If you’re just starting your freight brokerage, building momentum will take a lot of effort. Untested freight brokers don’t have the reputation yet to attract top shippers or carriers, no matter how much the two want to find each other so that a partnership can happen. You’ll need to go the extra mile when learning how to grow your freight brokerage.
Here are a few tips on how to convince top carriers to work with you as you build your carrier network.
No carrier wants to be chasing down their receivables, so make sure your carriers are paid on time with QuickPay options. Word will spread that you can be trusted to make fast payments and reduce your carrier's busy work. This also keeps pipelines flowing because you don’t stall, argue, or otherwise mistreat your carrier partners when it comes time to actually pay for services rendered.
Net-30 is an antiquated payment standard. Carriers need money now, and they work hard to complete jobs, so there’s no reason why they should be waiting on payments. By offering free and convenient QuickPay options for your carriers, you can pay your carriers faster, which is a huge benefit to them. Paying your carriers as quickly as possible will help you maintain these important relationships and grow your freight brokerage.
If you deliver value at every opportunity, you’re bound to get referrals. This is a slow, organic process, but you’d be surprised how many freight brokers don’t consistently pursue referrals. The freight industry is a tight knit industry and a lot of professionals work closely together. One satisfied carrier or shipper can connect you to another who needs to transport a load. Always put in consistent effort to cultivate a good reputation within your referral network.
There are thousands of brokers carriers can decide to work with, so it’s important to emphasize your value, especially as you are just starting your freight brokerage. By humanizing yourself, specializing in a niche market, and focusing on transparent communication, you can begin to convince carriers to work with you.
People like working with brands that they can relate to, so make sure to tone down the business talk and inject some personality into your brand, marketing materials, and website. An easy way to do this is to talk about your team. If you’re a small operation, highlight and emphasize the personal and efficient service that your carriers will receive over a large firm that moves slowly.
Also, don’t be afraid to cross the line between personal and professional relationships. Successful brokers go the extra mile and build relationships with their carriers by doing small but meaningful things, like sending holiday gifts, taking their carriers out to a nice dinner, or checking in on them and their family. We work with brokers who even send their drivers a DoorDash gift card if they are stuck in line at the shipper for hours!
Carriers want to work with nice brokers who care about them and their business.
As you’re starting your freight brokerage or growing your business, one key tip is to specialize in a niche because as they say, “a jack of all trades is a master of none.” This is especially important for brokers trying to convince carriers to work with them.
There is no “best” freight niche for brokers, but there are some ways you can determine what to specialize in. Here are some ways you can define your niche:
For example, Dennis Brown, CEO of Freight Broker Boot Camp, started his business by specializing in van freight that originated in the northeast because he was based in Buffalo, NY. This specific niche helped him grow his freight broker business. You can’t (and shouldn’t be) everything to everybody as a new or mid-sized broker.
Because there’s so much competition in the freight broker industry, transparent communication will pay off and help you grow your carrier network.
For example, be transparent on your rates and don’t low ball carriers in the negotiation process. You might not have the highest paying loads because there is always going to be a competitor that has their own relationships and can offer to pay more for the same exact lane. The key is to offer the best experience, treat your carriers with respect, and offer fair rates. If you do this, carriers will choose to work with you over and over again.
Another way you can improve the transparency between you and your carriers is to provide them with access to their Payee Dashboard, where carriers can view their historical and upcoming payments, respond to questions or requests, and make sure they are in-sync with you as their broker. This is just one example of the importance of digitalization in the freight broker industry.
Lastly, another way to improve transparency is to be available in directories or reports so carriers know your brokerage is legitimate.
All Denim clients are on our verified brokers page, so if a carrier needs to validate a broker's financial backing, they are able to check on their own. If a broker is verified by Denim that means they are backed financially and can guarantee payments to their carriers in as little as 24 hours.
Pass the link along to a carrier in the beginning of the relationship so they know how to find you.
If you don’t have a reputable risk score for your freight brokerage, shippers and carriers will pass on your brokerage for a larger, more established one. They’ll be afraid to lose a load to a broker that’s too new to the logistics industry.
Use your risk score to your advantage and convince carriers to work with you by:
Whether you’re looking to get your first risk score, or simply raise your score, do what you should do with all credit rating agencies and pay all of your bills on time.
Delays in mail payment lead to a lower credit score and a higher average days to pay. Combat this by offering ACH and eChecks to pay your carriers faster and more consistently. At Denim, we offer free ACH transfers and same-day processing. No ACH fees means more money in your pocket and a better payment process for your business.
As a growing freight broker, getting carriers to work with you over the competition is a huge obstacle in building your business. But, by setting yourself apart with 24-hour payments, specialized services and a human touch, you can begin to build your carrier network and stand out.
At Denim, we know how difficult it can be to find the time to find and nurture shipper and carrier relationships, while also handling all of your business operations. We help our brokers free up more of their time to grow their business by streamlining their broker operations and offering important services such as factoring, QuickPay, and time-saving integrations. Want to learn more about how we can help you streamline your operations while also paying your shippers and carriers faster and more efficiently? Contact us today!
Transitioning your freight brokerage to a new freight factoring company is easier than it seems. The freight factoring buyout is a process that allows freight brokers to switch their factoring company to one that better fits your needs. Switch to a better factoring company and say goodbye to poor customer service, high fees, late payments, or other challenges with your current factor.
Freight brokerages work with a freight broker factoring company to improve its cash flow and maintain its operations. As a freight brokerage, you may face long payment terms from your shippers, leading to cash flow problems and hindering your ability to grow your business. A freight factoring service can help alleviate cash flow challenges by purchasing your unpaid invoices and providing immediate cash advances.
