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In this uncertain economy it can be incredibly tempting for brokers to resort to non-recourse freight factoring to remove risk from their business. 

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While non-recourse factoring may sound like a great deal - putting your factoring company on the hook in the case of customer default, it also comes with a significant increase in expenses, fees, and restrictions on your business and clients.

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In this article, we’ll explore the best alternatives to non-recourse freight factoring that you can implement in your business for 2024, so you can improve your cash flow, de-risk your business, and accelerate your growth.

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Alternative 1: Recourse Factoring

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Recourse factoring is essentially the same process as non-recourse factoring, where a broker sells their open invoices to a factoring company at a discount, and gets paid a percentage of the invoice value up-front. The big difference is that with recourse factoring, the broker maintains responsibility for collecting unpaid invoices.

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When paired with other risk-mitigation strategies, recourse factoring is often less expensive and has fewer restrictions on your business than non-recourse factoring. 

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Most non-recourse factoring companies charge additional fees to compensate for the risks the factoring company is taking on. They also will run additional credit checks on your customers, and often only cover losses in the event of bankruptcy. These restrictions are reduced or removed entirely from recourse factoring agreements.

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Want to find out more? We compare recourse vs. non-recourse factoring in detail here.

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Alternative 2: Invoice or Receivables Financing

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Invoice financing is very similar to factoring, with one distinct difference: You continue to own and be responsible for any invoices. Instead of being sold at a discount to a factoring company, these invoices are used as collateral for a short-term loan. 

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Invoice financing has several pros and cons: First, you maintain full control over your invoices and collections process, and don’t involve your customers in your financing. This also means lenders are less likely to perform credit checks on your customers - but they may have additional criteria that your business must meet before providing the loan.

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Alternative 3: Line(s) of credit

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Lines of credit are another popular option for brokers to use instead of non-recourse factoring. The advantages of lines of credit are similar to those of invoice financing and bank loans - they keep your customers out of the lending process, and your business qualifies based strictly on its own merits.

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A line of credit can also be used for a variety of business needs beyond just paying carriers, such as financing expansion, hiring, and so on. The downside is that, in the current high-interest rate environment, lines of credit can get very expensive very fast.

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In addition to the various credit checks and financial statements a bank may require, a LOC adds debt to your balance sheet and requires consistent long-term payments that may restrict your cash flow. 

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They’re also often much more cumbersome than factoring agreements - where you can be waiting weeks or months to access funds vs. 24-48 hours with factoring.

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Here are some of the most important factors to consider when choosing between a line of credit and factoring:

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Want to learn more? Download our Factoring vs. Line of Credit ebook here.

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Alternative 4: Self-Financing

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One alternative for well-funded brokers is self-financing. This method of financing requires brokers to have access to large cash reserves, but provides full control over your financing and avoids cumbersome loan repayments.

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While there are some upsides to self-financing, there are also a few downsides. The most obvious is the amount of cash required to finance your operations consistently. Your team will also lack support for payables, meaning you’re on your own for options carriers love like QuickPay. 

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Brokers who self-finance may also find themselves running into a cash crunch if shippers consistently pay late, or during economic booms where your reserves don’t scale with demand. During large spikes in volume, you may find it difficult to consistently pay carriers quickly enough to keep them happy.

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Alternative 5: Bank, Government, or Private loans

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Similar to a line of credit, a broker may approach a bank, the government, or a private lender for a short or long-term loan to improve their cash reserves.

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These loans often have more favorable terms than lines of credit, but often come with other restrictions and limitations. For example, SBA loans have specific size requirements, documentation requirements, restrictions on how funds can be used, and may not lend to you if you can get funding from other sources.

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These loans may also require collateral, but do allow you to remove customers from the lending process similar to lines of credit and invoice financing. 

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Alternative 6: Receivable insurance

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Receivables insurance is a method of risk management that brokers may want to use in addition to some of the financing options above. This involves a business insurance policy that covers losses on a broker's receivables, up to a certain amount. 

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This can provide peace of mind to brokers who have many loads on the road, and want to avoid a catastrophic event that might impact their cash flow.

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Unfortunately, there are also a few downsides. Receivables insurance isn’t cheap, and is an additional cost on top of any financing costs you may incur. These policies also often only cover catastrophic losses, and don’t provide any cash advances or support for your ongoing operations.

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Alternative 7: Risk mitigation and management

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Regardless of the financing options you choose, we always recommend brokers implement risk-management strategies to maintain a healthy operation.

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These strategies should be used in addition to financing options like factoring, and when properly implemented can be both more cost-effective and safer than non-recourse factoring.

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Here are some of our top risk mitigation strategies for brokers:

1. Diversify your client base with a wide variety of customers across industries, geographic locations, and cargo types.
2. Perform credit checks on customers, and implement your own client vetting criteria. 
3. Monitor customer payments and business health - and be aware of any risks posed by having too much of your business dependent on one or two customers.
4. Monitor the health and stability of the market as a whole, and create backup plans in the event of a downturn. 

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With the implementation of these risk mitigation measures, most brokers find that they’re comfortable using full recourse factoring to finance their business because they’re more confident in their client base and business health.

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Conclusion

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As a broker, it may be tempting to use non-recourse financing to mitigate the potential risks of customer bankruptcy. In reality, there are significantly less expensive and more effective ways of de-risking your business while improving the financial profile of your company.

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Alternatives such as recourse factoring, lines of credit or loans, self-funding, and more are all ways to improve your financial health with fewer fees, and can be less risky than non-recourse factoring when paired with risk mitigation strategies.

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Want to learn more about how to improve your cash flow, get best-in-class finance tools and dashboards, and streamline your back-office operations? Click here to learn about factoring with Denim get started today.

Growing a brokerage is hard, and most brokers know it’s important to maintain access to working capital through freight factoring to aid their growth. Yet one dreaded term will often cause brokers to stop in their tracks: the personal guarantee.

