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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Carriers, freight brokers, and logistics professionals converged in Houston, Texas, earlier this month for a sole purpose: growth. Even amidst a challenging freight economy, the FreightFest atmosphere radiated determination, resilience, and a commitment to evolve.

Our team from Denim experienced the spirit of FreightFest firsthand. Unlike other conferences, this event was laser-focused on growth through learning and networking. Every session was buzzing, with attendees diligently noting key insights and encouraging their peers. It wasn't just about absorbing knowledge; it was about fostering a community.

Let's dive deeper into some of the most impactful points from the conference:

1. Embracing technology to stand out

"You want to make it so easy for someone to do business with you that they don’t have a choice." - Adam Wingfield, Founder of Innovative Logistics Group LLC.

Integrating technology into operations is no longer optional. Adam suggested using real-time cameras inside reefers, illustrating the proactive measures carriers can take. Such advancements make the process transparent for customers, allowing them to track their product conditions. 

It's the age of convenience, and as rightly pointed out, even a hint of tech can edge out traditional advantages like being a family-owned business.

2. Excellence in service as a deal-breaker

"Shippers are going to be more selective with brokers. They will look for a specific kind of service, and we will see service offering push farther and farther.” - Kyle Litner, Strategic Advisor vHub, Rocket Shipping.

It's about more than just successfully delivering a load but providing a 5-star experience. Shippers in an oversaturated market have a plethora of options. While competitive pricing is crucial, what will set businesses apart is the ease and efficiency of their service.

3. Laser-focused business strategy

"We’re closer to the market shifting than not. If you know your business, you will attract the right business out there.” - Chris Jolly, The Freight Coach.

Awareness of market trends and a deep understanding of one’s business is pivotal. As observed in recent months, market dynamics have shifted. However, businesses attuned to their core strengths and market needs remain successful.

4. Cold calling is still the most effective way to build a business. 

“Cold calling is the most effective way to develop business. You have to get on the phone. Make 10,000 calls in a few months.” - Desmond Clark, Bear Down Logistics. 

And who said cold calling is dead? The personal touch of cold calling remains unbeaten in business development. The unanimous agreement on its effectiveness during the Broker Panel reinforces its importance. 

5. Patience in business development 

"Building a successful business requires patience and adherence to four core principles: 1. Call or meet face-to-face as much as possible. 2. Believe in yourself and stay positive. 3. Showcase unwavering persistence and consistency. 4. Demonstrate resilience in the face of challenges. " - Tyson Lawrence, President and Founder of Diablo Freight Ventures

Relationships and trust don’t happen overnight. Patience is key. Staying positive, consistent, and pushing through tough times can set a broker apart. 

6. Transitioning roles for scalability 

"Step out of the role of being the all-star player to being an all-star coach to make my new team be all-star players.” - Kamard Johnson, CEO of GTT Commercial Tires 

In the early stages of a business, CEOs often wear many hats, driving growth with their direct involvement. But as a company scales, successful leaders recognize the need to transition from being the leading player to a guiding coach. This shift is pivotal for sustainable growth. 

To effectively make this shift, CEOs should prioritize hiring talent that aligns with the company's vision, empower them through trust and delegation, and foster open communication. This approach not only allows leaders to focus on broader strategy but also ensures that the entire team can evolve into all-star players, collectively driving the business forward.

7. Staying in business is the ultimate goal 

"All markets have strong and weak cycles. Do not allow that to force you into fear or unnecessary decisions. The ultimate win in business is staying in business.” - Kamard Johnson, CEO of GTT Commercial Tires. 

Market fluctuations are inevitable. Yet, enduring the ebbs and flows without succumbing to panic is the mark of a resilient business and business leader. 

8. Reducing owner dependence

"You are the lid on your business's value-creating potential. The only way to remove the lid is to give your influence and authority away to your team.” - Spencer Tenney, President and CEO of Tenney Group.

To maximize growth, business leaders must transition from being the central figure to facilitating team potential. A company that's overly reliant on its owner can be vulnerable. By empowering and upskilling their teams, owners not only elevate their business's potential but also make it more attractive to potential buyers and investors.

9. Selective clientele

"Play with those that want to play with you.” - Mitchell Ward, CEP of MW Logistics. 

Choosing the right clientele is as vital as offering the right services. Time and resources are wasted on clients who aren't a good fit for your business model or values. Prioritizing clients who align with and appreciate your ethos ensures better collaboration, smoother operations, and increased profitability.

10. Technology as a Growth Catalyst

"We’ve reached 92% automation with accounting software. The goal is not to replace people. You want people to stay and continue to do good work.” - Mitchell Ward, CEP of MW Logistics. 

Embracing technology shouldn't equate to sidelining human resources. Instead, automation should be viewed as a tool that alleviates routine tasks, letting employees focus on value-added roles. By optimizing processes, technology allows businesses to scale efficiently while preserving the integral human touch.

11. Financial Prudence

"We close our books in 3 days. Cash is so important. And make sure no one customer is more than 4% of the business.” -Mitchell Ward, CEP of MW Logistics 

Maintaining financial discipline ensures business longevity and resilience against market fluctuations. Promptly closing books indicates efficiency. Ensuring no single client dominates the revenue stream protects against potential losses. This approach fosters diversification, buffering the business against unexpected downturns.

12. Embracing Change

"Don’t be afraid to be redirected.” – Jorie Myers, Founder of Transportation & Logistics Clubhouse and Atlanta Dispatch

Change is the only constant, especially in dynamic industries like freight and logistics. While it's vital to have a direction, flexibility in responding to market shifts, technological advances, or client needs can open doors to innovative solutions and untapped market segments, fostering growth and sustainability.

These events aren't just about the latest in tech or business strategies. They're about the handshakes, the exchanged business cards, and the real conversations. In an era dominated by digital interactions, there's something irreplaceable about meeting face-to-face. Both industry veterans and newcomers walk away with fresh insights and meaningful connections. It's a testament to the enduring importance of coming together to share and learn.

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Inefficiencies in Accounts Payable can feel as tricky and intimidating as mythical monsters. Just when you think everything's running smoothly, these AP beasts emerge from the shadows, threatening to disrupt your back-office and drain your cash flow.

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These sneaky troublemakers hide behind the scenes, throwing wrenches into your workflows when you least expect it. If your office has been feeling the weight of a productivity slump, it might be the work of four notorious AP monsters:

• The ScatterSphinx of Disorganized Documents
• The Phantom of Past Processes
• The Tardy Troll of Late Payments
• The Manual Date Entry Medusa

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Fear not! Denim’s Ectomobile is here to help you conquer those back-office demons, banishing time-sucking ghouls from your brokerage once and for all. Let’s take a closer look at these troublemakers—and how to defeat them! Or, take the quiz to find out which monster is haunting your back office!