It’s important to remember not all freight factoring companies are the same. Brokers may have problems with their current factoring company, such as high fees, slow payments, and poor customer service. Any of these issues can damage your brokerage reputation and your business. Don’t let a lousy factoring company drive your business off track - it’s time to steer your brokerage in a better direction.
We are currently experiencing one of the worst freight recessions in history, as volumes decreased by 15% in Q4 of 2023. This means that trucking companies need to evaluate their costs for efficiency, as an increase in demand is not expected anytime soon.
If you're considering switching your freight factoring company, it's important to do so carefully. It's a bit like switching banks - it can be daunting, but it can pay off if done correctly.
Factoring companies work with both clients and carriers, so any mistakes they make can reflect poorly on a broker's reputation. To avoid such issues, brokers should take the time to research and find the right partner. This way, they can focus on growing their business and building strong relationships with their clients and carriers.
Remember, your factor is a core business component, so it's worth taking the time to find the best fit for your needs. When switching to a new factoring company, consider the following potential components.
One of the primary reasons to switch your freight factoring service is to get better rates and terms.
Freight factoring companies negotiate rates based on volume and average days to pay. If your brokerage has increased volume, it’s time to re-evaluate and shop around for new rates. A lower factoring rate translates into better margins, which is especially important during a freight recession. Every dollar counts.
It's essential to remember that while comparing rates is smart, paying attention to the fine print and being aware of hidden costs is equally important. You want to avoid being surprised by wire transfer fees, collection fees, credit check fees, or any other unexpected expenses. While factoring companies can charge for additional services, ensuring transparency is crucial. A reputable factoring company should always disclose all potential charges upfront. However, it's ultimately up to you to carefully read the contract before signing. If you're switching factoring companies because of cost, compare similar services and uncover hidden fees.
Additionally, some factoring companies have limiting contract terms like volume minimums, which can be detrimental during market swings. By switching companies, you can find a provider with more favorable terms that align with your business needs.
Fast and responsive customer service can be the difference between paying your carriers on time or winning a lane.
As a freight brokerage, you should expect attentive, responsive, and expert help whenever you have issues, questions, or concerns. Your carriers and customers should also receive excellent treatment from the factoring company. When the factoring company collects funds from your client, the service should be exceptional - consistently professional and reliable.
Suppose your current freight factoring company is slow to respond, unknowledgeable, or
fails to fund your invoices within the agreed-upon time frame. In that case, it’s time to consider switching to a factoring company that values your business. A factoring company should treat you and your customers with patience, respect, and eagerness to go the extra mile to meet your needs.
Your freight factoring platform should not look like a 2000s website. User experience has come a long way since web 1.0; your factoring dashboards should reflect that.
Freight brokerages are embracing freight technology in droves as more software companies have come to the market with intuitive and responsive platforms. The software you choose should have a sleek, clean, and easy-to-use interface that enables employees like Glenda in accounting to find what they need quickly. A well-designed platform will make Glenda a happier employee and free up her time to research new business opportunities.
Tech-forward factoring pairs financing with back-office automation to save brokerages time and headaches. Automation features like bulk uploads or two-way integrations with your TMS make invoices, payments, and recollections as easy as one click.
You want a factoring company that will scale with your business. Ideally, you want to switch factoring companies sparingly, as it could hurt your credit score and reputation. So finding a freight broker factor that will support your continued growth is paramount.
Shay Lynn Dixon of Scale Logistics chose to factor with Denim because she “knew the ‘old-school’ way of factoring wouldn’t work for her as a tech-savvy business owner.”
You can build a more substantial, sustainable business for years by partnering with a factoring company that shares your values.
Switching to a new factoring company can seem daunting, but it can be a smooth process with careful preparation.
Start by reviewing your current contract with your existing factoring company. Take note of any cancellation fees, contract end dates, and terms. Ensure you have all the necessary documents, including an aging report and a copy of your contract. This preparation will help you avoid any surprises or delays later on.
Next, identify the best factoring company. Do your research, read freight factoring company reviews on sites like Trustpilot, ask questions about their business, and ask for recommendations from other brokers. Request a demo of the software to get a feel for how it works and ensure it meets your and your team's needs.
By taking the time to prepare and do your research, you can switch to a new factoring company with confidence and set your brokerage up for success.
Good news: Deciding to switch is the hardest part of the process for you. The two freight factoring companies handle most of the buyout process. Your freight brokerage is only responsible for three easy steps:
Kick up your feet and take a deep breath.
At Denim, we want to make the buyout process as easy as possible for our clients. We will handle most communication and coordination with your current factoring company.The Denim team will provide daily updates on the progress, so there are no surprises or unanswered questions.
After you've notified your old factoring company and agreed on a buyout date, Denim will go to work for you.
The steps Denim takes to complete a buyout:
A Uniform Commercial Code (UCC) filing is a legal notice that a creditor files to notify other parties that it has a security interest in a particular asset, such as accounts receivable. Factors take the first position to protect their investment. Denim needs to verify the UCC filing to ensure no outstanding liens or claims against your accounts receivable.
Denim will request an aging report directly from your factoring company to verify the aging report originally provided in the sales process.
Contacting your shippers is vital to ensure a smooth transition to Denim. This step helps expedite the payment process and ensure you receive the funds you owe on time.
We will request the final aging report to ensure your brokerage added no additional loads to the account receivable. A final aging report is necessary for both Denim and you. It helps avoid any discrepancies or disputes that arise after the factoring buyout.
The buyout agreement is a legal document that outlines the terms of the factoring buyout, including the purchase price and any other relevant terms. This process can take up to a week.