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Freight brokers often shy away from signing personal guarantees because they see them as too risky, controversial, or limiting. While this can sometimes be the case, freight brokers can use personal guarantees to their advantage.

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In this article we’ll review what personal guarantees are, the purpose they serve, why they matter, and how they can be a useful tool for many brokerages to get a leg up on the competition.

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What is a Personal Guarantee? 

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In the context of freight factoring, a personal guarantee is simply a promise made to the factoring company that they will be able to recover the advance provided to a brokerage. Factoring companies use personal guarantees as a way to ensure that funds that are lent out will be repaid. 

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It’s essentially a backstop that a factor uses in the case of a broker’s customer refusing to pay an invoice or going bankrupt. Personal guarantees generally come in two forms, a limited guarantee and an unlimited guarantee.

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• Limited guarantees: A limited guarantee caps the amount that the guarantor (in this case, the broker who is borrowing funds) would be responsible for. These types of personal guarantees are generally set to a specific dollar amount or percentage of the debt, and are more common when there may be multiple entities that can pay some portion of the debt.
• Unlimited guarantees: Unlimited guarantees do not have a cap, and mean that the broker will be responsible for the entirety of the outstanding balance of the debt. 

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How Personal Guarantees Work for Freight Brokers

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Personal guarantees are terms that will be in the contract between a freight broker (borrower) and the factoring company (lender). These terms will be similar to other lending agreements between business borrowers and lenders, and are often used to secure credit when the borrower has a limited credit history. 

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Personal guarantees allow borrowers (in this case, the freight broker) to qualify for a line of credit that they otherwise normally would not qualify for or to secure a more favorable rate. 

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A guarantee in your contract may be under a variety of headings or clauses in your contract, such as:

• “Personal Guarantee”
• “Personal Guaranty” 
• “Guarantee Agreement”
• “Guarantee and Indemnity”
• “Grant of Security Interest”
• “Default”
• Etc.

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These sections vary based on the factoring company and terms of the agreement. Consult an attorney for more information.

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When a personal guarantee is made between a broker and a factoring company, the factoring company may run a credit check on the applicant (generally the business owner), in addition to checking the credit of the business itself. The lender may also ask the borrower to pledge personal assets such as checking or savings accounts, real estate, vehicles, etc. as collateral to secure the loan. 

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What Businesses Sign Personal Guarantees?

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There are several reasons a business owner may need to sign a personal guarantee. Some of the most common scenarios are in new or small businesses that are still building up a solid credit history. 

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Many business owners also choose to sign an additional personal guarantee because it helps them secure more favorable rates or terms with the lender. These business owners are confident in the growth of their business and see personal guarantees as a low-risk way to improve their cash flow. 

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This tactic has even been used by some of the most famous business people in the world, such as former President Trump who personally guaranteed $421 million in debt. 

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According to a recent Small Business Credit Survey conducted by the Federal Reserve Banks, upwards of 59% of small businesses use a personal guarantee to secure funding. 

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Personal guarantees are incredibly common, and shouldn’t discourage brokers from engaging a factoring company.

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Why are Personal Guarantees Used in Factoring Agreements? 

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The primary goal of personal guarantees is to protect the lender (factoring company) from bad actors. It’s incredibly easy these days to register an LLC, accumulate a significant amount of unsecured debt, and then declare bankruptcy leaving the lenders without any recourse. 

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Providing credit to new and small businesses carries significant risk for the lender, and personal guarantees are a common way to mitigate that risk, and in turn offer lower rates to clients.

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Without personal guarantees, lending rates would skyrocket and eat into the broker's cash flow, creating a lose-lose situation for everyone involved. When freight factoring companies like Denim can limit this risk through a personal guarantee or collateral, brokers can secure significantly better rates, improve their cash flow, and maintain healthy lending relationships.

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The vast majority of brokers should not be concerned about providing a personal guarantee to freight factoring companies.

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If you’re doing your best to run a healthy business and believe in your company and your clients, then you have little to worry about. Personal guarantees are rarely called upon, and usually only as a last resort due to extreme cases like fraud, gross mismanagement, or a broker’s entire client base going out of business.

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The best way to ensure your business isn’t one of these rare edge cases is to continuously diversify your portfolio of clients. The freight brokers at the highest risk are those who depend on one or two large customers for the majority of their business. 

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Diversifying your client base will eliminate the vast majority of scenarios where personal guarantees would be called upon. 

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Personal Guarantee Alternatives 

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There are a few alternatives to personal guarantees that are less common but still provide some protection for the lender and borrower. These can include validity agreements, credit insurance, or other types of collateral to secure the loan. 

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These alternatives have varying levels of protection, requirements, and pros and cons. For example, credit insurance would protect a brokerage’s assets in the event of a default, but comes with additional costs, fees, and credit checks. 

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Personal guarantees are often the least expensive way for both parties to secure a loan, meaning lower rates, fewer fees, and a smoother borrowing experience. 

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Does Denim’s Contract Include Personal Guarantees?

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At Denim we specialize in freight factoring for freight brokers and fleets, and we do require personal guarantees in our contracts. Personal guarantees are a standard practice in the industry, and are required by most freight factoring companies.

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Using personal guarantees to secure loans allows us to offer some of the lowest rates in the industry, even to brokers with little to no credit history. 

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These guarantees may seem daunting, but they’re a fundamental part of lending and borrowing in the freight industry where cash flow is king. 

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For freight brokers, embracing personal guarantees can open the doors to better rates, stronger relationships with your factoring company, and a clear path for growth. 

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If you’re ready to get started on improving your cash flow, building your business, and streamlining your financial operations, click here to speak with our team and start factoring today.

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Las Vegas recently hosted the Manifest: Future of Supply Chain 2024, a spectacle of innovation that transformed the desert landscape into a melting pot of supply chain evolution. 

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With over 4,500 attendees, including 1,500 shippers, the event was not just a gathering but a bold statement on the future of logistics and supply chain management. 

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We attended for our second year and had the opportunity to meet with many freight brokers and carriers, attend sessions, and network with partners. 