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1. The phantom of past processes 

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What it is: 

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This ghostly presence haunts your AP operations with outdated, manual processes. It keeps your office stuck in the past, preventing you from embracing modern, automated solutions. You might recognize its whispers of "we’ve always done it this way" or “I prefer doing it manually.”

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How it hurts you: 

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The Phantom drags down your efficiency. Tasks that could be automated—like processing invoices or updating payment statuses—become time-consuming and prone to mistakes. This slows down your cash flow and ties up your team's valuable time.

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How to defeat it: 

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Adopting new software and automation tools can send this Phantom packing. Digitizing workflows like payment processing speeds up operations, reduces human error, and frees up your team to focus on more valuable tasks. Automation not only saves time but also improves accuracy, ensuring everything runs smoothly.

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For example, solutions like Denim’s tech-forward factoring tools eliminate manual input for tasks such as sending payments, data entry, or updating carriers on payment status. With automation, you can reduce time spent on these tasks by up to 75%, while boosting the accuracy and speed of your AP processes.

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Begone, dark phantom! You have no hold here!

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2. Scatter sphinx of disorganized documents 

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What it is: 

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The ScatterSphinx is a trickster that thrives in chaos, turning your document management into a confusing labyrinth. It hides rate confirmations behind endless email threads, buries proofs of delivery under piles of paperwork, and scatters crucial files like leaves in the wind. Searching for the right document? The ScatterSphinx will have you solving riddles in your search bar, wasting precious time.

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How it hurts you: 

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This monster creates chaos and confusion, especially when you need documents quickly. The endless hunt through emails, misplaced files, and paper stacks becomes a major time sink, leading to missed deadlines and frustrated team members. When the ScatterSphinx is on the loose, efficiency takes a big hit.

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How to defeat it:

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Beat the ScatterSphinx by setting up a simple, centralized system for managing documents. Use a document management tool—whether it’s a cloud platform, dedicated inbox, or specialized software—to keep all your files in one place. Organize them clearly (e.g., rate confirmations, proofs of delivery, invoices) with easy-to-understand names, so you can find what you need without getting lost in the clutter.

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For example, Denim’s Document Inbox streamlines this process, letting you collect and manage load-related documents in one spot. No more digging through email threads or chasing down files—just quick access to what you need. With features like automated document attachments and a user-friendly upload portal, you can get paid faster and cut down on time-wasting manual tasks.

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ScatterSphinx, your riddles are no match for a well-organized office!

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3. The Tardy Troll of Late Payments

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What it is:

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The Tardy Troll loves to lurk around your payment processes, causing delays and holding up payments to carriers. This stubborn beast thrives in confusion, slowing down approvals and making sure that carriers wait longer than they should to get paid. When the Tardy Troll is around, smooth cash flow and timely payments become distant dreams.

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How it hurts you:

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Late payments frustrate carriers, strain relationships, and can even lead to losing valuable partners. When carriers aren’t paid on time, it impacts their ability to stay on the road and manage their cash flow. Plus, dealing with the aftermath—like answering calls from frustrated carriers or processing late fees—wastes even more time and energy.

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How to defeat it: 

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To banish the Tardy Troll, streamline your payment processes and consider using automated payment systems. Set up clear payment schedules and make sure your team has easy access to payment status updates, so they’re not stuck chasing down answers. Automated systems can help ensure payments are made on time, reducing manual errors and speeding up the process.

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With Denim’s integration with MCP, you can pull in carrier data and pay carriers according to their preferences, ensuring everyone gets what they need without delays. Plus, Denim offers QuickPay without additional fees, allowing brokers to pay carriers as quickly as 1-2 business days. Even better, brokers can add a fee for QuickPay services and keep the profits, turning timely payments into a potential revenue stream.

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Tardy Troll, your days of slowing down payments are over—Denim’s QuickPay sends you packing faster than ever!

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4. The Manual Data Entry Medusa 

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What is it: 

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The Manual Data Entry Medusa thrives on repetitive, mundane tasks, trapping your team in a tangle of duplicate data entry. Her tangled mane of invoices, spreadsheets, and forms forces your team into endless cycles of typing, re-typing, and double-checking—turning even the most efficient operations to stone with boredom and inefficiency.

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How it hurts you: 

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Manual data entry is slow, tedious, and prone to errors. It drags down your productivity, creating delays in payment processing and increasing the chance of costly mistakes. When your team is stuck re-entering data across multiple platforms, it’s tough to keep things running smoothly or focus on more strategic tasks.

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How to defeat it:

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Beat the Manual Data Entry Medusa by using automation tools that remove the need for tedious, repetitive tasks. These tools help eliminate data silos by seamlessly connecting different parts of your workflow, ensuring that information flows smoothly between systems. This reduces the need for manual input and ensures that your team isn’t bogged down by duplicating data across platforms. If automation isn’t an option, using templates and standardized processes can still cut down on time spent on these mundane tasks.

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With Denim’s automation tools and integrations, simplifying data entry is easier than ever. Denim integrates with over 16 TMS platforms and carrier onboarding systems, making setup a breeze. What once took hours of duplicative work is now reduced to just a single click. You can trust that load data pulled into Denim is accurate, reducing human error and ensuring jobs are processed correctly the first time. This means faster payments and avoiding overhead costs, leaving the Medusa’s grip far behind.

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The Manual Data Entry Medusa, your days of trapping our team in endless data entry are over—Denim’s automation turns you to stone, and not the other way around!

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Ready to Send These AP Monsters Packing?

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With the Phantom of Past Processes, ScatterSphinx, Tardy Troll, and Manual Data Entry Medusa no longer lurking in your back office, you can finally breathe a sigh of relief. By adopting the right tools and strategies, you can turn these pesky creatures into mere bedtime stories—no longer haunting your daily operations.

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From automating tedious tasks to streamlining document management, a little preparation and the right technology can go a long way. And if you’re looking for an ally in this quest, Denim’s solutions are here to help you conquer the toughest AP challenges with ease.

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So why keep battling these back-office beasts alone? Connect with one of our experts today, and let’s banish inefficiencies together—no monster is too scary when you’ve got the right team on your side!

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Farewell, AP monsters—your days of terrorizing operations are over!

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Leading a freight and logistics company is risky. Unexpected challenges surface that can be catastrophic. The recent closure of Meadow Lark and Convoy, after 40 years of reliable service, serves as a reminder.