The previous factors will initiate the buyout agreement because they are the party selling the accounts receivable. All three parties will sign the deal, including you, Denim, and your current factor. It is essential to review the buyout agreement carefully and understand all the terms before signing.
Once everything is verified, Denim will prepare and send the wire to purchase all the open invoices. Denim will verify the old factoring company received the wire.
The previous factor will send a release letter and permit Denim to terminate their UCC filing. Denim will then file a UCC-1 financing statement to take the first position. This step completes the buyout.
Denim will introduce you to your new account manager and onboarding crew. This group will help step up your account with any integrations and give you a demo of your dashboard.
Switching factoring companies is smart for freight brokers with increased volume or looking for a better experience. But finding the right partner can be a challenge - after all, factors play a crucial role in interacting with clients and carriers, and any mistakes can have serious consequences for a broker's business.
That's where Denim comes in. Our tech-forward factoring lets brokers enjoy smart automation tools and flexible factoring options without hidden fees or limiting contract terms. We offer some of the industry's lowest rates and the fastest turnaround on approvals, so you can keep your business running without any bumps in the road.
Don't just take our word for it. Read how Yeti Logistics switched to Denim in just 3 days and saved nearly $20,000 in factoring fees.
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Even in the best of times, liquidity may pose a challenge for brokers. Freight brokers must often pay carriers before shippers pay them, which means the money goes out before it comes in. COVID-19 has made the situation even more difficult. Thanks to widespread volatility throughout the supply chain, shippers’ financial conditions can change drastically and on a dime. Some may have to delay payment to brokers beyond the usual timelines. Yet, carriers will not take kindly to delayed payments.
With that in mind, it's more important than ever for freight brokers to maintain liquidity to give their brokerage a safety net. Here, we share some tips on improving the liquidity of your freight brokerage as you grow.
How can freight brokers improve liquidity without jeopardizing their relationships with shippers and carriers? Here are three ways to achieve that goal:
Logistics is a relationship-driven industry — especially for brokers. A freight broker’s entire business model depends on consistently streamlining transportation for customers and maintaining strong relationships with carriers. When times get tough, brokers must not lose sight of that foundational fact. Performing successfully with carriers and shippers amid disruption helps your brokerage secure long-term partnerships. Perhaps more importantly, shippers will appreciate how your brokerage went the extra mile for them. That confidence, in turn, will put you at the top of their payment lists. Shippers will prioritize paying your invoices because they will not want to lose the value you deliver. Even if payments arrive late, the delays will not seem as severe as they could have been.
When disruptions and pivots occur, liquidity remains a top concern for freight brokers — but not the only concern. Depending on the activity in the supply chain, adjustments to your operations may prove necessary. For example, a surge in demand might require you to find more carriers operating out of sectors less affected by the ongoing disruptions to handle the overflow. If you’re worried about processing invoices and chasing down payments, you may lack the bandwidth to focus on more critical business decisions. Automating these functions using time-saving integrations will free up your workforce to handle more complex, time-sensitive business decisions. Some financial platforms, like Denim, offer managed collections services, which means they retrieve payment from shippers. Financial platforms may also provide automated invoicing, doing away with the task of billing all your shippers manually. When combined, these two capabilities can improve cash flow while liberating brokers to focus on responding to the volatility of the moment.
Factoring for freight brokers is a great way to maintain usable cash flow so you can continue to focus on growing your business and ensure liquidity. Factoring allows brokers to get immediate cash for unpaid invoices by working with a factoring service. The factoring service then takes on the task of collecting payment from the shipper. So even if a shipper pays late, your brokerage can make sure it has the cash it needs to keep operations running. Even brokers who feel they’ve grown beyond the need for freight bill factoring services can still benefit when external events negatively affect cash flow.Every invoice does not necessarily require factoring. Some factoring partners offer spot factoring, where brokers can collect normally on invoices they expect to be on time while factoring any invoices where they expect delays.
With the right combination of automation, financing, and old-fashioned relationship-building, brokers can stay liquid no matter the obstacles they face. 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.
A freight brokerage rises and falls on its relationships, with sensitive data flowing between shippers, brokers, and carriers. It is the job of a freight brokerage to tactfully manage and protect this data coming in from both sides. But, as the transportation and logistics industry increasingly depends on technology to manage their businesses, this has become harder to do.
Cyberattacks across trucking, logistics, freight factoring, and freight forwarding are now happening more frequently and with added complexity. Not only are these attacks costly, but they can compromise the trust of your customers. According to data from IBM, the transportation sector was the seventh most-attacked industry in 2021, accounting for 4% of all cyberattacks within the top ten industries. When combined with the fact that 60 percent of small- to mid-sized companies will close after a cyberattack, it’s essential that small- and mid-sized freight brokers give special attention to cybersecurity practices.
There is good news, though. With the right systems, employee training, and technology partners in place, freight brokers can prevent cyberattacks, grow their business, and become trusted partners that focus on data security for their customers.
A cyberattack is any attempt by a foreign party to damage or destroy a computer network or system. There are a variety of ways cybercriminals or hackers can launch an attack, but ransomware ranks as the No. 1 cyber threat to freight brokers because of the level of access hackers can gain. During a ransomware attack, hackers encrypt sensitive data and demand payment to free it. Brokers are usually held hostage by hackers that hope the company will get desperate enough to pay the ransom to regain control of their data.
Because successful ransomware attacks can disrupt a company’s entire IT network and cause costly downtime, many brokerages find it cheaper to pay the hackers. This has further reinforced the idea that they are an easy target.
