Access to working capital is not the only benefit of freight brokerage factoring. 71% of brokerages making $2 million or more in monthly revenue use invoice factoring, according to our recent report. Even enterprise brokerages, who likely don’t need working capital, choose to factor.
Why?
Because factoring for freight brokerages provides protection against partnering with risky shippers and improves carrier reputation.
Protecting your brokerage relies heavily on operating with a solid reputation. It only takes one customer that can’t pay their invoices to dry up your network.
The better your reputation, the better partnerships you'll obtain. The freight market is soft right now. You can't afford to work with the wrong shippers or lose trust with carriers.
You need to grow a big network of qualified shippers and carriers so that you're ready for anything. Denim can
help you do that faster and more effectively.
Vet Your Shippers
Unfortunately, freight brokerages are not immune to scams (like double brokering), fraud, and deception. You want to make sure you’ll receive payment before booking a load or contracting a new lane.
When your network consists of shippers with bad credit, your entire business becomes vulnerable. Payment recovery issues can hinder your growth and ultimately hurt your image.
It only takes one non-payment from a shipper to undo a strong carrier network.
While due diligence helps, it can only mitigate some risk for your freight brokerage. Factoring with Denim protects brokerages with unlimited shipper credit checks.
Denim's Solution
- Denim offers free, unlimited shipper credit checks, so you can assess the risk.
- You can rest easy knowing you’re protected with unlimited shipper credit checks on all your prospects.
“Denim’s underwriting helped SCALE Logistics take the risk out of her business by credit checking her customers. Shay Lynn Dixon said ‘it’s like having your own CFO.’”
Lower Your Days to Pay
High diesel prices and inflation costs are straining carriers profits and business.
Carriers are going to prefer brokerages that pay the fastest, regardless of your shippers terms. No one likes chasing down receivables, and slow payments will inevitably cause your carriers to lose trust. The net-30 days of the standard of the past is obsolete in today’s digitized environment.
Factoring for freight brokerages can lower their days to pay carriers without impacting cash flow. Carriers will learn that you’re an honest and reliable broker and be more willing to work with you.
Not only does lower days to pay strengthen carrier relationships, it improves your credit. Staying as up-to-date as possible makes life easier for you and your carrier network. The logistics industry is big, but your corner of it is likely small enough that everyone talks, so prioritize performance that boosts reputation over anything else.
Denim's Solution
Nobody should have to waste time getting paid for a job well done. That's why Denim helps you lower your days to pay to as little as 24 hours.
Denim offers all clients free QuickPay, which means carriers are funded within 24-48 hours. There's no cost to you for the use of Denim's QuickPay service. Brokerages can choose to offer this service for a fee to carriers or not.
“Since working with Denim, Direct Expedite has become known as ‘the guys who pay their carriers within 48 hours of delivery.”
Grow Your Qualified Carrier Network
Shippers want to work with freight brokerages with a strong and reliable carrier network. So in order to obtain new business, you need to grow and maintain a qualified carrier network.
Growing a carrier network doesn’t happen overnight. But how do you do that optimally?
There are thousands of brokers that carriers can decide to work with, so it’s important to emphasize your value.
- Humanize your brand by sending holiday gifts and checking in on carriers' wellbeing.
- Specialize in a niche market for a unique connection with carriers.
- Be transparent on payment status by offering a contractor dashboard.
As a growing freight brokerage, getting carriers to work with you over the competition is a huge obstacle in building your business. But, by setting yourself apart, you can begin to build your carrier network and stand out.
Denim's Solution
We provide a two-pronged approach to growing your network of qualified carriers.
- Pay quickly: Pay out shippers in as little as 24 hours and eliminate time-wasting follow-up from carriers about payment.
- Build trust with carriers with Denim’s contractor dashboard: Carriers can upload sensitive data like bank information and addresses directly into their contractor dashboard. This ensures information is secure while establishing trust between carriers and brokerages.
5 Ways Denim Helps Immediately
While factoring for freight brokerage is largely associated with maintaining working capital, there are other great benefits factoring with Denim has to offer.
- Pay your carriers faster, boosting satisfaction and trust.
- Grow your network of carriers, so loads are delivered on time.
- Vet your shippers through free, unlimited credit checks.
- Prevent any loss in this soft market by reinforcing your network.
- Protect what you've built, so you don't have to put out fires later.
Put up a strong logistics defense with factoring from Denim.
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