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A complex and interrelated economy like ours means the stability of our business partners & stakeholders, especially freight brokerages, can have a ripple effect on our own success. If you're working with a brokerage that suddenly ceases operations, what's the path forward?

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Is there a way to safeguard your dues in such situations? Let’s explore this further.

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Warning Signs A Business is Going Under

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Keeping a close eye on your cash flow is a no-brainer, but fleets often overlook the need to evaluate risk in their business partners

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In a tight market, the last thing you’d want is to be caught unaware when the brokerage or shipper that owes you for last week’s loads files for bankruptcy. Abrupt closures cost you business time and resources. 

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To avoid surprises, keep these things in mind: 

1. Fluctuating Payment Periods: If your broker's payment periods are trending upwards, such as taking 10 days, then 15 days, then 20 days, and so on over weeks or months, it's a cause for concern. A rising Day of Sales Outstanding (DSO) can indicate potential cash flow problems.
2. Frequent Changes in Management: A revolving door at the executive level can signal internal issues.
3. Monitor the news: Keep an eye on the news for negative press signals. Look out for news on layoffs, bad funding rounds, or slowing operations.
4. Withdrawal from Long-term Contracts: Pulling out of or hesitating to enter long-term commitments is a warning sign of internal changes coming. 
5. Sudden Downsizing: A quick staff or operational scale reduction may signal a company’s inability to cover salaries. ‍
6. Lack of Transparency: If a company is reluctant to share financials or other critical information, proceed cautiously.

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Freight Collections After a Bankruptcy

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So what if it’s too late and your partner closes down but owes you money? Don't panic. There's a roadmap to recover your dues even after a partner's bankruptcy.

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1. File a Claim Against the Broker Bond ASAP.

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Freight brokers must have a broker bond (often referred to as a BMC-84) to operate legally. This bond is in place to ensure brokers fulfill their financial obligations to carriers and shippers. 

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If a broker defaults or goes bankrupt, carriers can file a claim against this bond to recover their dues. 

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Unfortunately, filing a claim doesn't always guarantee a full payout. The total amount might not cover all claims because there might be multiple claims against the same bond. 

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2. Reach Out to Shippers Directly.

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Directly contacting the shipper is likely the fastest route to recover your dollars. 

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Look at any documentation you have on the load and see if you can find a direct point of contact at the shipper. If you find a contact, call them ASAP to explain your situation. Be prepared to show the Proof of Delivery, invoice, and rate confirmation. 

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If you don’t have a personal contact, call the main line and look for the billing department. 

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Shippers have a vested interest in maintaining operational continuity. They don't want disruptions, and paying carriers is part of that smooth flow.

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3. Consider a Collections Agency. 

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Engaging a professional can sometimes expedite recovery. Collections agencies have the expertise and resources to pursue outstanding payments aggressively. They operate on a commission basis, typically earning a percentage of the collected amount.

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If you're uncertain about which agency to work with, reach out for recommendations. Leveraging trusted industry contacts can point you to reputable agencies.

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4. Hire a Lawyer and Take the Case to Court.

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When the owed amount justifies the investment, legal recourse can be the necessary path. Sometimes, the only remaining option is the court. It's a route that demands time and money. However, with a solid case, carriers frequently find favorable outcomes.

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Before pursuing collections and the court system, ensure the amount justifies your time and money investment. Bankruptcy proceedings can be complicated and prolonged. It's not a situation where a passive approach pays off. 

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Sometimes, it is more profitable to take the financial hit if you have a small amount outstanding. You could make up that cash by investing your time into new business instead of recovering old loads. 

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However, should you decide to pursue collections, swift action is crucial. The sooner you act, the better positioned you'll be to recover your funds. Remember, multiple creditors might be vying for the same limited pool of resources.

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Preventing Collections Headaches 

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Working with a Factoring Company  

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Staying on top of warning signs for all your customers and partners is tough. It requires time, due diligence, and regular communication. You may want to consider protecting your business with factoring. 

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Factoring is a financial solution where companies sell their invoices to a third party (a factor) at a discount. The factor advances the amount owed within days to use to pay for fuel, repairs, and grow your fleet. The factor then assumes the responsibility of collecting the invoice amount from the shipper or brokerage.

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If you use a factoring company with a great credit and risk management team, they will act as your risk barometer. A great factoring company will proactively notify you if they think credit is deteriorating for a customer or broker.  

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Partnering with a factoring company, especially one like Denim, offers several benefits:

• Immediate Cash Flow: Instead of waiting on uncertain payments, especially in precarious economic times, you receive an immediate influx of cash, strengthening your financial position.
• Risk Assessment: A thorough evaluation of the client’s customers is conducted before entering into a factoring agreement. This adds an extra layer of due diligence to help identify risky customers.
• Expertise in Debt Recovery: Factoring companies have experience in collections and may have established procedures for recovering funds from bankrupt entities, giving them an edge in maximizing recovery rates.
• Ongoing Monitoring: Factoring companies often continue to monitor the financial health of both the client and the client’s customers, providing an ongoing risk assessment.
• Business Analytics Dashboard: Tracks key metrics like slowest paying customers and DSO so that you can track the financial health of your business. 

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By effectively using factoring as a financial tool, businesses can maintain liquidity and gain a valuable partner in assessing and monitoring the financial health of their clients.

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Schedule a Demo with Denim to learn how our best-in-class credit risk team can help protect your business from unpaid invoices. 

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Credit Information to Evaluate Risk

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Steve Hunt asked a good question about risk evaluation during our recent podcast episode with The Freight Coach. Whether you rely on a factoring company or take the self-financing route, having the right information is crucial for gauging financial risk.

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When partnering with a factoring company, they spearhead gathering the necessary data. However, given that many shippers operate as privately held entities, obtaining comprehensive financial details isn't always straightforward. Many companies aren't extensively profiled on credit reporting platforms such as Experian or other online databases.

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To thoroughly assess risk or collaborate effectively with your factoring company to determine a suitable credit line, it's imperative to directly engage with your customer to gather the following details:

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1. Company and Contact Information:

• Legal Name, Doing Business As (DBA), and Business Structure*
• Essential contacts, including the CEO, CFO or Controller, Procurement, and Accounts Payable*

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2. Banking and Financial Data:

• Bank Name
• Account Number
• Average Monthly Revenue
• Existing Loans or Debts

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3. Trade References:

• Supplier Names, Credit Limits, and Payment Terms*

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4. Legal Insights:

• History of bankruptcy and ongoing legal proceedings

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5. Key Financial Metrics and Documents:

• The most recent audited financial statements, encompassing the Balance Sheet, Income Statement, and Cash Flow Statement
• Tax returns spanning the previous 2-3 years
• Bank statements covering the last 6-12 months
• Vital financial indicators such as the Debt-to-Equity ratio, Current Ratio, and Profit Margin
• Detailed Accounts Receivable and Payable Aging Reports

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This checklist is designed to help you seek detailed information from your shippers. While you might not get every piece of data you ask for, simply asking can provide more insights than if you didn't.