Other common cyberattacks include:
All cyberattacks will look different, but understanding some of the most common ones can help you prepare and minimize the damage. Suspicious network activity such as abnormal access patterns, database activities, file changes, or unexpected network activity are red flags freight brokers should be looking for to identify and suppress a cybersecurity threat.
Freight brokers are responsible for their customers’ most sensitive information, often including pricing and payment information. This puts even small to mid-sized companies at risk of a cyberattack and the financial losses that accompany them.
Unfortunately, the freight payment process between freight brokers and trucking companies has increasingly become a common target for hackers who assume these companies lack the sophistication and resources to protect themselves from cyber threats—and that assumption is not always wrong.
As digitization for freight brokers has revolutionized the industry over the last decade, many brokerages and carriers have not always kept up with the best practices in their payment solutions and other technologies to improve online safety. The sector’s prominent role in the consumer economy also adds to its vulnerability. Because it is so interconnected, one company’s cyberattack has the potential to bring the movement of freight to a complete stop. This has direct consequences for the entire supply chain down to the consumer level.
Protecting your brokerage from a cyberattack doesn’t have to be hard or complicated. Here are several freight brokerage best practices to help you prepare for the cybersecurity threats that may lie ahead:
Cybercriminals often try to access user accounts by using combinations of names, milestone dates (anniversaries, birthdays), and dictionary words. Brokers’ software systems should not only require user passwords but complex passwords. The Denim Payments platform, for example, requires all customers to have strong passwords that are complex for humans or computers to guess. These simple safeguards significantly reduce the effectiveness of password-related attacks.
Denim also utilizes mandatory password lockouts. We have implemented a mechanism that locks user accounts after 10 invalid password attempts. This measure helps protect customers from "brute force" attacks.
Employee education is arguably the most important step in improving cybersecurity. Training should be conducted during the onboarding process for all new employees and revisited regularly throughout the year for current employees. Annual training sessions keep employees updated on best practices and ensure they know how to spot cybersecurity red flags, such as suspicious phishing emails.
We regularly conduct cybersecurity training here at Denim. We provide employees with the knowledge required to identify and appropriately respond to cybersecurity threats. In addition, we regularly work with independent security teams to conduct penetration testing exercises that involve simulated cyberattacks designed to identify any potential vulnerabilities in our applications that cybercriminals may exploit.
Protecting proprietary, personal, and customer data is essential to the success of your brokerage. Choosing the wrong technology partners has the potential to open your business up to cybersecurity risks. This is especially true when selecting a freight factoring company. While freight factoring is an efficient way for brokers to avoid lengthy delays in payment on invoices, brokers must ensure their freight factoring company is making all efforts to secure their sensitive data.
For our cloud-based freight factoring company, cybersecurity analytics are always top of mind at Denim Payments, starting with limiting the amount of Personally Identifiable Information (PII) we collect for our customers. Any customer data stored via disk is securely encrypted to ensure protection in the event of a data breach, lost or stolen devices, or data leakage.
At Denim, we also offer our partners cybersecurity assurance through a variety of built-in features, such as secure data transmission and DDoS threat mitigation.
Protecting your brokerage's cybersecurity just makes good business sense. Freight brokers can set themselves apart and grow their brokerage by ensuring all personal and customer data is protected. And while choosing the right freight factoring company is a great place to start, it is also the responsibility of each broker to ensure they have the right measures and training in place.
Ready to learn more? See how Denim's payment automation software can help protect your brokerage from falling victim to a cyberattack. Please reach out to us with any questions or concerns.
Risk is an innate part of life and business. But you can mitigate some risks, avoid unfortunate outcomes, and build a successful freight brokerage.
When considering how to grow a freight brokerage, you should know that careful attention to risk management helps you adapt to changing economic times. You can plan for steady growth and build a brokerage that can thrive over the long term.
Keeping a close eye on your financials is essential to mitigating risk when learning how to grow a freight brokerage. You can focus on accelerating your income, reducing costs, and choosing the right mix of industries and customers to serve. Advanced freight broker software can help you every step of the way by providing you with real-time insights into the current health of your business.
Getting to know some essential financial concepts is critical when learning how to grow a freight brokerage. You also need solutions to manage financial details and automate key calculations to save time.
A profit and loss statement—widely known as a P&L sheet—is one of the most valuable financial tools for any business. It's critical that you get familiar with P&L concepts when learning how to grow a freight brokerage. In essence, your P&L sheet summarizes key financial data, including income, costs, and expenses, during a specific period.
A P&L sheet includes the following data:
While most companies create quarterly and annual P&L sheets, you can put them to use more frequently. Regularly analyzing your P&L sheet can help you keep an eye on cash flow and let you know if you are on track to generate a profit. You can identify whether you're not meeting profitability goals and make course corrections or know if you're in a position to pursue new investments.
While your P&L state provides a window into the overall health of your freight brokerage, it's not the only financial tool you need. It's helpful to know gross profit, but you must have clarity into your most profitable shippers and carriers. What's more, it's vital to know which companies pay you on time, so you can spend less time trying to track down payments. Whether you're a new broker or an established firm, identifying reliable shippers is an essential element of how to grow a freight brokerage.
That's why our team at Denim has developed a robust dashboard fine-tuned to the unique needs of freight brokers. Our dashboard provides at-a-glance insight into your fastest-paying and most profitable customers, along with your slowest-paying shippers. You can prioritize which shippers to do business with and know which ones are less reliable. Equipped with that information, you can choose to do business with more responsive companies and earn more.
Our dashboard also lets you see your most profitable and least profitable carriers, which is vital when understanding how to grow a freight brokerage. It's easy to see which carriers consistently meet their commitments and deliver loads on time and which ones fall short. Using this data, you can prioritize relationships with profitable carriers.