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From our conversations, we took away three trends:

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1. High Customer Expectations Across the Supply Chain

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Consumer expectations are being felt from top to bottom of the supply chain. And Amazon is setting a high benchmark to follow. 

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Amazon set a new standard by delivering a package in 15 minutes via drone in College Station from click to door. "Amazon has set the bar for customers, and we have to figure out how to meet it," said Itmar Zur, CEO & Co-Founder of Veho. 

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The ripple effect? Speed is now a basic expectation, reshaping the entire supply chain.

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Farrukh Mahboob, CEO & Founder of PackageX, provided a solution: shippers must diversify their carrier mix. This approach aims to meet evolving customer demands. 

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Brokers and fleets use this as a selling point. Showcase your diverse carrier network and educate shippers on why they need various options at their fingertips. Speaking to shipper's customer needs is a sure way to make a lasting impression and provide more value to their business. 

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2. The High Cost of Bad Data

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The industry is bleeding money due to insufficient data. The loss? A staggering $1.3 trillion, according to Sarah Barnes Humphrey, founder & host of Let’s Talk Supply Chain. 

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Getting data is only half of the problem, but molding it into actionable insights is where the real problem lies. Coby Nilsson, CEO & Co-Founder of Enveyo, said this was top of mind for his brokerage, "Getting data aggregated and digestible is something we are still working on." 

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When developing a successful data strategy for your organization, you must step back and reflect on potential blind spots hindering your progress. One helpful piece of advice from Cody, who is currently addressing this issue within his own company, is to begin. By taking that first step, you can better identify areas for improvement and start making positive changes towards a more effective data strategy.

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Peter Coratola Jr., CEO and president of EASE Logistics, added the importance of technology and internal processes. "The problem is workplace adoption inside our walls. The key is to keep it simple and not let it get in the way of customer experience."

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An easy way to encourage adoption and ensure data is moving smoothly across your technology stack is to only work with providers with an open API or integrate with your customer technology stack. Solutions that mesh seamlessly are not just nice to have; they're essential for survival.

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3. Overcoming Cash Flow Challenges

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In 2024, many brokerages and fleets are looking to grow their businesses. However, they face a significant challenge due to cash flow issues. The problem arises when they must pay carriers while waiting for payments from shippers. Factoring emerges as a viable solution to overcome this challenge. It helps support growth and ensures that carriers are paid on time. 

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According to Lexi Farris, Senior Sales Manager at Denim, business owners' perception of factoring has changed recently. In the past, factoring was considered a "dirty word," but now, several brokerages and fleets explicitly ask for factoring. Business owners have realized the benefits of factoring in this market. Farris believes that a healthy cash flow is essential for growing and sustaining momentum in business. 

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The logistics industry embraces factoring as an emerging trend, and more businesses recognize its value. Leveraging factoring has proven to boost a company's ability to take on new projects by ensuring steady cash flow.

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2024 Will Be a Big Year for Supply Chain

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According to Itmar, "2024 will be the biggest year of the supply chain. The last two years have been all about cost reduction. Those that will win are marrying cost with customer experience. Winners will start to emerge as the economy starts to shift." 

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We're really excited about what this means for all of us. Providing the best customer experience is a cost worth investing in. Businesses that get this balance right are the ones we'll be talking about next year.

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We believe this is the perfect time to think about how your business can jump on this opportunity. That's where factoring comes in. It's like a superpower for your cash flow, giving you the flexibility to invest in what really matters – your customers and your growth.

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Curious about how this works? Let's chat! Request a quote today, and let's explore how we can help supercharge your business growth.

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So, here's to 2024 – a year full of potential. We can't wait to see where it takes us all. Let's make it a great one, together!

It’s no secret that the economy is uncertain at best, and many brokers are feeling the pain. With stories of shipping companies laying off large portions of their workforce or closing entirely, non-recourse factoring starts to sound like a pretty good deal.

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Non-recourse factoring is a type of freight factoring where the factor takes on the responsibility of collecting debt in the event of default. 

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This sounds great for the broker, right? You get paid upfront for your invoices, and have no risk if the customer goes bankrupt. 

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However many brokers don’t realize that non-recourse debt factoring can add fees, limitations, and restraints to your growth.

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In this article, we’ll review the pros and cons of non-recourse factoring, including some of the not-so-obvious downsides that most brokers miss.

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What is Non-Recourse Factoring? The Myths and Misconceptions:

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On the surface level, non-recourse factoring sounds like a great deal for the broker: Brokers get paid upfront by the factoring company for their invoices, and the factoring company assumes all the risk if the customer doesn’t pay. 

The truth is, the risk transfer isn’t total, even if you’re working with the best non-recourse factoring companies. 

Many non-recourse factoring companies only cover a broker’s losses in the case of business closure or bankruptcy, and don’t cover the many other reasons a customer might not pay their invoices. 

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Some of the cases in which brokers are not protected by non-recourse factoring include:

• Disputed invoices.
• Invoices where the customer breaks their contract.
• Non-payment caused by invoices with errors or omissions.
• Customer insolvency from external factors outside their control, such as natural disasters.
• Cases of fraud or illegal activity.
• Insolvency of the factoring company.
• … and more.

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On top of the many cases in which an invoice wouldn’t be covered by non-recourse factoring, these agreements also come with higher fees and costs for the broker. While factoring without recourse can reduce your risk, the increased costs may outweigh the benefits.

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When comparing full recourse factoring and non-recourse factoring fees, non-recourse factoring often has rates that are 0.5%-1% higher than recourse factoring, which can have a noticeable impact on your cash flow. On top of that, non-recourse factoring often has additional fees such as:

• Additional admin fees.
• New credit check fees.
• ACH and wire transfer fees.
• Monthly minimums that must be met to avoid another fee.
• Termination fees.
• And additional charges for higher-risk clients.

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With all of these extra costs, it’s no wonder that most brokers choose to use recourse factoring instead.

