Freight 360

Freight Broker Essentials: The Basics | Episode 289

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Ever wonder why some freight brokerages thrive while others constantly struggle with cash flow problems? The answer lies in mastering the fundamentals that many brokers overlook.

In this eye-opening episode, we explore the critical but often neglected basics that make or break your brokerage operation. We share real stories of brokerages that generated impressive revenue on paper but collapsed when they couldn't collect payments because of poor documentation practices. You'll discover why verbal agreements without written confirmation are worthless, how missing verification steps can cost thousands in claims, and why immediate proof of delivery matters more than you think.

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Speaker 1:

Welcome back. It's another episode of the Freight360 podcast. This is we're up to episode 289, Ben, so we're knocking on the door of the 300 episode mark. So, anyway, thanks for joining us, everybody, and make sure to check out all the other content at Freight360.net. You've got all of our downloadable content you could share with your team. We've got blogs, YouTube videos, all kinds of good stuff in there. Check out the YouTube channel as well. And while you're on our website, you could check out the Freight Broker Basics course. That's a full length educational tool for you and actually we're going to be talking about, we're going to be pulling little bits and pieces out of that content for today's episode to kind of sprinkle in there. So if, if today's episode is valuable for you and you're learning a lot, the course will break down, everything from how to get started all the way through growing your team and and the back office and all that good stuff. So, Ben, what's what's happening with you, man? What's new? Did you get that that little cool off yesterday?

Speaker 1:

Cool off with you man, what's new? Did you get that? Uh, that little cool off yesterday. Cool off, what do you mean? Maybe, okay, maybe it maybe it's different over in, uh, no, I mean it was like cold here, it was like 65 degrees. I'm in siesta key right now, so it was like kind of like gloomy and cloudy and rain and I don't know it did it.

Speaker 2:

I mean it poured all afternoon like there was a huge storm came through. It rained like literally all afternoon like a lot of rain. And I did notice this morning, to your point like it must, I must've got it late in the night, cause I I mean, I wasn't outside late last night, but when I was walking the dogs this morning I was like, oh, it was a little chilly. In fact, I got on my cold plunge this morning and I was like, yeah, I was like normally I'm like really warm and it's all humid before I go and I was like, yeah, it's a little chilly.

Speaker 1:

Yeah, nice little change of pace. Yeah, I'll take it, man, I'll take it All right. So sports, the NCAA stuff all wrapped up and, like we talked about last week, the Duke meme has has floated around quite a bit with the guy with a gun to his head. Duke choked there, man, in the final four. I honestly thought it was going to be Duke and Florida in the championship game for the men's and yeah, duke couldn't hold on in the final four and Florida actually went the whole way. I think it's their first time winning in almost 20 years. So go, gators, congratulations to you guys.

Speaker 2:

I know there was a video of someone trying to pull down a traffic light post and the guy fell off it. I basically saw that all over the Internet. Did you see any of that?

Speaker 1:

No, where was this?

Speaker 2:

Well, so, like I mean, it's pretty similar You've seen, like other national championships and college towns, where someone will climb up on the pole that holds the traffic light and bounce on it until it falls. Well, he fell before the pole fell. Oh, you're just jumping up and down and just took an L right off the top.

Speaker 1:

Yeah, Gravity wins that one, I guess. Yikes it was. Actually. It was a cool game to watch the championship because Florida was like a slight favorite going into it and then they were down by like it was like double digits towards the end of the game, like 10 or 12 points, and they just rallied to come back. They were up by two with like literally the shot clock was turned off, so it was like 20-something seconds left, and Houston I think it was Houston right that they played. Anyway, they go up to try and tie it up, or even go up by one, and literally like made a mistake and the guy like who lost the ball couldn't touch it again, otherwise I think it would have been a double dribble. So like the clock, he just had to like stand there and like the clock expired. So, but anyway, that's sports, trying to think other.

Speaker 2:

Masters Tomorrow.

Speaker 1:

Yeah, so by the time this drops Matt, it's Masters weekend, so I'll be excited to watch a little golf this weekend. Yeah, same here, man, same here. Not a whole lot in news. We were talking about it. The entire world economy is collapsing in on itself.

Speaker 2:

It's like 10 trillion dollars in value wiped out of the stock market and let me clarify the next great depression not a whole lot new we've talked about.

Speaker 1:

We've talked about tariffs up and down.

Speaker 2:

The last like month or so I spent in our newsletter and I'm a little tariffed out um here's the thing that changed, though like one was the reciprocal tariffs going back to China was China didn't back down, so Trump levied another tariff on China and I saw and again I haven't got a chance to dig into it because it's happened so quickly, but like there were freight forwarders talking about the fact that, like goods that are literally on their way over here, the tariffs have exceeded the value of some of the goods and the shippers may just abandon them because they're not going to pay the tariff. The tariff is more expensive than the thing they shipped, and just, it's an absolute melee. No one knows what the hell is going on. No one can predict what's going on. I mean the market's in a free fall, so, yeah, not looking great for anyone anywhere in any business at this point in time.

Speaker 1:

So, yeah, I guess, terrace, that's the big news right now.

