3 Things You Need to Know About How Your Brokers and Shippers Credit Impacts Your Bottom Line

We have talked a lot about how your credit impacts your bottom line but unknown to many trucking company owners, and owner-operators is the impact of your brokers and shippers credit on your bottom line. It is hard to imagine that something you have no control over can impact your business so greatly. However, with this knowledge, you might want to think twice about who you decide to partner with. Here are three things you need to know about how your brokers and shippers credit impacts your bottom line.

How Long They Take to Pay
If a broker or shipper typically takes 30, 60 or 90+ days to pay others, there is a good chance they will do the same to you. If they are delayed in paying you, your available working capital will directly be impacted. You will have to consider how you will cover your fuel, maintenance and insurance payments if the money you earned is not received when you expect it.

Amounts Owed
It is important to know how much your brokers and shippers have in outstanding debt. It can be an indicator of their likelihood of paying you. Since no one wants to haul loads they won’t get paid for it is essential to make sure they are not one of the fly-by-night operations that will leave you high and dry.

Length of Credit History
Past history is a pretty good indication of future performance, and without it, you and others could be taking a greater risk than necessary. If you choose to haul loads for brokers and shippers who do not have a substantial credit history you could be risking the long-term success of your business.

 

There are financial partners, such as freight bill factoring companies like Tetra Capital, who can help eliminate some of the negative impact to your cash flow. However, factors will generally look at the strength and stability of the brokers and shippers you work with before determining the fee you will pay for their services. Many factoring companies can also help you to pull credit reports on new and existing brokers and shippers so you can be armed with the best information when choosing which loads to haul.

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About Matt Moore

Matt is an expert at helping transportation companies of all sizes grow by giving them access to the working capital they need. He has over 15 years in the financial services industry with 5 years in the transportation industry. He holds an MBA from the University of Phoenix and did his Undergraduate in Economics from the University of Utah.

View all posts by Matt Moore

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