Broker going out of business

Discussion in 'Freight Broker Forum' started by Denis0715, Nov 24, 2023.

  1. Denis0715

    Denis0715 Bobtail Member

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    Hey everyone,

    So my factoring company just notified me of a broker (SEL) that is going out of business and still has not paid us for the load we pulled (Going on 38 days). I have tried reaching out to the broker but all there numbers are no longer in service. This is the first time I've dealt with a situation like this and my question is, how does one even go about filing a claim against the broker and is it even worth it? The load was for $3800 so it's not a small blow to take as a small company. Also the broker was approved through our factoring company when I did a credit check but we are still getting hit with the recourse if they do not pay in the coming days. Any advice would be appreciated or am I just #### out of luck on this? Thanks!
     
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  3. Iamoverit

    Iamoverit Medium Load Member

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    You won't get the full invoice paid because their piddly nearly worthless 75k bond will have to be spread out evenly to every carrier that files a claim.

    Go to Safer. Look up the broker by their MC. Click the Insurance link. Get the policy number and call the insurance company listed. Follow their claims protocol.

    Then sit back and wait for whatever they give you.

    What's the point in factoring if you have to do all this work?
     
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  4. blairandgretchen

    blairandgretchen Road Train Member

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    That's my question too - If you're giving up a % for factoring, but they buy your paper with recourse built in to reneg on their deal with you.

    Are all factoring companies like this? If so, maybe I better start one - sounds like a clear winner for a business model.
     
  5. wichris

    wichris Road Train Member

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    Usually non recourse is only if the broker files BK
     
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  6. DUNE-T

    DUNE-T Road Train Member

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    Most likely bond is already exhausted, you gonna have to go after shipper or receiver, whoever was the broker's client
     
  7. Iamoverit

    Iamoverit Medium Load Member

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    Anyone that's been in Transportation knows the truck is only the mule. The easy money is made off it's hairy back.
     
  8. Iamoverit

    Iamoverit Medium Load Member

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    It's amazing how many people using factoring don't know that until it's too late.
     
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  9. DUNE-T

    DUNE-T Road Train Member

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    Detroit, MI
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    The point of factoring is cash flow and credit checks. If you have a bigger operation, its very hard to avoid factoring, since not many lenders will give you money just for everyday operating expense.
    When you do spot market working with tons of random brokers, factoring can help you out a lot by not getting burned.
    For example DAT load board shows credit worthiness of a broker, tons of double brokers show good credit score, yet some old legit brokerages do not, so a lot of people avoid booking with them, yet your factoring can approve it and you can book some great paying loads.
     
  10. Iamoverit

    Iamoverit Medium Load Member

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    Sounds like a business doomed from the start IMO.
     
  11. NorthEastTrucker

    NorthEastTrucker Medium Load Member

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    I remember back in 2021 when I was considering becoming an O/o I was going over the Factoring Process with Brokers when operating an Authority. I even talked to my bank financial adviser about it & he recommend I take a line of credit if I need extra money to run that way. In fact I thought it threw and said, 'What type of business I am running from wait 30 days to 90 (1 to 3 months)?' Basically, depending on credit alone and went the other route of Lease on in order of understanding things better and Glad I did.. Now that I'm reading how much who have their own Authority running load boards are trying to sign onto larger carriers with direct customers invoice directly because of the current market makes sense. I figure it's got to be a super bad time if megas are filing chapter 11 bankruptcy protection! Some Factoring companies are going bankrupt too so it seems like a bad business venture with that method. Minimizing overhead expenses is something I would consider a better business model overall in this current market.
     
    Last edited: Nov 24, 2023
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