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However, gathering this information is just the first step. It's crucial to cross-verify these data points with reputable credit bureaus such as Ansonia, Equifax, Experian, or Moody’s.

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Having such detailed data at your fingertips allows you to make well-informed decisions regarding financial risks. It also provides your factoring partner with the insights needed to swiftly approve essential credit limits.

Navigating Bankruptcies with Speed and Diligence

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Operating in a landscape of financial intricacies demands vigilance and proactive planning. When business partners face financial troubles, it's vital for you to quickly identify red flags and be equipped with tactics to recover due amounts. 

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However, simply reacting to challenges isn't enough. Proactive financial solutions, like factoring, are pivotal in ensuring stability. 

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By utilizing such avenues, logistics companies can unlock immediate cash flow, eliminating the often prolonged wait and unpredictability of payments. Teaming up with a financial partner like Denim adds another layer of assurance. With features like ongoing credit monitoring and collections services, you are better equipped to weather the current freight market. 

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Disclaimer: The contents of this article should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult with counsel concerning your situation and specific legal questions.

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Last quarter’s freight market trends are... confusing.

The Q3 Freight Market witnessed a combination of favorable and unfavorable trends, which even puzzled the industry analysts. 

However, one thing is clear. The oversupplied market continues, and we still feel its consequences. So, let's take a closer look.

Consumer Confidence and Economic Resilience Juxtaposition  

Consumers drive the economy, so their confidence and spending patterns are indicators for the freight market.

Consumer confidence declined for the past two months. Expectations for the next six months dropped below the recession threshold of 80, signaling less confidence about future business conditions, job availability, and incomes. 

Consumers are generally concerned with rising prices, but for groceries and gasoline in particular. Price changes impacting consumers include: 

• Food at 4.3% YoY increase
• Energy at 3.6% YoY decrease
• Gasoline prices were the largest contributor to inflation 
• Shelter also contributed to the increase, which rose for the 40th consecutive month 

Yet, despite these concerns, the broader economy remains surprisingly resilient. The American consumer is keeping the overall U.S. economy afloat for the time being with substantial spending on services such as concerts (i.e., the Eras Tour), travel, leisure, and various services. 

Brokerages and fleets may consider expanding their business to include service-based industries, considering spending is still strong in this area.

Loose Capacity Remains Despite Stronger Demand

The good news: August demand was relatively strong compared to the previous seven months. Progress is progress. 

The jump in demand from July to August is relatively standard historically, thanks to the drop in productivity post-Fourth of July. Hot dogs > loads. 

Long haul demand drove most of the increase, suggesting shippers replenished inventories downstream. Inventory bloat that plagued the industry earlier this year is dwindling.

The bad news: August demand was still lower than August 2022. And the increase was not significant enough to tighten capacity in the market and positively impact rates. 

The Rise in Diesel Prices: A Closer Look

The DOE/EIA reported that diesel prices, although down $0.243 from a year ago, have been upward since July.

This trend has implications for carrier operations, particularly those in the spot market, without protection against these price hikes. Higher fuel costs inevitably squeeze carrier margins, potentially influencing freight rates and carriers' decisions about which loads to accept.

Deciphering Ocean Volumes and the State of Imports

A key barometer for the freight sector is U.S. import demand. Ocean booking volumes are down over 35% since its peak on August 1st, indicating a significant slowdown in U.S. import demand.

While this shows a decrease in demand, ocean carriers are countering by using rejections to increase their utilization rates. This strategy may affect international freight rates and availability in the coming months.

Anticipating Q4: Key Trends and Their Implications for the Freight Market

Q3 presented a blend of challenges and opportunities for the freight sector. Consumer confidence saw a dip, yet the broader economy showcased surprising resilience.

August saw an uptick in demand, though not enough to tighten the saturated market. And the outlook for demand looks bleak, with the market leading indicator, ocean booking volumes, declining 35%. 

The upcoming Q4 faces headwinds. Persistent inflation, massive debt, minimal savings rates, and student loans could keep us anchored at the bottom of the market going into 2024. 

It's crucial to remember that the freight market is inherently cyclical. We've weathered market lows before. Now is the time to deepen carrier relationships, address operational gaps, and ramp up prospecting efforts. Brokerages that strategize and endure the upcoming quarter will come out stronger in 2024 and beyond.

Leaders constantly balance two goals: building strong client relationships and keeping their business stable.

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This balance gets tested when customers like Fortune 100 companies ask for longer payment terms.

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The Fed's rate hikes this year have constricted financial liquidity for businesses. Many shippers rely on bank loans, so when the Fed rates increase, they grapple with higher bills, straining their budgets.

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To handle these money pressures, shippers are thinking differently. Some propose longer payment terms, from the usual 30-day cycle to 60 or even 90 days. This shift can help their bottom line, making their financial reports look better or allowing them to make better offers to their clients.

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For brokers, it's about tactful negotiation. They aim to keep clients happy and close. But they also need to watch their company's financial well-being. Striking the right balance is an essential skill.

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Key Takeaways:

• The Fed's rate hikes have tightened finances, prompting shippers to extend payment terms, impacting broker’s cash flow.
• Brokers can negotiate using various tactics like early payment incentives, structured plans, and more. 
• Maintaining a balance between client demands and business sustainability is crucial. While adapting to client requests is essential, ensuring the company's growth and financial health sometimes requires making tough decisions.

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Why Shippers Extend Payment Terms

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Extending payment to suppliers is a popular practice for companies to improve their working capital performance. When payment terms are 90 to 120-days, shippers are able to hold on to their cash longer and use as needed. 

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When you receive the dreaded email with the subject line "payment terms," your first instinct will be frustration. Take a deep breath and focus on understanding the payment situation. 

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Reasons for changing payment terms can vary from temporary cash flow hiccups to a permanent policy. First, jump on the phone and ask specific questions to understand the situation.  

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A few reasons why your clients may be asking for longer payment terms: 

• The cost of operating has increased as a result of the Fed hikes. 
• Clients might face cash flow challenges, making it tough to pay immediately.
• They could be grappling with unexpected expenses.
• Some may need more buffer time due to internal processes.
• The new accounts payable procedure dictates a new payment terms requirement.

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Why Negotiating Supplier Payment Terms Matters

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Extending payment terms helps your customer but has tangible repercussions for your business. 