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Non-recourse factoring companies are selective

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We’ve covered the fees, but there are some other not-so-obvious downsides to non-recourse factoring. Since the factor is taking on all of the risks of non-payment, they can dictate which clients they want to work with.

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This means that brokers and carriers are often forced to work exclusively with highly reliable clients who have strong credit scores. Brokers may have to turn down clients who don’t meet the factor’s criteria, limiting their customer base.

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Conservative credit limits

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On top of being unable to take every customer, non-recourse freight factoring also imposes restrictive credit limits which further restrict your business. These limits reduce the factoring company’s risk, but often mean a broker can only factor invoices from certain key accounts. 

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These restrictions limit a broker’s access to working capital and can increase your overall business risk. During uncertain economic times, improving your volume is one of the best ways to de-risk your business, and non-recourse factoring can prevent that.

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A more intrusive relationship for your customers

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Brokers often have long-standing and unique relationships with many of their clients, and take these relationships into account when choosing to do business with a particular customer. When a non-recourse factoring company becomes involved in the agreement, these relationships can be thrown out the window.

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Most factoring companies will require additional documentation from your customers before taking on their invoices. These requirements can include additional credit checks, financial statements, and more. This can cause brokers to lose long-term clients they trust.

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Higher monthly minimum fees

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Factoring companies sometimes require minimum monthly volume commitments to avoid paying an additional fee. With full recourse factoring these volumes are usually small, and in some cases there are no monthly minimums at all. There might be certain revenue thresholds to qualify for factoring solutions. Search for a factoring company that offers selective factoring (like flexible factoring with Denim), so you can have control over which jobs you factor.

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With non recourse freight factoring these minimums are higher, and so are the fees for not reaching them! This can put brokers in a tricky position: they feel forced to take on more clients or shipments to meet the minimums, but simultaneously have restrictions on their client base imposed by their factoring company.

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What’s right for your brokerage?

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Before committing to a factoring company, it’s important to understand all of the implications and fine print that can go into a non-recourse factoring agreement. These agreements can provide a safety net if a customer goes bankrupt, but come with burdensome restrictions and fees in exchange.

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Most brokers understand that being in this business comes with some element of risk, and the risk of customer default is one of them. Brokers can mitigate these risks by performing credit checks on their customers, diversifying their customer base, and implementing a collections strategy. Using these tactics alongside recourse factoring can be just as effective as non-recourse factoring.

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If you’re trying to grow your brokerage, it’s incredibly important to work with a financial partner whose goals are aligned with your own. Fees and limitations on your customer base are the last thing a growing brokerage needs.

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At Denim we pride ourselves on providing financial solutions that enable your business to grow. Instead of the restrictions, fees, and limitations imposed by non-recourse factoring, we help brokers win more loads, save time and money, and streamline their operation.

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Click here to learn more about how factoring with Denim can help your brokerage reduce costs, improve access to working capital, and grow your business.

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Managing a fleet means grappling with significant fuel costs. For truckers, fuel is the second highest expense following salaries. Fuel expenses can range between $50,000 to $70,000 per truck annually. 

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But there's a savvy way to handle these expenses: enter the world of fuel cards.

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What is a Fuel Card? 

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Fuel cards, or fleet cards, are specialized payment cards truckers use to buy diesel, DEF, and other fuels. Additionally, they offer fleet owners tools to manage and track fleet-related expenses efficiently. Beyond fuel, they often extend to vehicle maintenance and related costs.

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These cards streamline payments while offering real-time insights into spending. They're essential for setting spending limits and simplifying International Fuel Tax Association (IFTA) reporting. Plus, they open the door to network-specific fuel discounts, saving significant money in the long run.

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How Does a Trucking Fuel Card Work? 

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Fuel cards work similarly to business credit cards. You distribute them to your team, linking all their transactions to one company account. This setup puts you in charge of periodic payments like a regular credit card. However, most fuel cards tend to be charge cards rather than credit cards, which means the balance has to be paid in full on the due date.

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The real game-changer is how these cards simplify expense management. They save you from the tedious task of tracking each employee's fuel and maintenance purchases. With features like expense tracking and reporting, these cards give you a comprehensive view of all on-road spending. They also come with added perks like fraud alerts and fuel discounts.

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The Benefits of Fuel Cards

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A fuel card can benefit your business in a variety of ways. 

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Depending on what you sign up for, you can take advantage of multiple perks, including:

• Rewards and Discounts: These cards often offer rewards or points for using certain truckstops  or meeting usage thresholds.
• Controlled Spending: You decide what types of purchases are allowed, for fuel and maintenance or snacks and drinks from convenience stores.
• Monthly Expense Tracking: Keep a close tab on transportation expenses, avoiding the headache of manual tracking.
• Employee Monitoring: Assign cards for detailed purchase tracking to specific employees or vehicles.
• Alerts for Unusual Spending: Stay informed about any abnormal fueling activities among your team.
• Long-Term Reporting: These cards provide valuable long-term data that's handy for business decisions and tax purposes.

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Comparing Fuel Cards and Credit Cards

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Fuel cards and credit cards may seem similar when it comes to payment options, but they are different, particularly in terms of fleet management. Fuel cards are specifically associated with individual vehicles or drivers, providing fleet managers detailed information about each vehicle's fuel usage. You cannot obtain this level of detail with standard credit cards, which offer more general and less specific tracking of expenses.

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Fuel cards provide better precision when it comes to spending controls. Managers can set specific spending limits and authorize purchases for particular types of products, such as fuel and maintenance. This differs from credit cards, which offer broader spending capabilities that can lead to less control over fleet expenses.

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The fee structures of fuel cards are also more straightforward, usually involving fewer hidden costs and no interest charges. This simplicity is beneficial for fleet managers who need precise and predictable budgeting. Credit cards often come with various fees and interest charges, complicating financial management.

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Additionally, fuel cards provide specific discounts based on purchase volume and loyalty to certain fuel networks, offering tangible cost savings for fleets. Credit cards typically do not provide this level of customization and savings.

