud to offer transparent, flexible factoring to brokerages of all sizes. You’ll never be surprised by your bill again with free account creation, applications, credit checks, ACH transfers, QuickPay, and more.
Set up your free account today and only factor the invoices you need, when you need them.
Call (855) 250-4142 or sign up here to get started today.
Additional Sources & References:
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Moving a load is never a straight line.
Oftentimes, a load encounters roadblocks, delays and changes that can impact the overall cost. Understanding these complexities is crucial for anyone involved in shipping, whether you're a business owner, logistics manager, or even a truck driver.
This article dives into one of the key components that often come as a surprise to many: accessorial charges.
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Their role in the supply chain makes freight brokers especially vulnerable to disruptions caused by the COVID-19 pandemic. However, these organizations are also uniquely positioned to shepherd the recovery of logistics and transportation. When freight brokers build more robust operations, the entire supply chain becomes stronger as well.
As brokers look to ramp up operations, new technology capabilities provide a great place to start. In particular, modernizing financial systems offers brokers a potent way to streamline processes, strengthen partnerships with shippers and carriers, and stay solvent in the midst of a volatile economic recovery.
The pandemic shook up the supply chain in virtually every way imaginable, from parts shortages and production slowdowns to closed ports, delayed shipments and massive staff turnover. Transportation hiccups, price volatility, and cash flow interruptions have left shippers, brokers, and carriers equally frustrated, ultimately taking a toll on their relationships with each other. Getting those relationships back on track is part of a successful supply chain recovery — and upgrades in enterprise technology can help.
The pandemic has created an opportunity for freight brokers to make a strategic effort to leverage technology that can optimize operations and restore or improve capabilities. For contemporary freight brokers, these technologies will ensure stability in years to come. The right enterprise technology will insulate a company from external and internal shocks, giving freight brokers the ability to operate near full capacity regardless of what happens and adapt to change as it occurs. When a business begins to automate manual processes, it gains benefits such as:
Company leaders collect more data about what’s happening in their organizations and the wider industry. In turn, this data enables them to make more informed decisions about logistics, finance, operations, and other critical business processes.
In manual operations, problems can spiral out of control before company leadership even knows they exist. The increased visibility offered by technology makes it easier for companies to identify and address issues before they escalate into major crises.
Upgrades in technology let business leaders automate tasks, empower employees to do more with less, and make operations more cost- and resource-effective. These capabilities can compensate for a lack of staff and interrupted cash flow — two major pain points for freight brokers, shippers, and carriers at this moment. It’s little wonder that so many supply chain leaders have come to recognize the vital importance of eliminating manual processes as a step in post-pandemic recovery. In this Global Procurement Officer Survey from Deloitte, “driving operational efficiencies” surpassed “cost savings” as the top priority of Chief Procurement Officers (CPOs) for the first time.
Freight brokers are the connectors of the supply chain — they link together shippers and suppliers, facilitating the efficient flow of goods from producers to end consumers. Because of this, the advantages of streamlining a brokerage extend far beyond its own four walls. It becomes easier for shippers and carriers to connect and makes the freight broker a valuable strategic partner to shippers and carriers struggling to get back on their feet.
But, brokers need to take care when developing priorities for the adoption of new technologies. Nearly every aspect of a brokerage’s business can benefit from digital technology enhancements, but focusing on the most impactful areas first will grant fast and abundant benefits. Sales and operations planning (S&OP) offers a good starting point to target manual processes, as these processes can benefit heavily from richer data and clearer visibility. Time-saving integrations between broker, shipper, and carrier systems is another top candidate, as it helps smooth any wrinkles in the fundamental relationships that power the whole supply chain.
Automating financial and back-office tasks will provide the most immediate impact for brokers struggling to remain financially viable. Automating essential but repetitive administrative duties frees employees up to focus on more complex tasks that require human attention.
Consider the amount of time spent handling invoicing and collecting payments. With a financial platform like Denim, brokers can automate invoicing, implement managed collections, and leverage freight-factoring capabilities as necessary. As a result, workers who typically handle these tasks can dedicate more time to strategic operations and revenue-generating activities.
The streamlined payment process also helps maintain more consistent cash flow and ensures the organization has the resources to overcome challenges and disruptions. With financial stability, freight brokers can continue working with shippers and carriers despite disruptions in other parts of the supply chain. And by using tools like Denim's QuickPay feature, freight brokers also make sure their carrier partners enjoy some financial stability of their own.