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Waiting longer for payment significantly disrupts cash flow and strains business operations.

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Additionally, longer payment terms can lead to increased administrative costs as the burden of tracking and managing delayed payments rises.

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One of the more critical impacts of late payment or longer terms is the Days Sales Outstanding (DSO). This key metric indicates the average number of days it takes for a company to collect payment after a sale. Extended payment terms will increase DSO.  

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For freight brokers, a high DSO has specific ramifications:

• Reduced Liquidity: A high DSO means payments are coming in slower, which can hamper the broker's ability to pay carriers on time or invest in business growth.
• Increased Reliance on Credit: Brokers might need to rely more on credit facilities to maintain operations, which can escalate borrowing costs.
• Operational Disruptions: Delayed payments can disrupt operations, potentially affecting service delivery and the ability to take on new clients.

By understanding the impacts of longer payment terms on your business, you are better equipped to find a solution with your customer. 

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4 Payment Terms Negotiation Tactics

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Finding a mutually beneficial solution is vital to keeping the customer while protecting your business and financial goals. 

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The goal is to go into the conversation with 1-2 solutions, including your best-case scenario and a backup idea. 

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A few solutions to propose include: 

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1. Offer incentives for early payment

Encourage timely payments by making them appealing. According to a survey, 42% of leaders state that capturing early payment discounts is a priority. Offering discounts or priority services to clients who clear their bills promptly can be a significant motivator in today's economy.

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2. Setting Up a Payment Plan

For clients daunted by immediate total payments, consider introducing structured payment plans. This solution breaks down the owed amount into more manageable installments.

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3. Charge a fee for longer payment terms 

An extended payment term impacts your DSO. If clients lean towards longer terms for various reasons, consider adjusting rates or charging a fee. Increasing your profit helps mitigate a longer DSO's financial ramifications and risks.

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4. Negotiate for more business

An effective counter to prolonged payment durations can be negotiating for additional business. This strategy can yield a balanced outcome, be it a larger shipment volume or extended contract terms.

Coming prepared to the meeting with a couple of solutions will make for a more productive discussion and show initiative. Remember to propose ideas that benefit both parties to find mutual ground. 

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Negotiating Payment Terms Successfully

Initiating the Conversation

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Ideally, negotiations should be conducted in-person or at the very least, over the phone. Opening a dialogue about payment terms can be intricate, and you don’t want anything to be misread over email. 

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When starting this conversation, the emphasis should be on finding a middle-ground solution, keeping an even keel, and reinforcing the value of the ongoing partnership.

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To ensure the conversation is both productive and harmonious, consider the following email template:

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Email Template:

Subject: Payment Terms Discussion

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Hi [Client's Name],

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I hope this email finds you well. [Personalize the email and express your gratitude for their business]

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I'm reaching out to discuss the payments terms in your contract [personalize to reflect who is suggesting the change and acknowledge the reasoning]. As you know, we work hard to retain the best carrier relationships to move your loads reliably and on-time. Part of that is paying drivers quickly, so they can cover fuel and upkeep. 

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Knowing this, we would like to propose a couple of mutually beneficial solutions to the current [or proposed] payment terms. 

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Are you available to discuss this week? 

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Warm Regards,

[Your Name]

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By laying the groundwork for a positive and collaborative conversation, freight brokers can effectively manage and strengthen their business relationships during payment term negotiations.

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Tips for Navigating the Conversation 

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Negotiating with clients can sometimes feel like a tricky dance, with both sides aiming for the best terms. But the secret to a successful negotiation is simpler than you think: approach it as a partnership.

Follow these tips for a productive negotiation. 

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1. Know Your Strengths

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Before diving into the negotiation, think about your competitive edge. 

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What makes your business a good partner? You may be an expert in a niche or local area. Maybe you’re working with specialized equipment and regulations. 

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Your strengths are negotiation tools. The clearer you are about why a vendor would want to keep you happy, the better you can discuss.

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2. Start Friendly

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Kick things off on a bright note. Inquire about their family. Maybe there is a local football game you can talk about. Setting a friendly tone from the get-go can make the whole conversation easier.

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3. Show gratitude

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Take a moment to let them know how important they are. 

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Mention something like, “Your business has helped my company grow.” It's always good to remind them that their business is valued.

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4. Be Clear and Honest

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When it’s time to talk about changing payment terms, be upfront. 

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Explain how an extended payment term will impact your business and carrier relationships. Dive deep into how your carrier relationships are built and retained by quick payments. 

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Share your reasons. Clear communication can lead to mutual understanding, making it easier to find the middle ground.

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5. Frame a Win-Win Offer:

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When you put forward your new payment proposal, ensure it's framed in a way that benefits both you and the vendor. 

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By highlighting the advantages for each party, you set the stage for a productive, mutually satisfying negotiation. Remember, the goal is to find terms that make both sides feel like they're gaining value.

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6. Stay Open

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Sometimes, the first offer doesn't stick, and that's okay. 

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If they're hesitant, be prepared with backup plans. Could you propose a trial period for the new terms?Or suggest staggered payments? Flexibility can make all the difference.

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8. End on a Good Note

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Wrap things up with optimism. A sentiment like, “We’re excited about our future together,” reinforces the idea of partnership and growth.

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Successful negotiations are all about collaboration and mutual respect. When both parties feel acknowledged and valued, finding common ground is easier.

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Freight Factoring as a Solution

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Unfortunately, freight and logistics companies don't have much bargaining power. Shippers can easily find another partner to meet their needs and for even cheaper. If a customer is unwilling to meet you halfway, you can seek cash flow support by factoring. 

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You don't necessarily have to wait out long payment terms. By utilizing freight factoring, you can receive an advance on the payment. In this arrangement, the factoring company provides the upfront payment, collecting the due amount directly from the client.

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Alliance Logistix faced this situation when a long-time client moved from 30-day to 90-day payment terms. Co-Founders, Alex and Natalie, chose to work with Denim to maintain their cash flow and retain their customer relationship. As a result of the added automation tools with the freight payment system, Alliance Logistix has increased their month over month volume by 35%. Win-win for everyone. 

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Navigating the Balance Between Client Relations and Business Sustainability

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In today's shifting financial landscape, balancing client demands with fiscal responsibility becomes paramount. The ripple effects of these changes challenge even major shippers to rethink traditional payment structures.

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Brokers face the dilemma of catering to client requests while safeguarding their operations from extended payment terms and its implications. The key? Embracing strategies like early payment incentives and structured plans. For those seeking an effective buffer against extended terms, factoring solutions emerge as a powerful tool.