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Lastly, fuel cards have features specifically designed for fleet management, such as automated accounting and tools for simplifying IFTA record-keeping. These features make fuel cards a strategic asset for efficiently managing fleet expenses, offering advantages beyond regular credit cards' capabilities.

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Choosing the Best Fuel Card for Your Fleet

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Selecting the right fuel card for your fleet involves considering factors like fleet size, usual routes, and vehicle types. Larger fleets may benefit from cards offering extensive network coverage and volume discounts, while smaller fleets prefer cards with lower fees and local network availability. Consider the geographical coverage that matches your fleet's routes and the specific benefits for the types of vehicles in your fleet.

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When comparing fuel cards, look beyond the network and discounts. Assess fees, credit terms, and additional services like maintenance discounts or roadside assistance. The ideal fuel card aligns with your fleet's operational needs and financial objectives.

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Integrating Fuel Cards with Fleet Management Systems

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Integrating fuel cards with fleet management systems streamlines operations by automatically recording fuel transactions. This integration provides real-time insights into fuel usage, simplifies expense tracking, and reduces administrative tasks. It eliminates manual data entry and minimizes errors, allowing fleet managers to identify fuel usage patterns and potential issues quickly.

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This integration also eases reporting and compliance, particularly for IFTA reporting, by offering accurate and accessible data. It can help identify areas for improvement, like route optimization or driver training for better fuel efficiency. In today's digital landscape, integrating fuel cards with management systems enhances fleet management efficiency, offering cost savings and improved fleet performance.

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Denim Fuel Card Program 

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Streamline your fleet management with the Denim Fuel Card. Say goodbye to fuel fraud and lack of control, and say hello to fuel discounts up to $2/gal. Denim combines tech-forward factoring with fuel optimization solutions going far beyond traditional rebates.

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Manage payments, fueling expenses, and accounting all within the Denim platform. With the seamless workflow between Denim and your fuel card, fleets can leverage their Denim funds to send real-time payments to manage expenses. From there, fleets can access a self-serve portal to keep fleet finances at their fingertips - track spending, set card limits and controls, block fraudulent transactions, save on fuel and non-fuel expenses, and more. 

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The Denim Fuel Card isn't just another card; it's fuel for financial flexibility, business credit growth, and an improved bottom line. Welcome to a future where your fleet operates at its peak potential.

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Apply for the Denim Fuel Card and start saving today!

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Moving a load is never a straight line. 

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Oftentimes, a load encounters roadblocks, delays and changes that can impact the overall cost. Understanding these complexities is crucial for anyone involved in shipping, whether you're a business owner, logistics manager, or even a truck driver. 

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This article dives into one of the key components that often come as a surprise to many: accessorial charges.

Taxes can be confusing, especially for freight brokers who don’t have large accounting teams. Adding to the confusion, most brokers use some kind of freight factoring service, which can make tax season even more complex by changing how payments are sent, adding fees, 1099s to carriers, and more. 

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In this article you’ll learn some of the impacts factoring can have on your taxes, and what your brokerage needs to know for the 2024-2025 tax year and beyond.

Georgia is renowned as the logistics and transportation hub of the Southeast. Home to 85% of the world's top third-party logistics companies (3PLs), Georgia's freight network extends its reach far and wide. An impressive 80% of the U.S. market is accessible within a 2-hour flight or a 2-day truck drive from the state, highlighting its pivotal role in the distribution chain.

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The heart of Georgia's logistics prowess lies in its world-class facilities. Hartsfield-Jackson Atlanta International Airport is the world's busiest and most efficient airport and features extensive cargo capabilities. With over 2 million square feet of warehousing space and a unique USDA-approved On-terminal Perishables Complex, it handles an astonishing 650,000 metric tons of cargo annually.

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Complementing the airport's capacity is the Port of Savannah. Georgia's port is a leader in American-made exports and boasts 67 cold chain facilities encompassing 189 million cubic feet of space. 

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This article breaks down the facets of Georgia's freight market that make it a hotspot for 3PLs and freight brokers. From industry-driving sectors to emerging trends and strategic insights, we explore what makes Georgia an ideal landscape for logistics success.

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Georgia's Economy and Industries

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Georgia's economy is characterized by growth and diversification, making it one of the leading economic centers in the Southeast. In recent years, the state has experienced significant economic development, marked by increased investment, job creation, and technological innovation.

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Georgia is known for its business-friendly climate, which includes competitive tax incentives, a skilled workforce, and a strategic location that provides easy access to domestic and international markets. This environment has attracted many businesses, from manufacturers to multinational corporations.

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Top Industries

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Understanding Georgia's industrial landscape is crucial as you look to expand your business and diversify your client base. Keeping an eye on growing industries can provide new opportunities and help in strategic planning for business expansion.

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Top 5 Industries By Number of Companies According to NAICS: 

• Retail Trade: A primary industry in Georgia, comprising everything from large retail chains to independent stores, significantly influencing the movement of consumer goods.
• Construction: The construction industry drives substantial freight movement from building materials to equipment. Although there was a 4.1% decrease in revenue last year, it remains a vital part of the state's economy.
• Wholesale Trade: This sector, contributing $43 Billion to Georgia's GDP, acts as a critical link in the distribution of products throughout the state and beyond.
• Manufacturing: Manufacturing is central to Georgia's economy, growing 4.3% and accumulating $59 Billion in GDP last year. 
• Transportation and Warehousing: This sector is crucial to Georgia's supply chain and boasts a 3.5% annual growth rate.

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Top Manufacturing Goods

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Georgia boasts a substantial manufacturing sector with 8,100 companies employing 476,170 workers. A significant portion of these companies, 12%, are publicly owned, and the same percentage imports raw materials. Notably, 25% of these manufacturers distribute their products internationally.

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Atlanta, Georgia's largest industrial city, houses 679 manufacturers with 49,090 workers. Other key industrial cities include Dalton, Savannah, Gainesville, Marietta, Alpharetta, and Columbus.