As an added benefit, our dashboard integrates directly with QuickBooks for a seamless transition of financial data between these two essential systems. You can enjoy up-to-date access to all your critical financial data to help you make smart business decisions.
Knowing which shippers always pay on time and which ones lag on payments gives you an important clue about your customers' financial and business health. Slow payments are often a sign of poor cash flow management or economic instability, especially if the problem persists over an extended time.
Running regular credit checks is another smart strategy to gauge the health of your customers. Frequent missed payments will lower a shipper's credit score and is an indicator of higher risk. While many brokers run credit checks before doing business with a new shipper, you should also check the scores of your existing shipping partners. A credit score decline can be a sign of economic hardship—and it's better to know before delayed payments become a problem for your brokerage. Keep this fact in mind when considering how to grow a freight brokerage.
You've likely heard the phrase, "don't put all your eggs in one basket." While that's an old cliche, it rings true for anyone learning how to grow a freight brokerage.
Why? You don't want to have only one or very few shipping partners provide all of your business revenues. If they change their business model, choose another broker, or go out of business, you'll abruptly lose revenues and may be unable to recoup those losses quickly. That can lead to your brokerage floundering or failing—an outcome you clearly should avoid.
Diversifying your book of business is essential to mitigate risk and promote sustained profitability. While having a breadth of customers is necessary, you should secure customers across varied industries or shipping sectors as well.
Here are some proven approaches to diversify your customers and fortify the health of your business. You can put them to work when exploring how to grow a freight brokerage:
Keeping costs in check is another way to reduce risks in your business. And the right software is a must for anyone learning how to grow a freight brokerage.
When exploring how to grow a freight brokerage, you should look for opportunities to make your processes more efficient. Whenever you can reduce the time for your team to complete a routine task, you can achieve savings. Team members can then redirect their energies to higher-value work and optimize your back-office operations.
Take invoicing, for example. This routine function can be a significant manual burden, as was the case with one of our clients, Direct Expedite. The company CEO, a 30-year logistics industry veteran, saw that his team took an average of 2.5 hours to process an invoice and knew there had to be a better way. Not only was this cumbersome process affecting revenue collection, but it was also forcing staff to engage in tedious, frustrating data entry.
Choosing Denim as a back-office automation partner transformed invoicing at Direct Expedite. The company reduced invoice processing time to just 12 minutes and was able to accelerate its payments to carriers. In addition, the Direct Expedite back office team spent less time on invoicing and had new opportunities to grow their freight brokering skills. Employee retention climbed, and the company's financial success allowed them to add new team members.
This is just one example of a freight broker cost burden you can eliminate through automation. Powerful solutions can transform your back office and accelerate operational efficiency.
Another smart move when learning how to grow a freight brokerage is to pursue freight factoring. With freight factoring, you can send invoices to a third party for a reduced rate after carriers successfully deliver loads. The factoring company will pay you an advance and pursues payment from the shipper. Through this approach, you can maintain consistent cash flow and ensure your carriers get paid quickly.
Factoring can help take the stress out of waiting for funds and ensure you don't need to chase down payments for shipping partners. Instead, you can enjoy more predictable revenue streams, ensure you have the funds to cover critical expenses, and develop a positive relationship with your carriers. All of these factors promote stability and reduce risk in your business.
You may think cybercriminals only target large businesses, but that's unfortunately not the case. The truth is that hackers willingly go after any organization that handles business or financial data, including small businesses.
As reported in a Verizon cyber security study, many bad actors have a "we'll take anything we can get" philosophy, so no company is safe. Verizon's analysis uncovered 832 attacks on very small businesses with less than ten employees, with the attack motives being 100% financial. Unfortunately, a single security incident can be very costly and put a small company out of business.
What do people learning how to grow a freight brokerage need to know about cyber security? Using strong passwords and training your employees on security risks are important first steps. Beyond those basics, you also need to work with a trusted freight factoring partner with a strong commitment to cybersecurity. Your partner must limit the amount of personally identifying information it collects, encrypt all customer data, and provide secure data transmissions.
Being diligent about cybersecurity can safeguard your business against costly attacks. According to research from Cisco, 40% of small businesses experienced eight hours of downtime due to cyber attacks. And around 40% saw damage to more than 50% of their operational systems. The costs of unwanted downtime and system restoration can add up quickly--but smart cyber security practices can mitigate these risks.
Instead of sealing deals with carriers with a handshake, you should always put terms in writing with a formal contract. Your contract should spell out critical details, including origin and destination points, rates and payment terms, dates, any additional services, dispute resolution processes, and other key details. In addition, your carriers should agree not to subcontract so that you know who is responsible for transporting cargo for your shipping partners.
Having a bill of lading (BOL) for every load is also critical. This document describes the freight, weight, item or pallet quantity, and any special handling instructions. Also, a BOL should list relevant National Motor Freight Classification (NMFC) codes for the load. There are 18 NMFC classes ranging from Class 50 for the least expensive items to Class 500 for the most costly items.
When learning how to grow a freight brokerage, you'll recognize the importance of fostering strong relationships with carriers. You need to focus on cultivating trust by paying carriers on time and showing appreciation for all the hard work they do.
Additionally, you need to hold your carriers accountable for their performance. Using our dashboard, you can keep tabs on your most profitable and least profitable carriers. Rewarding top carriers with choice loads and preferred routes can help them stay loyal to you. On the other hand, identifying carriers who aren't profitable can help you avoid doing business with underperforming carriers, which is essential when learning how to grow a freight brokerage.
