Brokers: Don’t be Afraid of the F-Word

Freight factoring can be a somewhat nebulous concept for freight brokers. Fear of the unknown can cause some to dismiss the subject altogether. But taking the time to understand factoring and finding a partner that will help make the process easier can combine to make a world of difference on the financial side of things. Simply put, factoring lets brokers receive a much faster payment for their services with the factoring company paying them right away and then handling invoice payment processing and collection. The broker gives up a small percentage of the invoice payment to the factoring company as compensation. Let’s take a look at some misconceptions as well as the many benefits of factoring.

Why Factoring Sometimes Gets a Bad Rap

As mentioned already, freight factoring can be a little complicated and sometimes there are concerns that can impact its image:

  • Chargebacks: If the factoring company cannot collect payment on the invoice from a client in a reasonable amount of time, the factoring company will request the advance back and will hand the invoice back to the freight broker. This is what is known as a chargeback. The broker will then have to contact the client and request payment for the invoice. Chargebacks can happen for a variety of reasons — defective products being delivered, client disputes, and invoices that are just too old. A reliable factoring company will keep the broker updated throughout the process of each invoice. When something seems wrong, they’ll communicate their concerns and will work to avoid chargebacks.
  • Hidden fees: Some factoring companies will add different fees, such as application fees, credit check fees, processing fees for each invoice that is financed, or late fees if a client is past due on a payment. Brokers must stay aware of these types of fees when working out a contract with a factoring company.
  • Poor invoicing etiquette: Handling invoices needs to be a priority, but some companies fall short on everything from leaving out key details on the invoice to simply forgetting to send the invoice to not following up in a timely manner when confirming the invoice has been received. There are plenty of ways the ball can be dropped and the broker can be on the hook for the payment.

How Factoring Can be a Supercharging Benefit to a Broker

The clear reason why freight brokers use factoring companies is that the quick turnover in payment after completing a shipment means immediate cash flow to help cover expenses. But there are more benefits to using a freight factoring company:

  • Factoring services can help brokers monitor the credit risks of a shipper and help them realize when the risk is too great to accept a deal.
  • A lot of the facets of freight payment management can be time-consuming. Having the right factoring company handle concerns like tracking down vendors for payments or waiting months for invoices to clear frees up a significant amount of time for a broker to focus on other tasks.
  • Budgeting and financial planning can be improved with the help of a good factoring company because they offer customized insights and data tracking that can point out issues and concerns within payment models.
  • Factoring service providers can help more effectively track financial health in both the short and long term. They can more easily monitor performance across multiple platforms and more efficiently coordinate loads and drivers, which means increased profits along with reduced fees and expenses.
  • The days of mountains of paperwork involving payment processing, logistics, and tracking documents are a thing of the past. With invoice factoring processes being shifted online, information — bills of lading, PODs, receipts, and actual invoices — can be recorded and shared faster.

Benefits of Getting Carriers Paid Digitally and Faster

The freight market continues to grow significantly. So does the competition for acquiring more clients as shippers or carriers. To stay on top of that aggressive market, it’s more important than ever to provide quality service and to do it as quickly as possible. Here are a couple of ways that can help you stand out from the other freight brokers:

  • With an exemplary reputation for shipping goods and providing the best customer service, you can become a “freight broker of choice.” With expertise in the field, this type of broker is often the first choice of those looking to ship cargo. The benefits of being a preferred broker of choice include being able to charge higher rates because clients know that you can get them the best service, getting more market exposure, increasing credibility that can attract new business more efficiently, having more negotiating power, and faster turnaround times during a time when meeting deadlines becomes even more important. With that new business, you’ll likely have concerns over cash flow while waiting for weeks for payments from your clients, which can disrupt your business operations. Partnering with a freight factoring service can help solve those cash flow problems with payments that are made digitally. With immediate payments from the factoring service, you have money to quickly turn around and put into the next job.
  • Another benefit of switching to a freight factoring service that uses digital payments is the enhanced payment and reconciliation process. Paper-based types of payment are replaced by a much faster digital process. Check codes no longer need to be confirmed, calls in the wee hours are obsolete, and drivers don’t have to wait around to get the payment processed. The process is not only fast, but the transactions all have a digital trail and make the transfer more secure. Lumper receipts are automatically created for the driver, broker, and shipper so that reconciliation is swift.
  • It also lets you take care of the carriers better. By ensuring the rapid turnover of payment, carriers can quickly put that money back into the next job and will realize the new digital service benefits them as well. That in turn raises customer satisfaction, nurtures mutual business loyalty, and can solidify a strong long-term relationship.

