5.0 Business, Financial, Credit & Legal Issues

Atex Freight Broker Training, Inc. –  El Paso, Texas

Lesson 5.0 Business, Financial, Credit & Legal Issues

Overview for Lesson 5.0

Your Business Vision

Load Manager Spreadsheets/Software

Credit Issues Extending Credit to Shippers

    Carriers Extending Credit to YOU

    Building Your Credit History

Cash Management Invoicing

    Paying Trucks

    Using Factors

Filing Claims

Cash Flow Analyses

Legal Issues in Your Brokerage

Accounting and Recordkeeping                  

Accounting Requirements

    Office Set-Up

    Direct Deposits

    QuickBooksPro

    After the Carrier Invoices You

    Financial Analyses

    Overall Financial Activity

    Business Fundamentals

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Let’s get started …

Your Business Vision

Operational

Staying small or growing the business

Load Manager Spreadsheets to Get You Started

(1) Spreadsheets – good for analytics and profit margins on each load & overall,

     (2)  TMS software,

(3)  Freight broker software

Credit Issues

 Extending credit to shippers

Difficult customers on collections

• What is your policy for slow payments?
• What is your policy for non-payment?

Create a credit policy

Carriers extending credit to YOU

• Your policy for paying carriers

• What payment options do you have?

Building your credit history and track record

Cash Management

• Invoicing
• Paying trucks
• Collections
• Using factors
• Cash flow analyses

 Paying trucks

The power of current technology

 Using factors

Here’s an example of a particular load:

There are many factoring companies

Filing claims

Whose responsibility?

What to do with a driver with damaged cargo or missing pieces on delivery?

Go here on the issue of federal law preempting state law:      >>>  The Carmack Amendment

Read more here about the right of a property broker in setting off cargo claims against freight charges: Go here below:

>>>  Setting Off Cargo Claims

Cash Flow Analyses

Projecting estimated future collections and payments                     

Legal Issues in Your Brokerage

>>>  Association of Transportation Law Professionals

Accounting and Recordkeeping

• FMCSA accounting requirements
• Office set-up
• Direct deposits & Bank transfers
• Com checks
• QuickBooks
• After the carrier invoices you

FMCSA accounting requirements

Code of Federal Regulations >>> (CFR 49, Part 371: Brokers of Property)

Office set-up

Very simple – good, high-speed computer, two telephone lines (maybe), fax (maybe, may use Internet fax as a back-up), third-party vendor to upload set-up packages to, file cabinet.

Direct deposits, bank transfers, Com checks –

Use your cell phone

Direct deposits 

Bank transfers

Com checks

Com check resource:

Here are two “com check” options: 

>>> ComData                                                                                                                 

>>>  EFSLLC

QuickBooksPro

For financial reporting, invoicing, printing checks, payroll (optional).

Cost of sales – payments issued to truckers

Operating expenses – accounting fees, insurance, telephone, office supplies, etc.

Chart of accounts

When using QuickBooks, set-up “Item lists”. Example:

After the carrier invoices you

Expect their invoice within 3-7 days

Review their invoice – get the Bill of Lading (BOL)

Financial analyses

THINK MARGINS!

Evaluating Your Shippers

Margins

Days in collection

• Ask the shipping manager about how quickly they pay,
• Run credit checks or get references, and
• Invoicing – decide on your terms

Several transportation credit services include Ansonia Business Credit Reports, TransCredit, Core Logic ComputNet Credit and RTS Credit.

When speaking with credit services’ reps, ask if they can give you reports on how quickly shippers pay “freight brokers”. You don’t care how quickly a shipper pays the water bill.

Other benchmarks might include:

• How many loads is each shipper giving you,
• How quickly are shippers paying you, and
• How easy it is to find trucks for particular customers

Overall financial activity

Doing a quick, cash flow projection

.. find your average dollar profit per load

For example –

30 loads next month x $175 – $5,250

Business fundamentals

• Cash management
• Marketing and customer acquisition strategies
• Setting up operations
• Planning     

Summary:

1. Establish your vision,
2. Start simple – load manager spreadsheets,
3. Credit issues,
4. Cash management,
5. Filing claims,
6. Cash flow,
7. Legal issues,
8. Accounting and such,
9. Office set-up,
10. QuickBooks,
11. Business fundamentals.