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Georgia's manufacturing landscape is diverse, featuring significant aeronautics, automobile manufacturing, and food processing players. These industries and cities are crucial to the state's robust industrial sector.

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Below are the top industries by GDP according to Georgia Tech’s Manufacturing Extension Partnership: 

• Food and Tobacco Manufacturing ($11,650 million in GDP)
• Chemical Manufacturing ($6,350 million in GDP)
• Aerospace and Transportation Manufacturing ($5,975 million in GDP)
• Textile and Textile Product Mills ($4,454 million in GDP)
• Paper Manufacturing ($4,381 million in GDP).

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New and Rising Manufacturers in Georgia

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Georgia's business-friendly environment attracts many companies to metro Atlanta and other parts of the state. Various businesses are opening headquarters, distribution centers, and customer service offices. 

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Here are some of the significant business moves happening in the area.

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Opportunities for Freight Brokers and 3PLs in Atlanta

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Atlanta's economy and freight market offers many opportunities for freight brokers and 3PLs looking to expand or diversify their business. Georgia's strategic position as the logistics and transportation hub of the Southeast, combined with its access to 80% of the U.S. market, provides an unparalleled platform for growth.

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The state's robust manufacturing sector, including solid industries like food processing, transportation equipment, and chemicals, continues to drive demand for freight and logistics services. 

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With Georgia's economy experiencing substantial growth and the freight and logistics industry contributing significantly to the state's GDP, there is an apparent demand for efficient, innovative logistics solutions. The influx of new businesses and business expansions in the state further underscores the need for capable freight brokers and 3PLs to facilitate these operations.

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Are you growing your Atlanta freight brokerage or trucking company? Need an Atlanta factoring company? Denim has your cash flow needs covered. With flexible factoring solutions, Denim can set you up for success in Georgia's growing market. Tap into the potential of this thriving economy and let Denim help you navigate the financial aspects easily. Learn how Atlanta-based Scale Logistics grew with Denim.

As another year comes to a close, it’s time for freight brokers to take a look in the rearview mirror and analyze their financial situation. The freight markets of 2023 have been unforgiving, with spot load rates and volumes plummeting by nearly 50% compared to 2022. This ongoing drastic downturn has had a significant impact on many brokerage’s finances and cash flow.

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With predictions for 2024 ranging from a miraculous rebound in Q2 to a long-term freight recession that could linger through 2025, it’s more important than ever for brokerages like yours to build a robust and resilient financial plan. 

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Without a solid plan, brokerages risk falling into common finance traps such as relying on receivables to sustain their operations, potentially jeopardizing relationships with carriers.

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This guide will serve as a quick start to help your brokerage create sound financial structure and guardrails in your business, so you can endure next year’s volatility and come out on the other end more prepared than ever. Let’s dive in.

Last year, we compiled end-of-year freight and logistics industry predictions. Our expert contributors offered insights that proved to be quite accurate.

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In 2023, the freight market faced its share of challenges. We observed a sluggish market, an uptick in acquisitions and bankruptcies, and a strong push toward more efficient operations.

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Now, what's in store for 2024? The experts are ready to share their forecasts, and if history is any guide, you’ll want to pay attention.

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Back with a fresh set of predictions, our panel of industry veterans is armed with years of experience and an understanding of the nuances of the supply chain.

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These professionals shed light on potential technological impacts, market shifts, and emerging trends. Read on to discover the key predictions for 2024 and how they might shape the landscape of freight and logistics.

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1. The next freight cycle will start with another external shock from the broader economy in late 2024 or early 2025

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“The freight markets are now 22 months into the freight recession. While truck capacity is returning to balance with more normal load volumes, a truly balanced and healthy market doesn't seem to be around the corner. I don't see many green shoots in the broader economy. 

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Freight cycles are hard to predict, and many start with a sudden shock to networks from the broader economy. We'll likely see another shock to the system (hopefully not as severe as a pandemic) that will kick off the next bull market. Hopefully this will happen in the back half of 2024. Fingers crossed.”

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Kevin Hill

Owner of Brush Pass Research 

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2. Shippers will go back to the basics.

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“In my business, I have never been asked what my tech stack looks like by any of my shipper customers. I truly feel that automation is a great tool to utilize as long as there is core fundamental training behind the broker using the software. You cannot automate bad training, and I truly feel that shippers are returning to the basics of service & execution.”

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Chris Jolly

Founder of Freight Coach 

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3. There will be a shift in how visibility and connection are thought of. 

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“In recent years, visibility has meant tracking. Connection has been transactional. Whether the connection is powering payment, tracking, or load tender and acceptance, it has been a bottoms-up transaction driven mostly by technology companies promulgating their specific solution. 

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2024 will see growing demand from shippers, brokers, and carriers for true trusted connections starting at the top of the value chain that brings together multiple parties operating in historically disparate digital environments. When we think about verified identity, rates, location + movement, risk management instruments, and settlements, those will still exist with separate vendors but streamlined in a connected ecosystem. This ecosystem we are building simultaneously pulls risk from any company's balance sheet and increases the speed of trade across many players dealing in the truckload sector.”

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Michael Caney

Chief Commercial Officer at Highway

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4. Shippers will award lanes to brokerages offering customized solutions with value-adds.

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“In 2024, shippers are expected to increasingly award lanes to freight brokerages that provide customized logistics solutions and significant value-added services. This shift is driven by the need for more adaptive and strategic supply chain management. Brokerages that excel in offering tailored services, such as advanced route analytics, real-time tracking, and sustainability initiatives, will stand out. This trend highlights a transition from transactional relationships to collaborative partnerships, where the ability to offer personalized, data-driven solutions is key to securing and maintaining business relationships with shippers.”

Lexi Farris 

Sr. Sales Manager at Denim 

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5. The truckload market will likely stay stressed until Q3 2024, but there could be a boost in Q2 due to increased demand during produce season.

