Every business needs to have top-notch cash management skills or they lose. The loss could be loss of potential income or the loss could mean going under.
Freight brokering is a little different than other service businesses. Normally, you will pay your carriers before you get paid from your customer. At least, this is the routine for beginners.
Here is what you want to do to control your cash:
1. As you are speaking with potential customers, ask them how quickly they normally pay freight brokers; then, make a note of this,
2. If and when you do get loads from them, run a credit check first so you know what to expect before you go any further,
3. Record the actual number of days that it takes to receive money from the customer; then compare this to what they told you and with what you find out on the credit check;
4. On your invoice terms, enter "Due upon receipt", or "Net 10 days"
5. Refuse to take loads from a customer if they are paying you later than 40 days,
6. If the customer is behind on some payments, make them pay up 100% before you take another load,
7. Require advance payments for those customers who are slow payers.
Is all of this easy to do? Not always, but you are better off losing some bad paying customers rather having them mess with your cash flow.
As anxious as you are to find and work with customers, you have got to be a pit bull at times to manage your cash.
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