Additionally, an advanced financial platform gives freight brokers access to high volumes of valuable data. For example, understanding the financial stability of shippers and carriers will help a freight broker make more intelligent decisions about partnerships. Our dashboard shows freight brokers important data like this, including their fastest paying customers, their slowest paying customers, and their most profitable customers.
Through integrations with transportation management systems and accounting software like QuickBooks, brokerages can turn their data into a real asset by sharing it between systems to further enhance visibility and facilitate informed decision-making processes. This combination of automation, financial stability, and accurate reporting allows freight brokers and their partners to ride out volatile shifts in the economic terrain. Moreover, it keeps the entire supply chain moving — when freight brokers are doing well, so are the shippers and carriers that depend on them.
With a robust financial platform, freight brokers can leverage a tumultuous supply chain as an opportunity for growth. Freight brokers will strengthen their relationships with existing partners and attract the attention of new businesses, too. Only 10% of supply chain pros feel “extremely prepared” for disruption in the future, whereas 59% say their disconnected systems and processes are to blame for potential future disruptions, according to Quickbase’s Supply Chain Resilience Survey. This data suggests that freight brokers who choose to move away from manual processes now — especially in financial operations — will position themselves as supply chain recovery leaders. To see how Denim can help you grow your freight brokerage, please reach out to us today.
The US freight brokering industry is expanding at an impressive rate. In 2020, the market size was around $1.1 billion, but the market is on pace to reach $13.78 billion in 2028, an annual growth rate of 36.2%.
Whether you're wondering how to become a freight broker or are an established veteran, you know this rapid growth means opportunity. But you need to prepare now to capitalize on it.
One critical step is abandoning any cobbled-together technologies you use to run your operations. Specific freight broker technology designed with the needs of the industry in mind wasn't available for years, and many brokers still struggle with outdated solutions.
The lack of industry-specific freight broker technology has been a barrier to efficiency, but that's not the only challenge. Instead of devoting time to building close bonds with carriers, brokers were all too often mired in paperwork.
Fortunately, you can now access digital freight broker technology, streamline your business, and focus on fostering trust-based relationships with your carriers.
Building strong relationships with their shipping customers is important. But it's essential to extend that customer service mindset to your carriers as well. When you do, you can gain significant benefits for your brokerage, such as:
The good news is that the technology you use to manage day-to-day activities can also help you forge strong ties with your carriers. By streamlining routine tasks and offering value-adds like factoring and prompt payments, you can rely on freight broker technology to keep you and your carriers connected.
To build trusting relationships with carriers, you must be honest about jobs, payments, and expectations. You won't win any points by conducting hard-ball negotiations and undercutting rates. Also, if you can't pay as much as other brokerages, it's best to be upfront about that. When you're open and honest, carriers who enjoy working with you will return time after time, even if you aren't always at the top of the pay scale.
You should also try to get to know your carrier's preferences. Do they value certain routes or work schedules? Although you may not always be able to accommodate them, you'll earn appreciation by making a good-faith effort to meet their needs sometimes. Giving some consideration to your carriers can make them more willing to step up if you need help covering an extra load or an unplanned cancellation.
As non-salaried workers, carriers depend on prompt payments to ensure a steady cash flow to keep their business running. No one likes chasing down receivables, and slow payments will inevitably cause your carriers to lose trust. Even the net-30 of the standard of the past is obsolete in today's digitized environment.
With Denim Factoring and QuickPay, you can overcome this common challenge. You can use our freight broker technology to simplify the invoicing process for your carriers and get money into their hands faster. They spend less time handling billing and payments and more time transporting loads, meaning they can earn more.
Smaller and mid-size freight brokerages have an advantage over larger competitors—a human touch. When carriers work with a larger firm, they often are one of many independent service providers. That can lead to a feeling of being treated like a number, not a person.
Also, more digital freight brokerage firms are popping up. While they offer efficiency, they can't provide that all-important personal connection. Traditional firms that have top-quality freight broker technology can deliver the same speed while building personal relationships with carriers.
You can give your freight brokerage a competitive advantage. A service mindset and freight broker technology that makes the administrative side of the business easy for your carriers can help you stand out.
Freight brokering is an innately complex business. You need to juggle multiple shipper accounts and stay on top of their payment patterns. At the same time, you need to engage with various carriers and ensure you are utilizing and paying them effectively.
With state-of-the-art freight broker technology, you can keep a close watch on all the critical metrics that drive your business. Denim's Business Performance Dashboard gives you at-a-glance insight into key data, including jobs over time and average days sales outstanding (DSO), along with fastest paying, slowest paying, and most profitable customers. You can always be in the know about the health of the business and make targeted adjustments to optimize your broker operations.