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“In 2023, approximately 88,000 carriers ceased operations, along with the closure of around 8,000 brokerages. Even as volumes tend to be higher than pre-pandemic levels, they cannot sustain the continued glute of capacity. The challenges posed by double brokering and freight fraud have undoubtedly contributed to the prevailing market conditions. As more carriers and brokers either shut down or have their authority revoked, a gradual reduction in overcapacity within the market is anticipated.

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While it's unlikely that we'll experience a significant increase in Q1, given that it is traditionally a slower period after the holiday rush, I anticipate encountering some resistance, with tender rejections possibly rising at a higher percentage as we enter the Q2 produce season. The challenges in the industry are expected to persist into 2024, making it a demanding year.”

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Thomas Werdine

Founder at ThinkFreight

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6. The Fed will lower rates, leading to an increase in freight volumes.

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“Many analysts predict the Fed will lower interest rates around May 2024. 

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My guess is this provides a short-term boost to the housing market because many of the potential buyers sitting on the sidelines will try to buy at once. Thus, more freight will be moved for things like renovations & new construction. The darker side is that the prices of single-family homes will shoot up.” 

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Travis Vaught

Demand Generation Manager at Denim

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7. Challenging freight market conditions will continue for most of 2024, increasing business risk for both Fleet and Broker businesses. However, many growth opportunities will still exist for a Smart Fleet or Broker business.

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“As the freight market comes out of the doldrums, shippers may pay higher prices to ship their Freight later in 2024. Expect the next stage of the freight cycle to be harder on freight brokerages than shippers. Many shippers have started to prefer asset-based carriers in their routing guides, which has meant lost volume for brokers. Lower volumes mean lower margins for brokers. Consequently, many brokers with freight committed to contract rates will see their margins squeezed.”

JJ Singh

CEO of EKA Solutions, Inc. 

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8. In the next five years, innovation will be led by SmartBrokers, combining deep industry relationships with cutting-edge third-party technology.

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“Over the past five years, venture-backed digital brokerages like Convoy and Uber have set the pace for innovation in our industry. They’ve shown how technology can transform freight brokering, making it more efficient and transparent. However, the next phase of innovation will be dominated by SmartBrokers. These traditional brokers have deep-rooted industry connections and are now integrating advanced third-party technologies into their operations. This blend of relationship-driven business and tech-savviness will define the future of freight, offering a more holistic, efficient, and customer-centric approach.”

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Bharath Krishnamoorthy

CEO and Co-Founder at Denim 

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9. The surviving carriers are going to largely “chase the money” around the country to survive as shippers continue to take advantage of lower-than-normal rates.

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"In light of the recent Panama Canal challenges, a stark contrast is evident: the LB/LA ports on the West Coast are witnessing historically high volumes while Houston and Atlanta experience lower volumes. This scenario fosters accelerated recessionary patterns in Houston and Atlanta, juxtaposed with stabilization or growth in the Southern California market. In response, surviving carriers will likely 'chase the money' across the country, adapting to these regional imbalances. Expect unusually rapid, region-specific shifts – both inflationary and deflationary – throughout the year, eventually leading to a general trend of nationwide inflation once the market corrects the current oversupply."

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Alex Schick

Co-Founder and COO at Alliance Logistix 

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10. Credit Crunch will continue for asset-lite businesses.  

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“We’ve seen several brokerages this past year get into trouble with Asset Based Lines of credit, and as brokerages continue to experience drops in volumes and in rates the temptation to use that capital to fund operations will continue to grow.  As interest rates remain at this high level, we will see brokerages turn to factoring as an added source of control and working capital.”

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Sean Smith 

VP of Product at Denim 

Facing 2024's Freight Challenges: Enhance Your Cash Flow with Flexible Factoring

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Navigating 2024’s market swings will require not just foresight but also flexibility. The insights from our experts paint a picture of a sector that's continually adapting to new challenges and opportunities. From technological advancements to economic shifts, staying ahead in the freight industry means being ready for anything.

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One key aspect of this readiness is financial stability, and that's where factoring comes into play. In a landscape where cash flow is king, factoring can be a game-changer for freight businesses, especially those looking to adapt to the dynamic market conditions we've discussed. Whether you're dealing with slow-paying clients or looking to expand your operations, factoring offers a reliable way to keep your finances in check.

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Are you curious about how factoring can benefit your business in 2024? Learn more about our flexible factoring solutions. Discover how you can transform your financial strategy to meet the challenges of 2024 and beyond.

At F3, if 'oversupply' were a bet, you'd leave with pockets as full as a loaded freight container. 

This November, the Chattanooga Convention Center didn't just buzz; it roared with discussions of market dynamics that had everyone from seasoned pros to newcomers perking up their ears. The Future of Freight Festival, set in the heart of Freight Alley, became a junction for the global freight community to dissect and debate the industry's hottest topics.

It wasn't the "Please Advise" hats or the splash of Hawaiian shirts that caught the eye—it was the enthusiasm for what's on the horizon for supply chains, the strategies for navigating unpredictable markets, and the emerging technologies set to redefine how we think about logistics.

Shippers' Perspective on Efficiency

In a conference rich with insights from brokers, carriers, and tech innovators, Sabrina Carr, the Director of Global Transportation at the Clorox Company, stood out by bringing the vital shipper's perspective into focus.

She zeroed in on three key metrics that she believes are crucial for supply chain efficiency: on-time pick-up, cost, and truckload utilization.

Sabrina highlighted the importance of on-time pick-up, explaining that being late can mess up a shipper’s operation. It’s a common problem that often leads to a blame game between shippers and carriers. Sabrina’s message was clear: better data helps us understand and solve these issues.

Regarding cost, the goal is straightforward – move goods as cheaply as possible without sacrificing quality or reliability.

Sabrina then delved into the critical measure of truckload utilization, underscoring the industry's drive towards maximal space efficiency with a simple yet potent phrase: "No one wants to pay for shipping air." This sentiment encapsulates a broader industry challenge as firms strive to optimize every aspect of transportation to combat rising costs.

