Why Does It Take So Long To Get Paid In This Industry?

Our main business is machinery moving and rigging, trucking is just a side gig related to our main business. 60 days is more the norm than 30, with some accounts 90 days. We just budget accordingly.

 

I’m their defense, especially big companies, it takes a little time for them to process things. They have checks and balances that certain people have to sign off on before they issue payment. This is all done to make sure the payment is legitimate and that all the terms of the agreement has been met. Now I will agree that 30 days is long enough for them to go though this process, and they are just holding your money after 30, but the norm is leaning toward longer and longer terms.

 

That's not the point, The Point is with the 'Broker' showing transparency with the O/o. 'YES', trying to find a Honest, Genuine Business man who would follow the genuine rate of what they receive from the Shipper is a 1 in a thousand chance however building a relationship with O/o might benefit them in the future instead of searching for O/o on load boards. That's all I'm saying.

Yes, you can slice it even beyond the Broker and the O/o's will keep undercutting themselves but many factors to which O/o from their experience, driving record delivery record, credit etc.. should determine the one for the higher rate oppose the lower rate and that O/o has a major problem delivering that load safely.

Yes the industry is fast pace and the Shipper only cares about the load being delievered in the fastest possible time frame. But on the same end I don't believe if a Shipper can save $3000 on the load being shipped safely and on time they will take that rate.

 

This is why I always say you need at least 2 months of expenses in your pocket before you go into the trucking business (or any other business). Either that or be a slave to the factoring company.

 

If you or anyone agrees to move a load for a rate why does the other transaction matter? Why do you feel entitled to know their contract details with another party? If the rate being offered isn’t satisfactory to you then let it sit. The rate will either come up or someone else will agree to a rate that wasn’t good enough for you.

Let’s flip this around the other way. Last year when rates were high would you move a load for less money if the broker showed you what they were getting paid from the shipper? Or would you expect “market rate”? Because I can promise you that when rates were $4-5 a mile on the spot market the contract rates weren’t even close to that.

 

Well, the O/o is the one doing 95% of the work (some would say 100% but the Broker is finding the work).

Transparency for the O/o needs to be there because they're taking on the responsibility, liability, accountability etc. For the freight being delievered safely on time.

Yes I will agree that if the rate isn't what a O/o wants they can simply pass on it. However, O/o's who still have truck payments, insurance payments, mortgage payments, grocery bills etc. Need to operator so if we live in today's times (current economy) most will eventually have to give up the loadboards and brokers and move with a larger Carrier to make ends meets. So I do agree with your point to a point.

 

I'd say more like 6 months in today's current market. I know some O/o's now signing onto the carrier I'm with because their bank accounts are drying up quickly.

 

A.)
Hi.
I’m going to get broker authority: I’m only charging 1% of the originating rate to broker my freight out. I will show you all documentation to prove it. How many $0.99 a mile loads are you signing up for?


B.)
Hi.
I’m brokering a load (I got from a 3PL, then taking my percentage before offering it to you after my boss gets a 10% cut) It pays $2k on 100 miles load and go.


Which situation is better?
Knowing what someone else makes muddies the waters if that’s your negotiation tactic- if you think you are entitled to more money: go get it! It’s there to be taken.

 

To answer those who think I'm wrong, it is this fact that really needs to sink in.

NO ONE FORCES ANYONE TO TAKE ANY LOAD FROM A BROKER.

Right now we have an over-capacity situation, this keeps rates down, we have TOO many trucks out there chasing freight, we need to see that reduced to get rates to rise.

Blaming the broker isn't the problem.

AND to add to this issue of transparency - we ONLY need transparency for who owns the load, eliminating the crap of crap brokers scraping loads from load boards and reposting them with diminishing rates. This one issue would help most owners, knowing what they make won't.

 

Established motor carriers [one truck and up] usually have some 'established' business accounts that are the foundation of their business and a critical source of cash flow. A driver buying a truck without an initial source of business starts with the handicap of depending on broker freight to sustain their cash flow outside of their initial start-up capital. They will continue to always have someone's hand in your pocket until one finds a sustaining account without having to cut someone's rate to the point of unprofitably just to get the account.

Now consider starting out leasing you and your power to a carrier.

Doesn't need to be a 'MEGA'. I remember the numbers from one company from listening to the numbers our controller used when schmoozing customers/suppliers saying our 9 locations with 165 leased units were averaging around 18 million a year and the average 'out on the street' was 1 to 2 million in revenue uncollected at any given moment. That's 11% at a place with 9 revenue centers invoicing daily and established to follow up on tardy payments.

Each location invoiced the freight as the operators turned it into the terminal to possibly speed up collecting the revenue and they paid this weeks revenue the trucks earned in next weeks settlement to each individual owner and waited to collect the money 30 or 60 days later IF there were no hiccups.

The individual truck owners were funded on a regular basis allowing them to build up the reserve needed if they wanted to go on their own.

Yes the carrier gets a slice of the whole pie for having the freight, providing the back office [and more] while possibly growing ulcers keeping that big wheel turning by keeping the customers & truck owners satisfied while guarding 'their' customer base and taking all the risk.

Often the trucker/shipper relationship means the carrier loosing money to satisfy the customer's demands to make 'adjustments' to a large block of freight that the shipper believes were over charged and refuses to pay.

Same outfit as above, the lady doing credit/collections/adjustments kept bringing me copies of delivery orders asking if this was really 'haz mat' and 100% of the time it was haz mat. After a year of her fighting with the steamship line; the owner got a phone call and came out and told the lady 'Give in and adjust the loads to non haz mat' taking possibly a 6 digit hit without deducting from the truck owners.

That's just one kind of risk budding Owner Operators will face and these 'little' things [AKA death by 1000 cuts] and without preparation and money to operate for a long period of time leads to individuals loosing their trucks they worked hard and spent a lot of money to get.