Having this information readily available saves hours of time that you would normally devote to administrative work. You can redirect those energies to building better carrier relationships.
We all prefer to work with people who respect us and treat us well. For carriers, brokers who keep the lines of communication open and show appreciation will win trust and loyalty. It's also imperative to be transparent about payments so that carriers can know exactly when they'll receive funds for their work.
Denim freight broker technology makes it easy to achieve those goals. Our freight factoring pays you out for loads promptly and allows you to offer factoring to carriers at whatever rate you prefer. With QuickPay, you can deliver payments within 24 to 48 hours for each factored invoice. Carriers will learn that you're an honest and reliable broker and be more willing to work with you.
As you're learning how to be a successful freight broker, you'll set profitability and customer acquisition goals. You should also make fostering close ties with carriers a key business objective.
When carriers recognize you as a transparent broker who always pays on time, they'll be happy to work with you. That gives you more stability and predictability since you'll know you have carriers you can rely on to transport loads. You'll develop a reputation as a reliable broker to your shippers, opening the door to more business.
Without question, embracing technology as a freight broker is critical for success. Today, freight brokers can access intuitive solutions that make the administrative side of the business easier.
Features like robust data dashboards, automated invoicing, and quick payments mean less busy work and more opportunities to connect to carriers. With more than 90,000 freight brokerages in the US, this attention to relationship-building can make you stand out from the crowd and position your brokerage for long-term growth.
Contact us to learn more about how Denim can help set your freight brokerage apart and attract top shippers and carriers through technology.
SmartBroker
/smärtbrōkər//
Noun
noun: SmartBroker; plural noun:SmartBrokers/SmartBrokerage
Modern freight broker that makes use of advanced technologies and business practices
“Those SmartBrokers are always outperforming the market."
"The brokerages that will survive in 2023 are the SmartBrokers"
The Supply Chain continues to evolve and new technologies are emerging every day challenging long-held standard operating procedures. Freight brokers need to stay up-to-date with industry trends and consider whether they are operating as efficiently and effectively as possible. Brokerages with a growth mindset are transitioning to a SmartBroker model in the face of unprecedented challenges within the freight and logistics industry.
A SmartBroker is a modern freight broker that makes use of advanced logistics technology and business practices. They are experts with a growth mindset who leverage that tech for operational excellence - creating deep relationships. And they are comfortable with change, not only embracing the industry transformation, but actively pursuing it.
SmartBrokers utilize advanced technologies and prioritize efficiency, transparency, and customer satisfaction within their operations. They leverage their tech stack to empower employees to be efficient through their daily tasks and operationalize these user-friendly platforms to allow shippers to easily work with their brokerage. SmartBrokers use data analytics tools to optimize routes and negotiate the best rates with carriers, and may even find ways to use artificial intelligence to automate certain aspects of the booking and dispatch process. Oftentimes, SmartBrokers have a strong online presence, engaging, sharing and learning with the community on social channels and dedicated freight & logistics groups. This is part of the growth-mindset that every SmartBroker has.
But SmartBrokers are more than just tech-savvy intermediaries. They also place a strong emphasis on effective communication with both their customers and carriers, ensuring that all parties have timely and accurate information throughout the shipping process. Rather than focusing on one-off transactions, SmartBrokers prioritize building long-term partnerships with both shippers and carriers.
Shippers, now more than ever, are looking for reliable brokers to build long-term relationships with, and freight brokers who are quick to adopt this new methodology will be the ones who ultimately win out against those that fail to adopt and evolve. And it's the SmartBroker, the modern, forward-thinking freight broker that utilizes advanced technologies and prioritizes efficiency, transparency, and customer satisfaction in their operations – that will win these shippers’ hearts.
SmartBrokers help increase efficiency and cost savings for their shipping customers by leveraging an intelligent logistics technology stack, with data analytics tools that help to optimize routes and negotiate the best rates with carriers. They also prioritize transparency, providing real-time updates and information to their clients and carriers, which helps to build trust and long-term partnerships. The goal of a SmartBroker is to deliver a seamless and efficient freight brokerage experience that exceeds the expectations of both their clients and carriers. (Easier said than done.)
All freight brokers, sometimes known as a third-party logistics provider or 3Pl, act as intermediaries between shippers and carriers, negotiating rates and arranging shipments on behalf of their clients. Freight brokers have a deep understanding of the transportation industry and are skilled at finding the best carriers for a particular shipment based on factors such as price, availability, and delivery time.
SmartBrokers differentiate themselves from traditional brokers and digital marketplace brokerages as responsive and modern partners for shippers – offering an unparalleled customer service from blending new business technology with human professionalism.