Sabrina concluded with straightforward advice for those doing business with companies like hers: "Keep looking ahead. Be ready with solutions before problems arise. Those who help us think differently about our supply chain are the ones who add the most value. We're all about keeping things moving smoothly and costs in check."

Navigating Freight Markets and Bid Cycles

Josh Phelan, SVP of finance and pricing at J.B. Hunt, and Craig Fuller, CEO of FreightWaves, didn't mince words in their discussion about the current state of freight markets and bidding strategies.

Their assessment was honest – the market isn't looking great. Josh drilled into critical metrics like rejection rates and the supply/demand ratio. He pointed out that we're not seeing the carrier drop-off needed to balance out the rates. Carriers are sticking around, even with spot rates as low as $2.21 per mile, which is longer than expected.

Craig drew parallels to the 2015 recession but with a critical difference: "The rates now swing much wider. We're seeing fluctuations roughly three times what we saw back then, making today's market especially tough to navigate."

But it wasn't all doom and gloom. Josh had practical advice for navigating these choppy waters during the bid season. His strategy? Begin with a clear customer-focused approach, setting out expectations from the get-go. Then, pivot to asking the customer what they need most. This approach helps create a customized pitch that can hit the mark.

Entrepreneurial Insights for Growth

A highlight at this year's F3 was the town hall with Brad Jacobs, executive chairman for XPO, Inc. Forgoing the usual script, he opened the floor to questions, addressing everything from business scaling to personal queries about making it with a modest start.

Here are key insights from the session:

Facing Problems Head-on:

He emphasized mental resilience in entrepreneurship: "When you're building a business, facing problems is inevitable. The key is to tackle them head-on and not let them take over. It's about mindset and staying level-headed through the challenges."

The Foundation of Scaling—People:

He shared that the secret to successful scaling lies in the team: "A company grows with its people. Look for individuals who are diligent, driven, collaborative, and honest. When you trust your team, and they trust each other, you can achieve remarkable things. It’s all about nurturing the right culture."

Understanding the Nature of Freight Brokerage:

He provided an insider's perspective on the industry: "Many assume that good times will last forever, but freight is inherently unpredictable. That's exactly why freight brokerage is essential—it thrives on market volatility, and that’s where it adds value."

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Addressing Fraud in the Freight Industry

Kendra Tucker, CEO of Truckstop, delivered a session rich in analysis, tackling the pressing issue of market oversupply. She underscored a significant challenge within the freight industry: the influx of new carriers, with an unprecedented 81,000 entering the market in 2021, signaling a need for market correction.

Kendra pointed to the financial success during the early stages of the pandemic as a cushion that has allowed carriers to weather the current oversupply. This resilience has delayed the market's natural rebalancing.

Highlighting the extremes in the market, she noted the anomaly of record highs in fraud and capacity without a corresponding drop in rates. "For the market to correct the oversupply, spot rates need to lower," she explained, indicating that a gradual market correction is in motion. The correction is seen in the uptick in bankruptcies this year, which exceed those seen in 2019, suggesting a shift may be underway.

The issue of fraud, exacerbated by the oversupply, was a focal point. Kendra revealed that Truckstop has been actively combating this rise in fraudulent activity, with thousands of accounts removed to uphold market integrity. In drawing a comparison to the role of credit card companies in e-commerce, she affirmed Truckstop’s dedication to safeguarding its users against fraudulent practices.

Until Next Year 

As the buzz of F3 fades into the rearview, the conversations don't end here. From the flood of 'oversupply' chats to the deep dives into tech's role in freight, the festival was more than just a meet-up; it was a think tank in motion. Our team left inspired, with our minds brimming with insights from the best in the biz.

Whether the casual catch-ups by the coffee stand or the intense strategy sessions, this year’s F3 reminded us that we’re all in this big, sometimes chaotic, but always moving world of freight together. So, until next year, keep those wheels turning, stay nimble, and let’s keep the conversation going. Because if there’s one thing F3 has shown us, it’s that the future of freight is a road we pave together.

If you’re not flying to Chattanooga in November, you are missing out. 

From November 7-9, 2023, the Scenic City will host the second annual F3: Future of Freight Festival. Set within the heart of Freight Alley and the birthplace of FreightWaves, the Chattanooga Convention Center will brim with experts, entrepreneurs, and leaders, all eager to share insights and spark conversations on the latest advancements and challenges.

Wondering which sessions to earmark? Here are three that you shouldn’t miss:

1. Fireside Chat: Tackling Unique Supply Chain and Logistics Challenges

Every shipment has its demands, but what happens when those demands become uniquely challenging? 

Ramona Hood of FedEx Custom Critical takes center stage to discuss these intricate dynamics. Her journey from an entry-level role to becoming the first Black female CEO of a FedEx operating company promises to offer inspiration and valuable insights into the nuanced world of special shipments.

2. Fireside Chat: Special Freight: The Niche Demands of Perishable eCommerce Freight

Juan Meisel from Grip has a wealth of experience navigating the intricacies of specialty shipments. His expertise in crafting logistics solutions for unique demands, such as ButcherBox's premium offerings, will shed light on the world of niche freight. Join the discussion on creating robust systems that ensure product quality and customer satisfaction, even when the stakes are high.

3. Keynote: What Happens in China Doesn't Stay in China - The Ripple Effects of the Chinese Economy on Global Supply Chain Stability

China stands as a monumental player on the global stage, but deciphering its economic heartbeat can be a daunting task. 

Leland Miller of China Beige Book International will demystify this, providing insights that span over a decade of research. His session promises to be an enlightening look into the subtleties and strengths of this economic powerhouse.

And… Don’t forget to swing by the Denim booth 

If you're attending F3, don’t forget to visit booth 11 in the main hall. Our team at Denim will be showcasing our latest AI-driven Invoice Audit and flexible factoring benefit. Plus, if you're up for a breather, challenge us to a round of foosball. We're keen to connect, share our innovations, and enjoy some friendly competition.

Mark your calendars for F3! See you there!

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