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At the core, it's about fostering trust and mutual respect in client partnerships. With clear communication and strategic flexibility, brokers can navigate these challenges, ensuring both relationship integrity and business growth.

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Looking for a factoring solution? Schedule a demo with us today and explore how Denim can support your business needs.

Details matter.

However, many logistics companies admit to incorrect payment information. A report from ControlPay found that only 17% of shipping invoices are accurate.

You spend hours securing new lanes. You’re diligent with your communication and deliver impeccable customer service. You complete jobs with safe and punctual deliveries. Yet, the final step— accurate invoicing and payment—sometimes falls short.

Freight payment and invoicing are more than just paperwork. Many shippers engage freight brokerages and 3PLs to avoid managing carrier payments. This adds value for shippers by sparing them countless hours in manual auditing and could reduce their staffing needs.

A single invoicing error from a brokerage or 3PL can jeopardize financial standings and hard-earned trust. Thankfully, there's an antidote: freight audit software safeguards against such payment slip-ups.

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Key takeaways: 

1. Only 17% of shipping invoices are accurate. So there's a pressing need for meticulous document review in logistics.
2. Freight audits address financial discrepancies. This fortifies trust, enhances operational efficiency, and solidifies client relationships.
3. Automated audits with AI reduce costly overhead. Plus, they ensure accuracy.

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Common Mistakes in Freight Payment and Invoicing

Accurate freight invoicing and payments are essential. 

Often, blunders in these areas stem not from negligence but from oversights. Even the most meticulous professionals can overlook nuances.

Here are five common mistakes:

1. Inaccurate Billing Information:

Billing errors can occur due to incorrect input of important information. Incorrect information can include billing address, company name, or account number.

2. Overlooked or Duplicate Invoices:

Operational oversights, particularly during peak business periods, can lead to skipping invoices. Redundant software processes or data syncing issues might generate and dispatch duplicate invoices.

3. Missing Documentation:

Sometimes essential documents are missed or wrongly attached to a load. Such an oversight can lead to inconsistencies during invoicing and payment. 

4. Inconsistencies Between Documentation and Data Entry:

Manual data entry is prone to human error. Payment will likely be wrong when data entry across systems doesn't match documentation. 

Managing freight documentation and invoicing is vital to any logistics operation. While the mistakes highlighted are common, awareness of these pitfalls is the first step to ensuring accuracy.

Consequences of Freight Payments and Invoicing Mistakes

A minor invoicing error may seem insignificant at first glance. However, its ripple effect can profoundly impact a business's finances and reputation.

Imagine a scenario where an invoice gets mistakenly issued for $3,500 when the intended amount was $5,300. A number switch can lead to a $2,300 shortfall. Such a simple mistake can have sizable monetary repercussions, especially if unnoticed.

The complexity escalates when third parties, like factoring companies, come into play. Sending an incorrect invoice to a factor for approval could delay payment to carriers and disrupt your cash flow. Even a day's delay can severely strain your finances.

But the impact isn't just monetary. Payment discrepancies can also leave a permanent mark on your company's reputation. 

Requesting additional payment from a client due to an incorrect invoice amount is unprofessional. Such experiences can make shippers reconsider assigning you further loads. Their rationale? If back-office processes are sloppy, how efficiently can you manage increasing loads?

Remember, invoicing isn't just about numbers; it's also about building trust with your clients.

The Solution: Freight Audit 

Losing focus and missing important details is common when dealing with heavy workloads and multitasking for long periods. Rushing to close deals and collect payments can cause you to overlook critical elements.

Enter the Freight Audit. 

What is a Freight Audit? 

Freight auditing is a detailed review of freight bills, cargo logistics, and associated shipping data. The audit process promotes transparency and accuracy in shipping operations.

While a typical freight audit primarily focuses on financials, its scope is much broader:

• Freight Bill Analysis
• Delivery Accuracy
• Timeliness & Cargo Condition
• Unanticipated Charges
• Carrier Routes

Shippers frequently enlist third-party audit specialists or turn to the expertise of 3PLs and freight brokerages to manage freight audit and payments.

Freight brokers and 3PLs come equipped with specialized knowledge. This prepares them to spot and correct errors easily during the auditing process. With their guidance, they streamline freight operations and educate shippers on best practices and potential pitfalls.

Still, it's vital to note: even with all their experience, they can sometimes overlook a detail.

The Benefits of Freight Audits

Freight audits are crucial in ensuring accuracy and building trust in the logistics industry. Meticulously examining invoicing details safeguards businesses from potential financial discrepancies and reinforces their credibility with clients. 

Here's how audits benefit invoicing processes:

1. Invoice Matching: Freight audits ensure that each invoice aligns correctly with other important documents. This thorough check ensures no wrong billing and every charge is justified.
2. Spotting Mistakes Early: Audits can catch and fix errors before an invoice reaches the customer. By being proactive, companies maintain a strong, trustworthy reputation.
3. Earning Client Trust: Consistently accurate invoices show reliability. Clients trust companies that get it right, helping to strengthen and deepen business relationships.
4. Streamlining Work: Conducting regular freight audits helps businesses operate more smoothly. Everything gets organized and efficient, making it easier for teams to manage their tasks.

Freight audits are the backbone of a transparent and efficient logistics operation, reinforcing accuracy and trust. With such significance attached to these audits, the methods by which they are conducted equally matter.

Understanding the Freight Audit Process: Manual vs. Automated

Two main ways to complete freight audits are manually or by leveraging software-driven automation. 

Manual Approach

Manual freight audits involve rigorous human intervention. This traditional method provides an in-depth, hands-on examination of freight documents and details. While it allows for thorough inspection, it is time-consuming, costly, and prone to human errors. 

As the complexity of freight documentation grows, the possibility of overlooking discrepancies in numerical data and cargo descriptions increases. Errors can occur when cross-referencing various documents, even with the utmost precision and meticulous attention.

Often, larger organizations might employ a team to undertake these audits. An internal audit team introduces a cross-checking system to reduce potential oversights.

AI-Powered Automated Approach

With technological advancements, the freight industry is seeing a significant shift in how audits are performed. Enter AI-based auditing, a method that revolutionizes accuracy and efficiency in this sector.

At the core of this approach is Optical Character Recognition (OCR). OCR technology works by scanning paper documents, like freight invoices, and turning the written or printed text into digital data that the system can read and process.

Once this data is digitized, the real power of AI comes into play. Instead of manually sifting through piles of invoices and cross-referencing various details, AI algorithms analyze this digital information. They are programmed to:

• Check for discrepancies in invoice amounts.
• Verify details against contracts or other relevant documents.
• Identify any errors, inconsistencies, or anomalies.