Traditional freight brokers may not have the same level of technological capabilities or emphasis on carrier satisfaction. They may also be more rigid in their business practices and less adaptable to changing market conditions. Traditional freight brokers have been around for many years and typically operate through a network of established relationships with carriers and shippers. They might rely on manual processes, such as phone calls and faxes, to communicate with their clients and carriers and negotiate rates.
While digital marketplace brokerages like UberFreight have revolutionized the way that freight is booked and coordinated, they operate on a different model than traditional brokers. Digital marketplace brokerages act as facilitators, connecting shippers with carriers who have available capacity, but lack the traditional levels of human interaction and relationship building that is critical for long-term growth within the industry.
In contrast, SmartBrokers are agile and flexible, with the ability to quickly adapt to new technologies and changing customer needs. SmartBrokers take a more proactive approach towards building their business, actively seeking out the best options for their clients and negotiating rates with carriers on their behalf.
All SmartBrokers possess 4 key traits that set them apart from the pack.
These pillars are the foundation for any freight brokerage evaluating themselves and their journey to fully embracing modern SmartBroker best practices.
SmartBrokers know that every contract is not guaranteed, so they are obsessed with constant improvement and growth. They are in the constant pursuit of differentiating tools and strategies to win new contracts or build upon existing contracts. Market shifts like digital, real-time, flexible, just-in-time business models are not roadblocks but instead springboards for new opportunities.
Implementing a best-in-breed, fully-integrated freight technology stack enables SmartBrokers to harness the power of complementary tools. Jobs effortlessly move through their technology ecosystem from preload tools like CRM and TMS to post-load tools like Freight Payment Systems.
The freight and logistics industry is built on relationships. SmartBrokers understand this deeply and are laser focused on creating meaningful interactions with all parties. By eliminating transactional communication and leading with empathy, SmartBrokers provide stellar service to carriers and shippers alike.
Operational excellence is the back-bone of SmartBrokerages, enabling them to move quicker and smarter. Intelligent automation is deployed across a SmartBroker’s operating model to create a highly efficient and low-error set of services.
According to IBIS the whole freight broker market has grown ~6% per year over the past 4 years and is expected to grow ~2% this year. Individual freight brokerages are seeing larger swings in their growth rates as they compete for market share.
The transportation industry continues to evolve, so it is important for freight brokers to consider whether they are operating as efficiently and effectively as possible, and whether transitioning to a SmartBroker model could benefit their business. Embracing advanced technologies and prioritizing efficiency, transparency, and customer satisfaction means that freight brokers can position themselves for success in the 21st century. The evolution for all freight brokers to SmartBrokers is an important step towards a more efficient and effective industry.
Utilizing advanced technologies and data analytics tools, SmartBrokers optimize routes and negotiate premium rates with carriers, resulting in increased efficiency and cost savings for their clients. A SmartBroker might use real-time traffic data to select the most efficient route for a shipment, a Freight Payment System to streamline and manage the payment & invoicing of carriers & shippers, or an integrated TMS to automate certain aspects of the booking and dispatch process.
SmartBrokers prioritize transparency in their operations, providing timely (and automated) status updates and information to their customers and carriers. When all parties have a clear understanding of the shipping process, it helps to build trust and establish long-term partnerships that are profitable for everyone.
A user-friendly platform and effective communication is table stakes today. SmartBrokers are able to deliver a seamless and efficient shipping experience that exceeds the expectations of their clients. The increase in customer satisfaction creates loyalty, as well as helps to establish a stronger reputation in the industry.
SmartBrokers are agile and flexible, with the ability to quickly adapt to new technologies and changing customer needs. The natural desire to stay ahead of the curve and respond to shifts in the market helps ensure that they are operating as efficiently and effectively as possible.
By embracing the principles of a SmartBroker, freight brokers can differentiate themselves from traditional brokers and digital marketplace brokerages, positioning themselves as leaders in the industry.This helps to attract new customers and build long-term partnerships with like-minded shippers and carriers, leading to increased competitiveness and success.
Identify gaps against industry SmartBroker best recommendations (below) and success stories.
Take stock of your existing business and operations today. Where are your strengths and weaknesses? Are there bottlenecks in your processes? What could be made more efficient with technology?
Assess your tech stack and each component to ensure interoperability. Try to reduce existing manual processes and avoid adding new ones. Remember to keep in mind efficient work distribution for every system and individual using the systems.
Reach out to peers and advisors to ask questions and understand best practices.