You can also use tools such as Truckstop.com and carrier411.com to vet your carriers. Remember that you don't just need someone to transport loads from one place to another. You want to work with top carriers with an outstanding reputation for doing good work and being honest.
Learning how to grow a freight brokerage is an ongoing journey, but risk management should always be a critical component of your operations. From the earliest days of your brokerage, you need to have a fundamental knowledge of how to read a P&L sheet and identify your most profitable shippers and carriers. Those insights can help you stay on top of your financials to make intelligent business decisions that drive profitability and have enough funds on hand to cover unexpected expenses.
Controlling costs is another critical step in learning how to grow a freight brokerage. You can automate key functions to eliminate costly manual work and use freight factoring to ensure a steady cash flow both for you and your carriers. Steps like these can help you establish a sterling reputation as a prompt payer and inspire the best carriers to want to work with you again and again. Having a solid network of trusted carriers empowers you to deliver better service to your shipping customers, which means more loads and more revenues.
No doubt about it: understanding risk management is a critical component of how to grow a freight brokerage. Putting proven practices to work and using top-quality technology solutions build exclusively for freight brokers can minimize risk and help your firm thrive.
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What does it take to make a freight brokerage successful? Brokers juggle a lot, from maintaining excellent relationships with shippers to finding reliable carrier partners. But how a brokerage handles freight payments remains one of the most critical factors.
While every business in every industry requires intelligent financial decisions and processes, the nature of freight brokering means the payment process itself can serve as a make-or-break component in a brokerage’s success.
To ensure your brokerage will thrive, try following these six best practices for freight payments.
Broker success depends on ensuring on-time and accurate freight payments, but a broker’s expenditures and income tend to operate on different schedules. Generally speaking, most shippers will pay brokerages on net-30 or net-60 terms, while most carriers will expect a broker to pay on net-15 terms at the latest.
As a result, brokers must often spend a significant amount of money before seeing their own invoices paid. For this reason, most successful freight brokers have enough cash on hand to float the business for three months as a general rule. Building this liquidity into your financial model will help your freight brokerage mitigate risk and handle any unwelcome surprises – such as late payments from shippers – with relative ease.
With that previous tip in mind, how exactly does a brokerage maintain three months’ worth of liquidity? Brokers may use a few methods to support this strategy, including loans, investments, and self-funded capital stores. Still, leveraging invoice factoring for freight brokers remains the easiest and most reliable way.
Invoice factoring occurs when a brokerage sells unpaid invoices to a third-party factoring partner. The factoring partner will pay out a lump sum for each invoice of the invoice’s total value. For example, Denim offers up to 90% advances. This portion of the payment gives the brokerage immediate cash on hand. Then, the factoring partner will recover payment from the customer. Once the customer pays, the factoring partner will deduct a percentage for its services — usually 1-5% — and pay the remaining balance to the brokerage.
Factoring offers an effective means to stabilize cash flow without taking out loans. However, brokers should thoroughly understand the process before making a factoring arrangement. In particular, brokers should know the difference between recourse factoring and non-recourse factoring:
While non-recourse factoring carries less risk for the broker, it comes at a higher cost since the factoring service takes a higher percentage of the invoice to make absorbing the higher risk worthwhile. Therefore, brokers must balance their financial needs with risk mitigation to determine which arrangement suits them best.
Every broker wants to be a partner of choice for carriers. This way, a firm ensures it always has access to the fleets it needs to move shippers’ freight on time and at a reasonable price. Staying in carriers’ good graces requires paying carriers as quickly and conveniently as possible. Many freight payment solutions, including Denim, now offer carrier QuickPay options that make it easy for brokers to pay carrier invoices immediately. However, did you know that as many as 90% of brokers lack fast, digital methods to pay carriers? When you rank among the 10% of brokers actually utilizing these solutions, carriers will prioritize your loads over the rest.
Freight invoices aren’t always straightforward. In addition to paying freight rates, a brokerage may also have to pay a carrier for accessorial charges above and beyond hauling freight. How a carrier bills a brokerage will affect how the brokerage bills its shippers.
As a best practice, make invoices to shippers easy to understand, with a clear breakdown of each charge and its reason. That way, the shipper knows precisely what they’re paying for and that working with your brokerage remains a good investment.
Additionally, many shippers now use freight payment auditing services to keep costs under control. With crystal-clear invoicing, billing mistakes that require an arduous auditing process will disappear.
Given the complexity of the freight payment process and the dynamic nature of the supply chain, managing financial transactions through old-fashioned spreadsheets just won’t cut it. There’s a lot of room for error in manual payment processing, and your billing department won’t be able to use efficient tools like QuickPay.
At least 75% of freight bills now get delivered electronically, so it makes sense for any freight broker to adopt a digital payment platform that allows them to keep up with the times. A reliable digital payment platform also makes it easier to send and receive payments, run financial reports, and exercise more control over brokerage cash flow.
Many modern digital payment platforms also integrate with transportation management systems (TMS), further streamlining operations and billing. In searching for the right digital platform for any brokerage, consider options that go beyond just a software solution.
Finding a freight payment partner that offers both digital tools and in-depth expertise can help you develop a freight payment process that truly works for everyone. For example, Denim provides many helpful services beyond digital payments, including factoring, automated invoices, managed collections, QuickPay, and more. A freight brokerage can transform the payment process from a nagging challenge into a strategic differentiator with a good partner and the right platform.
Simply put, freight payment can be a hassle for many freight brokers — but it doesn’t have to be. By following these best practices, you can gain more control over your cash flow, keep shippers and carriers happy, and build a convenient freight payment process that sets your operation above the competition. If you’re interested in learning more about how Denim can help you grow your freight brokerage, we’d love to talk.