The Key Benefits of HaulPay

Using the factoring and payments of ComFreight’s HaulPay, you can leap into the digital age by replacing manual payments and old-school factoring with a better way to pay and get paid. With HaulPay, payments arrive within one day, digital processing comes without hidden fees or extra interest costs, and you can check credit on any customer for free while automating your invoicing with free software or TMS integrations. Here are some key benefits of HaulPay:

  • Non-recourse factoring with no minimums, low or no reserve, and the best flat-rate pricing options. This also means a big reduction in your credit risk.
  • Optional advances of your own broker margin on a load-to-load basis when you want it to accelerate your cash flow on demand.
  • Turn your carrier payables into working capital by having HaulPay pay the carrier at a scheduled time, either with quick pay or on a specific future date the carrier wants.
  • Flexible self-finance so you can use your own funds when you need to.
  • Establish good credit or improve your credit score by always paying fast.
  • The ability to decide how much you want HaulPay involved in your invoicing processes. For instance, you can choose which of your customers and invoices you want to process.
  • Free software to check customer credit approval and add new customers in real-time.
  • Eliminate carrier payment fraud with HaulPay’s carrier setup process and growing network of vetted carriers that you can connect to.
  • Leverage HaulPay’s carrier setup process to automate dealing with your carriers’ factoring companies saving even more time on your payables.
  • Scale faster with more of your back office automated at no additional cost to you.

HaulPay Helps Pave the Way

After taking a deeper look at freight factoring and its many benefits, you can see why the right broker-focused factoring solution can be a part of your future and success. It’s also evident that getting around in this complex world of freight factoring can be much easier with a partner. ComFreight’s HaulPay can help you leave the old-school world of paperwork and manual payments for an automated system that includes flexible low-cost factoring options. Come take a look at the new wave of freight brokering benefits with a demonstration on our website.

 

Provided By: Steve Kochan, Founder & CEO, ComFreight HaulPay

How to Make Paying and Getting Paid Easier as a Freight Broker

Like with any business struggling to stay afloat during these times of market uncertainty, cash flow is critical. This is especially true for companies operating in the shipping and transportation industry, including freight brokers. To survive continued recovery and market pressures, shipping companies must quickly turn orders into cash by processing shipping invoices as swiftly and accurately as possible. The slightest error or delay in freight invoice processing and payment can lead to massive financial disruption. Commercial Carrier Journal pointed out, “as shippers and 3pls have become stricter in their auditing of freight invoices to catch errors, carriers and brokers are focusing on eliminating billing mistakes that cause delays in payments and rework that compresses their profit margins.” Most transportation management systems have options to set custom alerts and can flag specific billing requirements for each customer or load type. They can also help to streamline order entry processes and improve the invoicing tracking and payment process. Freight brokers must simplify processing various invoices of shipment documents and maintain adequate cash flow. The following steps can help enhance freight invoice management across the entire supply chain network and help companies get paid for more loads.

1. Know What Your Carriers Charge and How

Managing shipping invoices and tracking payments hinges mainly on the type of setup your drivers are operating under with their freight brokerage partner. There are three primary pricing method options used in the industry today: per-mile, “all-in” and hourly rate. With a per-mile payment process, a freight invoice is set up based on the mileage the driver racks up during delivery. With “all-in” this is typically represented with a flat linehaul rate that includes everything in one rate. With an hourly rate, drivers are paid a rate based on miles driven by other tasks related to the shipment. Both methods have pros and cons and can affect how a freight broker invoice needs to be set up and paid. There is more granular breakdown in many invoices that includes line items for fuel surcharge and other accessorial and it helps to have an invoicing service that can account for all of these cases and take this hassle off of your plate.