Identify your long term vision and set achievable steps along the path towards it. Source vendors and design target state model along with a change management plan to achieve your goals of tech stack and operational improvements
Launch vendor evaluations for tech stack improvements
Build a change management plan for operations improvements
With your technology and tools in place, it's time for the work to begin. Design your change plan. Build a timeline. Phase in your changes and execute on the plan! Easier said than done, but if you’ve gotten this far it is clear you are a lunch pail carrying, walk-the-walk, nose to the grindstone, rubber meets the road SmartBroker. You’re our kind of SmartBroker
Continue to evaluate opportunities for improvement and plan steps for your ongoing evolution. The industry is changing in such amazing ways, and SmartBrokers know that there are always new ways to grow and improve their business to be a leader in the space.
Every freight broker is different, but in general a SmartBroker will have a freight tech stack that consists of a mix of the following platforms & services.
A Transportation Management System (TMS) is a software application that empowers brokers to plan, create, manage, and analyze freight load jobs. A TMS offers visibility into day-to-day transportation operations, trade compliance information and documentation, and helps ensure the timely delivery of freight. Some advanced Transportation Management Systems include track and trace services – enabling real-time information exchange from the SmartBroker with carriers and shippers.
SmartBrokers use accounting software for accepting business payments, managing and paying bills, and other assorted payroll functions. Benefits include:
Carrier on-boarding is the process of bringing new carriers (or transportation providers) into a company's network. This process typically includes a review of the carrier's safety compliance records, insurance coverage and other qualifications, to ensure that the carrier meets the company's standards for safety and compliance. Safety compliance refers to the adherence to regulations and industry standards related to transportation safety, such as the Federal Motor Carrier Safety Administration (FMCSA) regulations in the United States.
Capacity management is a data-driven software that helps SmartBrokers find and book the best carriers with the most efficient loads at the right moment. With capacity management software, Smarbrokers are able to expand capacity, scale bandwidth, and grow their business. Capacity management helps to encourage carrier re-use and better carrier relationships, empowers your broker team to be more efficient and effective in their daily work, and higher and more profitable customer win rates.
Freight brokers use a variety of customer acquisition software and information sources to help them identify and connect with potential clients.
Lead generation software, which helps brokers identify and track potential clients and leads.
Marketing automation software, which helps SmartBrokers automate repetitive tasks such as sending out email campaigns and managing social media accounts.
Sales software, which helps SmartBrokers manage their sales pipeline and track progress towards sales goals.
Additionally, staying connected with key industry resources is crucial to staying informed and relevant when discussing new business opportunities.
SmartBrokers can manage and automate the process of obtaining rate quotes from carriers, and then using that information to create and send quotes to their own customers. This type of software typically includes tools for managing carrier relationships, tracking market trends and pricing data, and generating quotes based on a variety of factors such as shipment size, distance, and delivery time. Some systems may also include features for tracking and managing customer relationships, including tracking customer-specific pricing and terms. SmartBrokers use Rate Pricing & Quoting Systems to streamline and increase the overall efficiency and accuracy of the pricing and quoting process, which can help to increase profitability and improve customer satisfaction.
Whether we like it or not, all brokers must be masters of these systems. They allow freight brokers to post available loads and search for available carrier capacity. Load board software typically includes features such as load matching, carrier rating, and messaging, which allows SmartBrokers to communicate with carriers and negotiate rates. Digital Freight Matching marketplaces lets brokers to filter loads by specific criteria, see pre-posted rates, and book these loads right away.
This software provides SmartBrokers with real-time visibility into the location of shipments, as well as other important information such as delivery status, estimated time of arrival, and any delays or issues that may arise. This information can be used to improve communication with customers and ensure that shipments are delivered on time and in good condition. Additionally, freight broker tracking visibility software can help to improve the efficiency and productivity of SmartBrokers by automating many of the tasks associated with tracking and monitoring shipments.
A Freight Payments System (FPS) is a specialized tool for SmartBrokers that streamlines the process of paying carriers, credit checking customers, invoicing freight charges, and reconciling payments between shippers, carriers, and other parties involved in the transportation of goods. Freight payment systems are one of many key components to a robust SmartBroker freight tech stack.
A freight payments system streamlines and automates manual tasks throughout the full life cycle of a load, including:
2024 is the year of the SmartBroker. As our industry continues to evolve, Denim is here to support the brokers, carriers, and shippers who are moving it forward. Get in touch with us today to discuss how a Freight payment System would benefit your specific operation. Or speak with a SmartBroker expert to get a better understanding of what the future holds for freight, logistics, and the greater supply chain. Freight brokers have been around for decades, but in recent years, the industry has seen the rise of a new type of brokerage - the SmartBroker.
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