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There are legal risks of not separating carrier and brokerage operations when both reside under the same roof.
The main purpose of MAP-21 is to prohibit motor carriers from brokering freight, and brokers from providing motor carrier services. The intent is to clarify that motor carriers need a separate broker authority to LEGALLY broker freight. The sole purpose is to prevent carriers and brokers from illegally double brokering freight to unsafe carriers keeping them in business.
Below is a general description of each section contained within this law: On September 5, 2013, the FMCSA issued Guidance on MAP-21 requirements related to registration and financial security for brokers.
To avoid putting your business at risk, it’s imperative, if you intend to have both a carrier and a brokerage authority, to keep the entities completely separate! Register for two separate MC Authorities, one as a brokerage and one as a carrier. 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.
The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information.
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In 2020, Gartner analyst Balaji Abbabatulla predicted that most most supply chain operations would migrate to the cloud by the end of 2022. As more brokers pursue solutions that support and integrate with the supply chain automation needs of partners and customers, it looks like he was right. More and more organizations in the logistics space — especially freight brokers — are moving financial transactions, transportation management, and other critical processes to the cloud.Why? Here are just a few of the factors driving freight brokers to replace their legacy systems with cloud platforms — and why you should think about doing the same:
Companies developed many of yesterday's legacy systems to handle specific tasks. For example, your legacy payment platform might issue and process invoices, but that's it. While these legacy systems perform their functions well, they have inherent limitations. As a result, freight brokers must often buy different pieces of software to handle different processes, and those software tools rarely communicate with each other.
When software systems don't share data, your team has to spend a lot of time on inefficient administrative processes, entering and reentering the same information into disparate systems.In contrast, cloud solutions are all about integration and flexibility. The average cloud platform bundles multiple functions into a single solution, allowing freight brokers to do more with a more straightforward software system.
For example, Denim's online financial platform can process invoices and payments while also supplying factoring services, credit checks, custom reports, and more.In addition, cloud solutions typically communicate with other cloud software through application programming interfaces (APIs). Essentially, that means different cloud solutions can share data, even if distinct companies make them. That streamlines operations and significantly reduces administrative work for employees. For example, Denim's platform can integrate with QuickBooks and various transportation management systems (TMS), making it easier to track shipments, payments, and vital accounting information.
Cloud applications also have a scalability advantage over their legacy counterparts. Because cloud platforms can integrate with one another, it's far easier for a cloud software ecosystem to grow alongside your business. You can easily add new tools to your arsenal as needed.With legacy systems, tapping into new lines of business, reaching new partners, or gaining new insight into your company's operations often requires purchasing or commissioning a brand-new specialized software solution. Unfortunately, that also means another tool your people need to learn.
With the cloud, on the other hand, you can often find a solution that does the job and integrates with your existing software, creating a streamlined experience that requires only a minimal learning curve for your team. Given the rapidly evolving pace of logistics automation technology, this ability to adapt quickly has become essential.
Because cloud apps are hosted online instead of in-office hardware, you can also access them anywhere. In short, cloud solutions support remote work. As a result, those brokers already using cloud solutions had an easier time maintaining operations during COVID lockdowns. Similarly, cloud-savvy brokers will also find themselves prepared to weather future disruptions.In addition, given that 57% of job seekers want to work remotely, adopting cloud solutions makes your company more competitive in a tight talent market.
Supply chains are complex, with many (literally) moving parts. And freight brokers may have the most complicated position of all — connecting shippers and carriers, managing relationships with both, and ensuring every party gets what they need from the transaction. All that complexity can make it hard to move freight quickly and efficiently where it needs to go, but speed and efficiency are key differentiators for great freight brokers.
Cloud applications can help simplify things in your freight brokerage. By integrating your technology platforms into a cohesive, interconnected system, you make it easier to carry out critical business operations. Data flows between the tools, automating more complicated procedures like processing payments and tracking freight. That, in turn, makes it easier to avoid common mistakes like duplicate invoices and payments. Your team members also have less administrative work to do, allowing them to focus on high-touch, high-value tasks.
While simplicity is a boon to your staff, shippers and carriers will also appreciate the way logistics automation will streamline your operations. You'll be able to make connections between shippers and carriers much faster, and the data gathered by your cloud solutions might even help you make more efficient connections.With a cloud-based payment platform, you streamline the invoicing process and facilitate payment faster from shippers.
This type of supply chain automation means shippers will be happy because they won't have to deal with complicated payment processes, and you could even see fewer late payments as a result. Also, carriers will appreciate getting paid faster, especially if your cloud payment solution has a QuickPay feature. According to some estimates, 90% of brokers still don't have fast digital ways to pay carriers. As such, a cloud platform with QuickPay sets you apart as an ideal broker partner for carriers.
Resilience is the ability to bounce back from tough times and overcome any challenges that come your way. In recent years, resilience has become a must-have for freight brokers, and cloud systems are inherently more resilient than their legacy counterparts.There are a few reasons for this:
Legacy systems may have served your brokerage well so far, but they simply weren't designed for the fast-paced, data-driven, high-tech world of today. You can try to keep up with the rapid pace of supply chain automation by bolting more software tools onto your legacy system.
However, you're likely to end up with an overcomplicated mess that only makes your people's jobs harder.In truth, every modern freight broker must now be a digital freight broker. By switching to cloud platforms, freight brokers can streamline operations, simplify their software systems, and deliver better experiences for shippers and carriers alike. 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.
Welcome to 2023! As we begin the new year, it's important for freight brokerages to stay ahead of the latest industry trends. Here are 8 predictions that freight brokerages should keep an eye on in the coming year. From the increasing adoption of technology to the evolving regulatory landscape, these trends will shape the way freight brokerages operate and compete in the market. Freight brokers that are looking to improve, become smarter, and embrace these trends will not only survive but thrive in the competitive and constantly evolving market of 2023.
