question about brokered loads

There are a lot of different ways that you can qualify a broker. The only broker I had to get tough with had great credit, been in business for years but got in trouble with one of their largest accounts. Some would say "See, you can never tell" but if this was an under funded new broker they would have been out of business. So a 90-day pay would have been a no-pay.

Biggest question is if you are going to work with new brokers. I set my criteria for new brokers based on two things.

One, are the attached to a carrier. There is a big difference in what it takes in terms of capital to be a carrier compared to a broker. These brokers are providing this service to cover customer loads not as a sole source of business.

Two, are the funding quick pay with internal funds or via factoring company. If it is not via internal funds then I will not touch them. If they have the funds to quick pay then they have the funds to wait out a slow paying customer.

Of note, very few brokers passed the second part and of the ones that did, they paid within 21-days.

 

LS pays in 21 days don't they? That is, if you're not LSP, in which case its 48 hours.

 

I'm a newly established broker. I don't have a lot od start up capital, so was (ignorantly) convinced that factoring would remedy my lack of cash. Well, carriers are reluctant to do any loads without seeing credit. Being 2 months "old" I don't yet have any! Factoring companies will have a talk with carriers for me in attempt to assure them of payment, but they will not fill out a credit reference application. I'm between a rock and a hard place. I have prepaid a few loads to try and establish terms, have luckily established terms with carriers that know me well and know they can trust me. Not one carrier has been convinced by talking with the factoring company that they should take the chance (and they are reputable). I'm learning lessons quickly!

I handle 95% bulk work, so my invoices are not small. I suppose I understand the carrier's view, but I can't afford to prepay all the loads. So, now I'm applying for a loan and hoping in the meantime to establish some references with the prepaid and happy carriers.

I'm sure I sound so ignorant, but I was truly convinced that factoring could help get me going.

 

And there you have why carriers are scared of new brokers what happens if you don't get paid by your customer are you going to take a loan out on your house to pay us no!
I just filled for my broker license what's bad is how easy it really is to get started I put my $10,000 bond up front something I was told don't happen much I have run for my customers for years and I know there good for the money so with that said you think I'm going to run out and get new customers hell no I'm not after working with them for a year or so than yes I will broker these loads out but if I'm going to get screwed it's going to be with one of my trucks
I know a custumer that started using a new broker for two months in one of there loads was lost due to a rollover the carrier had the worst safty scores you could have they did have insurance but did not pay the claim in full long story short this costumer kept the money for every invoice that was not paid they said it's the brokers falt for not looking into that carrier safety score so with that the broker is gone now and I bet alote of truckers got screwed also

 

The information is available out there for brokers and shippers to check on which carriers are safe and which ones are not. In the courts view these days liability is not just on the carriers anymore as it has been for decades past before SMS. It's on the brokers and the shippers as well from here on out. Now that they're being held financially liable things are going to change for the better, slowly but surely. Google vicarious liability and look at the $23.5 million settlement CH Robinson had to pay out because of an incident like you described where people got hurt. Older drivers on here blast Bill all the time thinking CSA 2010 sucks and isn't going to change anything. They are dead wrong. You probably already know this from speaking with traffic managers, shipping dept's etc all the time, it's a hot topic and big concern among shippers.

 

Well, I did say that I have prepaid, so your assumption that I would just not pay isn't very fair. I've had to trust that my carriers will take care of a load after I have already put out the money. It's certainly a matter of establishing trust. I do have additional insurance that I have invested in, as I did not think the bond was sufficient in the industry these days. I also qualify my shippers, or I wouldn't take the risk in prepayment.

Your scenario of a rollover is, although a reality, an extreme. I don't think anyone is happy or getting off scott-free in that situation . The broker did not do their job and qualify the carrier, not good. Being in bulk, and floating high invoice numbers, I would never utilize an "unsafe" carrier. It's a bad decision. So, I suppose I asked for your response by posting--but also see the "broker is a four-letter word" generalization glaring through your response. I suppose I have to fight that reputation with everything I have.

On a very happy note, it looks like I have secured some funding, making prepayment a reality, until I can convince and prove to my carriers that I am a worthy partner. The funding will also increase my non existent (not BAD!) credit worthiness, which would probably make the discussion moot!

Thank you for the insight.

 

Be careful. Believe it or not there are actually carriers that will cheat brokers too!
I'd make sure the carrier I was using was very reputable or you may end up with a load not delivered. I'm sure you've factored this in to your business plan - just saying.

 

Thanks! Yes, it is not an easy decision to say "sure I'll wire you the whole amount" (gulp). Luckily, I worked with some great carriers for few years now who I can trust (fingers crossed)!

So far, so good.

 

only once did i have a broker that wouldnt pay on a $500 partial. took the time to find his office, walked in introduced myself then laid my holster down on his desk and asked if he would like to see what went in it. walked out with my money. never seen a guy sweat so much in all my life.

 

You had me at holster. Lol!