2. Aggregate All Invoice Data Faster Through Digital Systems 

Get the right invoice factoring for freight brokers set up in place early on to streamline the entire process. Pulling all invoice data from carriers is easier with a digital and cloud-based system. It is easier to upload and manage files, report invoices, share to shippers, and send all the information to the factoring systems, so transportation companies get paid. This streamlining is possible with an automated invoice shipment process and an aggregate freight invoice processing system. HaulPay actually enables you to have carriers and drivers upload their docs directly to your payment cloud for faster document review. You can also integrate your TMS so that docs flow to HaulPay for real time invoicing, payments and settlement as well. Cleaning up another big mess.

3. Don’t Get Lost in the Weeds of Endless Fees for Invoice Factoring for Brokers 

Freight brokers should know their expenses for invoice of shipment management and their factoring costs for getting paid for any job they accept. Shippers and carriers alike are looking for a simple solution that provides them with the freight invoice services they need without costing them an excessive amount of fees. A good balance between profits for those managing freight broker invoices and shippers must be maintained and is the foundation of a mutually beneficial partnership.

4.  Integrate Trucker Payments With Your Systems of Record to Initiate Payments ASAP 

An essential piece of the freight broker invoice management puzzle is properly integrating multiple management systems and processes throughout the existing platform network. With the right collaborative platforms and dashboards in place and real-time data tracking and access, freight invoice processing becomes more accessible and much more simplified. Optimizing the invoice payment process and automating payment initiation can make it easier to track cash flow and invoice factoring for freight brokers from start to finish. This is easy with HaulPay and helps keep invoice transaction records and trail of updates current and matching to what payments are expected to go to carriers and what invoice amounts are expected to be paid by shippers.

5. Know the Credit Risk of Each Shipper and Prioritize Low-Risk Shippers

There is always a certain level of risk inherent with freight shipping but reducing errors and the possibility of issues during invoice of shipment payment can help improve shipper relations. Knowing the credit risks of shippers and choosing those that are less likely to increase risks overall will make freight invoice management much more straightforward. Even complicated loads and more detailed freight invoices and payment schedules will benefit. With HaulPay you’ll be able to selectively factor invoices or take advances only when you want to and you’ll be shielded from the credit risk of those shippers when you do. Credit risk of your shippers is always available at your fingertips in our web app for Brokers.

6. Get Paid Faster From Shippers With Freight Payment Solutions Like HaulPay 

Opting for online digital processes is the final option that can help speed up shipping invoice payments and streamline overall techniques. Invoice factoring and payments for freight brokers can benefit significantly from innovative advancements and automated tools and processes becoming more common in today’s shipping and transportation industry. Keep your back office running like a well-oiled machine and eliminate risk of errors and bottlenecks with a digital invoicing and payment solution like HaulPay. Decide if and when you want to factor, finance a payable to carrier or just use the system as your invoicing service with full transparency and automation.

Streamline Freight Invoice Processing and Scale Your Brokerage Faster With HaulPay

Ultimately, the goal of improving invoice of shipment processing and payment is to maximize profits and maintain good cash flow, even amid uncertain markets and shifting customer demands. Freight invoices are a vital part of the carrier, broker, and shipper relationship and are just some of the many services where freight invoice management can assist. Improving routine freight invoice processes can help reduce fees and expenses while maximizing overall profit margins.

Maximizing income is vital to improving operational costs and freight invoice processing and avoiding costly delays and mistakes with bill payment tracking. To take advantage of the latest invoice services, be sure to sign up for HaulPay by ComFreight as a way to get loads and to maximize freight invoice income, even amid market volatility.

Keeping up with invoice billing and the payment ins and outs can be a challenge for even seasoned transportation companies and management teams. Partnering with industry experts familiar with invoice factoring for freight brokers and shippers can make a world of difference in both short- and long-term income. Get a demo of ComFreights HaulPay invoice tracking and management system today and see how easy freight broker invoice management can be!

The Benefits of Digital Freight Finance for Brokers

Poor cash flow is the precursor to bankruptcy. In 2019, declining freight rates led to bankruptcy filings and shuttering of 640 trucking companies, reported Scott Simanek of FreightWaves. Since the onset of the pandemic, bankruptcy has seemed like a far-fetched risk.