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In recent years, shippers all over have been turning to regional final mile carriers to increase efficiencies in their supply chain. Now, many of those same brands will look to do the same with their middle mile. Diversifications, consolidations, and advancement in middle mile visibility & technology will play a big role in 2023.
This could involve shippers partnering with a wider range of regional carriers to increase efficiency and flexibility in their supply chain, or larger carriers expanding their middle mile operations to serve a greater number of shippers. Consolidation, on the other hand, could involve smaller carriers joining forces with larger ones to gain access to new markets or expand their capabilities. Additionally, as stakeholders demand greater transparency and real-time tracking throughout the supply chain, companies will need to invest in technology solutions that can provide this level of visibility.
Founder & Chief Executive Officer at Roadly Logistics
With the announcements of AWS Supply Chain, and Microsoft Supply Chain Platform, and similar initiatives underway at Google Cloud Platform and Oracle, more people and organizations in supply chain logistics will begin to see the potential for connected platforms in logistics to create immense value for beneficial cargo owners. It will take time for such platforms to reach full maturity, but in a world that is becoming more volatile, uncertain, complex, and ambiguous, beneficial cargo owners need to participate more directly in managing their freight and logistics supply chains from end-to-end - that will serve as an accelerant for the development of such platforms AND it will be a boon for logistics technology startups with mature products that solve specific problems that the big tech behemoths can't solve.
Founder & Managing General Partner, REFASHIOND Ventures
The benefit of brokerage is that it's always an optimal market for growth. When supply is tight, brokers have the ability to drive volume to good, reliable carrier partners. In a market flush with excess capacity, brokers fill the need of pairing high volume shippers with the right carriers. The pricing strategies change, but the value remains balanced between strong carrier and customer relationships.
Additionally, now is the perfect time to diversify your mode mix. We're seeing LTL carrier rates beginning to fall and the focus shifting to volume. Brokers offering both TL and LTL options can minimize revenue impacts during a down market.
Vice President Sales at Quote Factory
From the driver to the customer, supply chain stakeholders have higher than ever standards for what they expect in terms of visibility. In 2023 this standard will only increase. The market wants insight into supply chain movements and technology partners will have to rise to the occasion. This includes real-time tracking of shipments, updates on delivery status, and access to information about the location and condition of goods.
To meet these higher expectations, freight and logistics companies will need to leverage technology to provide stakeholders with the visibility they demand. This may involve implementing tracking systems, investing in advanced software solutions, or partnering with technology providers who can offer the necessary visibility tools.
Vice President of Strategic Alliances, Turvo
To better manage supply chain volatility, companies must prioritize lead time management, cycle time reduction, and visibility and collaboration in 2023. Lead time — the amount of time a broker gets before the ship date of a load — is critical. The more lead time a broker secures on a shipment, the better the rate and service for the customer.
Having a transparent, efficient process for load cycles and over-communicating will allow companies to handle volatility more effectively. For example, a broker should explain a rate change for a same-day shipment in a market with limited capacity. GPS tracking also encourages visibility and more efficient collaboration, eliminating the back-and-forth between shippers and broker agents trying to determine a truck’s location for pick up or delivery.
Senior Sales Manager at Denim
With industries focusing on digital transformation initiatives — particularly in the logistics sector — companies are increasingly susceptible to security and data risks. These aren’t sophisticated attacks, either. Bad actors are casting wider nets to capture sensitive information from many freight companies because they know they don’t have continuous security monitoring or employee cybersecurity training. In 2023, cybersecurity will come to the forefront of the freight-tech conversation. We will see large and even small freight brokers only partner with technology companies with cybersecurity protocols in place.
Head of Product at Denim
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SmartBrokers often have a strong online presence, with user-friendly and intuitive websites or platforms that allow shippers to easily book and track shipments. They may also make use of data analytics tools to optimize routes and negotiate the best rates with carriers, and might even utilize artificial intelligence to automate certain aspects of the booking and dispatch process. In addition to these technological capabilities, SmartBrokers prioritize effective communication with both their clients and carriers, ensuring that all parties have timely and accurate information throughout the shipping process.
Overall, the goal of a SmartBroker is to provide a seamless and efficient freight brokerage experience that exceeds the expectations of both their clients and carriers.
Head of Marketing at Denim
“I expect we’ll see a significant influx of M&A activity next year, largely due to valuations being significantly down overall. It's an ideal time to buy companies at a lower price. The vast majority of the market is bleeding through its last round and will have a tough time raising its next one. In 6-12 months, we’ll see many flat and down rounds, forcing conditions to worsen before improving. Companies with sufficient cash flow or profitability will be well positioned to buy companies at a great price and supercharge their growth.
CEO at Denim
2023 is shaping up to be a year of significant change and innovation in the freight and logistics industry. From the increasing adoption of technology to the evolving regulatory landscape, it's clear that the status quo is no longer sufficient for companies looking to succeed in this competitive and dynamic market.
The key takeaway for freight and logistics companies in 2023 is the importance of shifting conventional mindsets and developing solid supply chain and logistics strategies that align with the current landscape. This may involve embracing new technologies, partnering with innovative service providers, and continuously adapting to the changing needs and expectations of stakeholders.
Staying up-to-date on the latest trends and being willing to take calculated risks and make necessary changes is paramount for freight and logistics companies to position themselves for success in the year ahead. It is crucial for companies to stay agile and proactive in order to thrive in this exciting and rapidly-changing market.