What sets AI apart from traditional methods is its learning capability. As the system processes more data, it learns and adapts. It picks up patterns, understands common issues, and sharpens its accuracy. This continuous learning means that the AI-based freight audit software becomes even more proficient at identifying potential errors or issues in the auditing process over time.

The benefits of AI-based freight audit software are evident. AI-based auditing can process vast amounts of data at incredible speeds and ensure a level of precision that's challenging to achieve with manual methods. By integrating AI and OCR into freight auditing, businesses stand to gain a more accurate, efficient, and streamlined verification process for their invoices.

Manual vs. Automated Audits

Manual audits, while thorough, are not only time-consuming but can also be riddled with human errors. In fact, the average cost to manually process a single invoice can be up to $15, adding up quickly over numerous transactions. In contrast, automated audits harnessing the power of AI provide rapid results with heightened accuracy, all while reducing overhead costs.

By embracing automated methods, freight brokerages conserve significant time and resources. This newfound efficiency empowers them to channel more energy into expansive strategies and innovations, setting the stage for a modernized approach to freight management.

Elevate Accuracy and Trust: The Power of Freight Auditing with Denim

Even the most attentive professionals can face challenges ensuring accurate invoicing and payments. As illustrated, minor oversights can escalate into significant financial and reputational challenges. Freight audit and payments are not just an operational necessity but an indispensable tool for maintaining trust, optimizing operations, and ensuring financial accuracy. But what if there was a streamlined way to simplify and bolster the auditing process? 

Denim Audit uses AI technology similar to ChatGPT to identify discrepancies and streamline your document management process. Documents like proof of delivery, carrier invoices, and rate confirmations are scanned automatically within seconds, providing matching results or flagging any inconsistencies with a job.

The result? Expedited payments and minimized discrepancies, ensuring your operations run smoothly and your reputation remains untarnished. By incorporating Denim Audit into your operations, you ensure your invoicing remains as flawless as your freight operations. Book a demo today to see Denim Audit in action. 

Cash flow is the headwind all logistics companies face at some point.

Imagine a situation: shippers are on net 30 to 60-day payment terms, yet carriers must pay their fuel bills immediately. This scenario frequently translates into a significant cash crunch for growing brokerages and fleets.

On top of a challenging financial model, the supply chain faces one of the worst down markets in history.

The tumbling freight spot market and low demand push more fleets out of the trucking industry. So much so, it's actually setting records. According to Q1 2023 federal data, 31,278 trucking companies ceased operations in the year's first four months.

And it's not just impacting fleet vehicle owners. Multi-million dollar freight brokerages are filing for bankruptcy or merging.

In a tumultuous market, improving cash flow is even more critical. Freight brokers and fleet owners who effectively manage cash flow can:

• Navigate the challenges of an economic downturn
• Maintain their ability to serve clients' freight volumes and pay carriers
• Offer competitive pricing and flexible payment terms
• Capitalize on strategic opportunities for business expansion

The secret to keeping a healthy cash flow? Avoid these 5 common mistakes.

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1. Overlooking Possible Client Payment Delays

Consumer spending habits are veering from goods to services. Your customers may experience financial difficulties due to decreased demand. This can result in delayed payments, which can have a significant impact on your business's cash flow.

To counter this, monitor your accounts receivable and freight payment processes closely and establish a robust credit control system. A freight payment system can automate collections and create receivables reports to l inform you of any delays or discrepancies.

Additionally, communicate with your clients and negotiate payment terms that work for both parties. Consider offering incentives for early freight payments to encourage promptness.

2. Neglecting to Control Expenses

It's crucial to keep a close eye on your expenses. Review your cost structure and identify areas where you can cut back without compromising your operations. Look at areas like non-essential travel or underutilized employee perks. Renegotiate contracts with vendors, and look for lower rates on factoring services or insurance.

Freight factoring fees are always open to negotiation based on days of sales outstanding and volumes. If your current factor is unwilling to re-evaluate your rate, it might be time to shop around. Switching your factoring company may seem difficult, but it can be done in under a week (Yeti Logistics switched factors in just 3 days).

While these steps are crucial for immediate expense control, considering a long-term view is equally important. Consider ways to avoid unnecessary costs in the future and maximize the value of your spending.

3. Inadequate Financial Planning

Failing to develop a comprehensive financial plan can affect your cash flow. When your business loses money, receives late payments, and incurs higher expenses, you need to develop a plan to fix it.

A comprehensive financial plan lays down a roadmap for cash flow and anticipates potential obstacles. By creating a strong cash flow forecast, you can consider typical recession effects like losing clients, smaller profits, and fraud. This forward-thinking strategy allows for identifying potential cash flow gaps and formulating strategies to bridge them.

A financial plan should include the following aspects:

• Revenue Forecast predicts how much money you will make in a certain time. It takes into account things like market trends, seasonal patterns, growth plans, changes in customer demand, and new laws.
• Expense Projection is a careful estimate of all your expenses. This includes fixed costs such as rent and salaries, as well as changing costs like fuel and vehicle maintenance. Additionally, it takes into account planned investments in technology or business growth.
• Cash Flow Analysis involves examining the inflow and outflow of your money. This includes considering potential delays in client payments and unexpected large expenses.
• Profit and Loss Projection shows how profitable your company is by subtracting costs from revenue, indicating potential growth.
• Contingency Planning involves creating a financial safety net for unexpected events. This can include keeping money aside, getting a credit line, or having plans to quickly cut costs if necessary.
• Capital Expenditure Plan: A strategic document that outlines any significant investments, such as new vehicles or warehouse facilities.
• Debt Repayment Plan: A clear strategy for servicing business loans or other debts is crucial for maintaining a healthy cash flow.
• Growth Strategy: Your financial plan should align with your growth goals. It's important to factor in the expenses and possible profits involved in expanding your services or entering new markets.
  

A financial plan's true strength is its ability to change and grow with market conditions, economic predictions, and internal adjustments. Regularly reviewing and updating your plan helps your logistics business stay financially stable, no matter the economic climate.

4. Over-Reliance on a Few Major Clients

Dependence on a select group of major clients can jeopardize your cash flow. In fluctuating consumer demand, the logistics sector often feels the ripple effects. When demand for goods slows, freight and logistics markets follow suit. This situation is where diversifying your client base becomes a strategic shield.

Diversification isn't about losing focus or expanding too broadly. It's about expanding your client base in a targeted manner. This strategy spreads risk, ensures a consistent revenue stream, and maintains your niche expertise.

Let's take a practical example. Suppose a logistics company primarily serves the automotive industry. A downturn in the automobile sector would directly impact the company's revenue.