Rates have been higher through 2021, but rising fuel costs and market headwinds are pushing rates down. Some have expressed worry over what the rest of 2022 will bring. The brokers that source capacity for shippers face a very clear threat, regardless of demand trends.

If the rates fluctuate upward and extended payment windows remain, there’s a risk of burning through cash faster than it’s replaced. However, digital freight finance for brokers is poised to save the day, and it’s important to understand what it is, what it is not, and what it means for the future of freight management in 2022 and beyond.

What Is Digital Freight Finance?

Digital freight finance can be a complete solution that allows brokers to establish or repair their credit following strained cash flows. It also helps create more fidelity in the payment process. This is an in-demand need for a post-COVID world of soaring rates soared while brokers still had to pay carriers. Furthermore, digital freight finance goes a step further by allowing brokers to leverage factoring options and additional software to support changing finances and workflows.

Solutions for freight finance can help you accelerate your own cash flow through forms of invoice factoring and often help you streamline the payment process to your contracted carriers. In recent years solutions have been moving digital, leading to even more transparency for all parties on the transaction and more options to pay and get paid at different speeds.

Keep your carriers happy and their cashflows rapid, and they’ll be more likely to be there when you need them most. With rising fuel and headwinds for carriers in more aggressive markets, you can also leverage the right freight finance partner to accelerate payments keeping carriers in business longer. A clear, easy automated payment process for carriers also means less time juggling carrier payment issues and invoicing requests. The best solutions take this busy work off your team and roll this up as an included part of the product or service.

However, digital freight finance is not an end-all solution. It’s not a magic key that can force shippers to pay. It is, however, the key to getting payment for services rendered and holding shippers accountable, not your brokerage’s value, when shippers do not pay on time.

Finding a flexible solution that fits your needs as you grow or encounter challenges can mean the difference between just surviving or continuing to grow even in choppy markets.

See a quick demo of HaulPay’s funding request process from the recent FreightWaves Future of Supply Chain Conference in May 22 by Steve Kochan, Founder & CEO of ComFreight.

What Are the Benefits of Digital Freight Finance for Brokers?

A digital freight finance solution for brokers helps streamline many typical processes that eat away at cash flow. The top benefits of using such a service include:

  • Option for payment on invoices within one day of making a funding request.
  • Ability to process payments to partnering carriers faster and digital management of payments and invoices.
  • Automated software to track payment status and expected deposits, as well as integration into your TMS.
  • Non-recourse solutions mean that shippers are responsible for failure to pay, not your brokerage.
  • Clear, concise. and competitive fee structures are built to help you succeed.
  • The best options also reduce the possibility of fraud with carrier account vetting.
  • Access to more carriers with credit-building opportunities through established partnerships and a growing trusted payment network.

 

What Are Today’s Brokers Saying About Freight Finance?

There’s a saying that the proof is in the pudding, and that’s certainly true of ComFreight’s HaulPay digital freight finance customers. Here are a few of their stories:

“The team at ComFreight HaulPay continues to impress with their ability to reshape the idea of what it means to be a factoring partner. From seamless TMS integrations for automated accounting to capacity matching from within the system, their heavy investments into the technology platform and engineering team are abundantly clear,” said Nathan McGuire, COO of Wicker Park Logistics.

“ComFreight is the best factoring company which we came across. Double A Logistics is very grateful to have such a factoring company. We are pleased to do business with such a company who has always put our needs first. It’s one company who is always there to help and our relationship is that of trust,” said Akashna Singh, CEO of Double A Logistics and Dispatch.

Secure Your Brokerage’s Financial Future

As the future unfolds, everyone must manage the inevitable disruptions at play in the freight market. Meanwhile, brokers that take their needs and find the right solutions to financial straits will have the opportunity to survive and thrive. That’s the potential of working with a digital freight finance solution like ComFreight’s HaulPay. Get started today by signing up, which is free too, and see how the benefits can help your team get back in the cockpit of your next carrier or shipper interaction.

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