Cash management is extremely important in any business but especially so for freight brokers. In this business, you want to pay the truck quicker rather than later. You will build a more loyal and reliable base of carriers if you do this.
You normally will wait 1-4 weeks to get your money from the shipper after you pay the truck. So, you have a gap to fill until you get paid. What are your options?
The ideal thing is to have a cushion of money to pay your trucks on time. And, you do NOT need buku thousands of dollars for this especially if you are starting from scratch. For those without a cushion, there are "factors". They will buy your invoice at a discount and advance the money to you quickly.
Factors are all different in the way they operate. It is hard to do an "apples to apples" comparison (I tried it). Nevertheless, you will want to talk to a number of them. The first four questions you would ask are:
- Do you work with freight brokers? (Some don't)
- Do you have a monthly minimum?
- Do you have non-recourse advances?
- Do you require every invoice from a particular company to be run through your system or can I pick and choose which invoice I want to factor?
So, if you are strapped for cash, consider factoring your invoices to get you started. Believe me, the time is ripe for some of you to get going here, one way or the other. Don't be left with the crumbs after the economic turnaround takes on more strength.
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