Methods of convincing Direct Shippers

I don't believe you fully understand "non-recourse" factoring. If the customer has a legitimate reason not to pay you will have to "buy back" your invoice if they go past X days. The factoring company accomplishes that by keeping any invoice you send them.

You have all kinds of costs that you may not be able to invoice. TONU, detention, layover to name a few. If you're in the reefer/food segment there is no insurance that will cover OSD's that fall under the deductible. What if a truck breaks down on a time critical load? Your customer isn't going to pay anything extra to re-power it. You want me to list all the things that have happened over 40 years?

 

Is insurance for a broker mandatory or optional? Why would a broker require carriers to list them as additional insured if they already have their own insurance? It seems wasteful to require both parties to carry insurance covering the same job.

 

No they are not.

Additional insured doesn’t mean it’s going to get paid though. And what if you have 75k outstanding with the customer and they freeze payments until an 80k claim is taken care of? But, no it’s not required just good practice to help manage your risk.

 

That's why we carry 500k contingent cargo. Better safe than sorry.

 

Have to make sure that your contingent doesn't just follow the carriers. It needs to cover any exceptions to their policy. That makes for an expensive policy.

 

I'd have to check. That's the owner's deal.

 

Thing hardest to insure is "owner" theft followed by "employee" theft. Theft has a broad meaning in insurance.

 

Any idea as to the average length of time a brokerage is floating capital (ie paying carriers before getting paid by customers)? Starting out, I'd imagine that brokerages will need to entice carriers to work with them so they would need to offer free quick pay options, so I could see the float being ~25-30 days initially. Once established though the float should be just a few days on average overall though, right? I presume normal terms with direct customers would be ~30 days as is with carriers unless opting for quick pay. Would be interesting to see what percentage of loads through a brokerage are paid on quick pay terms vs. standard pay.

 

When rates are up, quick pay/advances are low. Rates are down, it goes way up. Since the first of the year we're at just under 55% advances and 76% quick pay.

 

Those figures are a lot higher than what I was anticipating. Appreciate the input!