To counter this risk, the company can venture into related sectors. Industries such as agricultural machinery or construction equipment need similar logistics services but operate under different market dynamics. This way, the company is less vulnerable to a single industry's performance.

Besides industry diversification, consider new geographies and adding new services. Explore other areas with potential demand growth if your operations are in one region.

Moreover, introducing new services can attract a broader range of clients. Services such as final delivery or temperature-controlled logistics can generate extra income, making your business more resistant to market changes.

Planning how to diversify your clients can make your business more stable in different market situations. This way, your company leverages its niche expertise while growing and protecting its revenue.

5. Lack of Technology Investment

Technology isn't an adversary to your cash flow in the logistics industry—it's an ally. Investing in technology is important for your company's efficiency and competitiveness, even if you are being careful with expenses.

Investing in technology isn't about acquiring the latest and most expensive gadgets. It's about strategically implementing cost-effective solutions that streamline operations and boost productivity.

One such indispensable tool is a Transportation Management System (TMS). A TMS can enhance your logistics company's efficiency.

It enables route optimization, lowering fuel costs and reducing delivery times. It improves inventory management, minimizing warehousing costs. Moreover, it enhances visibility throughout the supply chain, allowing for better decision-making and improved customer service.

In essence, strategic technology investments are integral to optimizing operations, improving service delivery, and enhancing cash flow management.

Remember, This is Cyclical

There have been 12 freight recessions since 1972, and the savviest brokerages have become stronger each time.

Maintaining a healthy cash flow during a recession is critical for the survival and growth of your freight brokerage business. Avoid these 5 cash flow mistakes to navigate the economic downturn and position your business for success when the market improves.

Remain vigilant, adapt to the changing landscape, and leverage available resources to ensure your company's financial health and stability.

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Only one thing is always true for your freight brokerage. 

Positive customer experiences drive success. 

The present market is encountering more significant difficulties than ever due to excess supply compared to limited demand. Recent market conditions caused Surge, a $150 million freight brokerage, to declare bankruptcy.

In this volatile environment, ensuring goods move from point A to point B is insufficient.

To stand out in this sea of providers, you must consistently offer a service that exceeds expectations and fosters deep, enduring relationships. 

Customer experience is not just a perk of the service - it's the crux around which all operations revolve. It has transformed from a nice-to-have to a fundamental, non-negotiable business requirement.

Key Takeaways: 

• Customer Experience is Key: Success for freight brokers hinges on providing a consistently positive and personalized customer experience.
• A poor customer service encounter can lead to a loss of business, highlighting the importance of consistency in delivering excellent customer experiences.
• SmartBrokers are using the POWER Strategy - emphasizing proactivity, communication, world-class service, technology use, and responsiveness. 

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Navigating High Stakes: The Impact of Customer Expectations

The bar for customer expectations is set high in the current market landscape. 

A revealing Salesforce study suggests, "74% of B2B buyers are likely to switch brands after a single poor customer service encounter."

It is crucial to prioritize providing not only a satisfactory customer experience but rather the best possible experience that is consistently delivered.

But what does a poor customer experience look like in the freight and logistics industry? It can manifest in several ways:

• Lack of Communication: Lack of regular status updates or transparent communication about changes can lead to feelings of distrust and dissatisfaction. 
• Delayed Responses: Not responding on the same day or within 24 hours makes customers feel ignored. 
• Unresolved Issues: Failing to address and resolve customer issues promptly and satisfactorily can leave customers feeling frustrated and neglected.
• Inaccurate Billing: Inconsistencies or inaccuracies in billing can erode customer trust and damage your reputation.
• Unfriendly Interactions: Lack of empathy or courtesy during interactions can negatively impact a customer's overall experience.

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It is essential to be aware of these potential pitfalls. SMARTBrokers can learn from these errors and make changes to provide customers with a personalized, attentive, and consistently positive experience. This proactive approach satisfies customers and promotes loyalty, resulting in repeat business and setting you apart in the competitive logistics industry.

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SMARTBrokers Competitive Advantage: Transforming Transactions into Relationships

The freight brokerage landscape is diverse, with behemoths managing vast logistics networks and commanding extensive resources. However, the scale of these companies sometimes leads them to overlook the importance of personalized services and customer experience. SMARTBrokers fills this gap.

Large freight brokerages and 3PLs can make customers feel like another number in their extensive database. Their focus on scale can lead to a lack of personal touch and attention to specific client needs, including simple gestures like remembering special occasions.

SMARTBrokers take advantage of this gap in the market by offering more personalized and attentive service. By making each customer feel like they are the most important, you can turn every transaction into a relationship built on trust. This can lead to repeat business and referrals, helping your business grow.

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Ensuring Stellar Customer Experience with the POWER Strategy

To consistently meet and exceed customer satisfaction, consider embracing the POWER strategy:

P - Proactive Problem Solving

Anticipate potential challenges and address them before they escalate, saving customers unnecessary costs, time, and stress.

O - Over Communication

Regular updates on processes, fees, timelines, and shipment statuses can foster a trusting relationship.

W - White Glove Service

Exceed standard expectations by tailoring services to each customer's needs and providing swift responses and detailed attention.

E - Embrace Technology

Utilize technology like freight payment systems, TMS, and track and trace tools to remove non-value add tasks. In doing so, you'll streamline processes and have more time to dedicate to customer experience. 

R - Responsiveness

Quick and readily available responses to customer inquiries can create a positive impression and earn customer loyalty.

The POWER strategy can set you apart as a freight broker. Yes, it demands time and resources. However, the potential rewards are well worth it. You'll see gains in customer loyalty and repeat business. Plus, positive word-of-mouth can boost your reputation. So, in today's competitive market, excellent customer service isn't just a bonus—it's an essential element for success.

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Outpacing the Competition: The Critical Role of Customer Experience

Providing an excellent customer experience is no longer optional but crucial for survival and success. A superior customer experience can give a lasting competitive advantage.

By adhering to the POWER strategy – Proactive problem-solving, Over-communication, world-class service, Embracing technology, and Responsiveness – you cultivate an environment conducive to customer loyalty and repeat business.

However, this is not a one-off process but a commitment to continual enhancement. Customer expectations are not static. They evolve with each technological advancement and shift in market dynamics. Staying attuned to these changes is essential. Use the POWER strategy as a guide and tailor it to your unique business model and customers' needs.

The time and resources invested in enhancing customer experience might seem significant. Still, the returns, in terms of increased customer loyalty, repeat business, and a lasting reputation for excellent service, are invaluable.

Remember, your customers hold the key to your success. Prioritize their experience, exceed their expectations, and success will naturally follow.