Speaker 1:

Outside of that I know we've kind of beat the dead horse on it oh, there was actually. There is something and this came out in our newsletter on Tuesday this week was that the Department of Transportation is actually asking for feedback from those impacted by regulations in the industry. So in our case, like brokers, carriers, et cetera, there's the whole concept of like, hey, if we're going to impose any new regulations, we want to repeal unnecessary older ones. Like a multiple of like 10 to 1, I think it was. So they said hey, we have comments open until May. Basically, let us know. If you go to our newsletter the link for regulationgov, I believe it is, and there's actually an email address you can reach out to as well as like, hey, what are the things that you find are unnecessary or outdated, et cetera, they're taking comment on it. So whether or not that will mean anything, not really sure, but I think that's kind of like the ripple effects of Doge yeah, maybe, or just really government, you know, trying to shrink the the government in general is.

Speaker 2:

I think that's kind of like the whole concept behind that is what is some of the old, unnecessary stuff that we should revisit and maybe repeal. And I for sure agree with all that in principle, right. Like I remember I don't know where I was reading it Some of it was in one of Elon Musk's biographies. They talked a lot about it in the, you know, in the weeds of the business stuff Is that like government puts on new regulations but there literally has never been a process to repeal regulations that are valueless, and it's just like it just keeps expanding without ever getting smaller.

Speaker 2:

And it's like there are funny examples of like you can't marry an elephant in some random states, like obscure regulations that exist in places that just aren't enforced. But like there are real impacts to regulations that no longer have value in protecting, whether it's consumers or business or people that use products that just sit there indefinitely because someone passed it 70 years ago and there was no process to get rid of it. So like I'm absolutely a proponent of creating a process that repeals older regulations that no longer create the impact or protect in the way they were meant to do so I think that's the move in the right direction.

Speaker 1:

That's the whole discussion with CFR 371.3C, right, it's like. And again, that's not nested under DOT, it's part of the federal regulations. But, it's the same concept like outdated, not applicable anymore, and the way it's being used now is not the way that it was intended in the past.

Speaker 2:

So the industry changed Right, but the regulation sat the way it was, like prior and Stephen did a great piece on this Like, literally, the money flowed in a different direction carriers paid brokers back then, then it switched to brokers paying carriers and brokers financing it. So like the intent and why it was established was for an industry that functioned the way it no longer does and people are like, oh well, let's enforce this. And it's like, well, like it wasn't even written for the way the industry works, and like it's literally ass backwards where, like you're trying to justify something that didn't even have that intent. And not only did it not have the intent, the industry didn't function that way. So, again, I think that's a pretty good example of this.

Speaker 1:

Here's another one too, and a guy actually asked me on the phone yesterday. He's like did you? He's like, what are your thoughts on Walmart doing this whole freight brokerage thing? Have you heard about this?

Speaker 2:

Yes.

Speaker 1:

So and you made me think about it when you just talked about how the transaction changed and my one I'm no expert on the details of what Walmart's plan is. I heard about it in the last couple of weeks and he's like, well, what do you think about it? And I was like I was like you know, the last time I worked with Walmart I had them on 120 day terms. That was their standard payment. And I said and he even, you know, reciprocated he's like, yeah, he goes.

Speaker 1:

When I worked at I forget where he was working, but it was a large brokerage years ago and they looked, they pulled up like Walmart's aging Walmart had over $13 million of unpaid invoices that were 300 days old or older. And I was like companies like that, if they try to open a brokerage, they can no longer play ball that way. Right, if they're going to move their own freight, right, they can't offset their transportation costs and put it on some other broker's cash flow if they're going to be moving it in-house. So just food for thought. I'd be curious to see how they I will point that out too.

Speaker 2:

So another example of that I worked at a large brokerage and my customer was Maersk, which at the time was the largest shipper in the world, and their pay terms were I think they started at 60, but like they averaged around a hundred, similar to Walmart Right. And when the ELD thing happened and everyone lost capacity because it got constrained, we wanted to get into why. But like they were desperate to get containers moved Right, I was able to move so many containers they couldn't, which, on the face of it, from their point of view, they're like we don't understand this. Like we've literally every carrier that is a member of the UIIA, almost like we theoretically should be able to access and move loads with them. Why won't they take our loads? But they'll take our loads from you and it is literally for the reason you just said I was like it's cashflow, like none of these carriers that I'm calling on the phone and talking to want to work directly for you, because even when you pay on time, you're at 60 days or beyond and you're notorious for finding clerical errors or issues and invoicing systems that delay things well over a hundred days, and we ran into that too, like I it took me.

Speaker 2:

I remember we started running a large portion of that freight like January of 2017. I don't think we started seeing any payments until like August of that year, like anything. And then there were things outstanding literally for the better part of a year. And I've seen this with every major steamship line, like the bigger the company, the more leverage, the more they create friction to pay you, to hold onto their cash.

Speaker 2:

So it's like, yeah, they're going to have a great, huge network of carriers they can access, but the reality is is like that's not as beneficial as it seems simply from a money standpoint. Like carriers aren't going to be clamoring to do business with a company that isn't going to pay them for six months and then they'll go. And then you'll hear this argument Well, carriers have factoring companies. They do, but what do you think the factoring cost is now when the factoring company doesn't get paid for three or four months? It's no longer 1% or 1.4%, like it might be three and a half percent, right, and carriers that are operating on thin margins all of a sudden, you're just running freight for free. And carriers that are operating on thin margins all of a sudden, you're just running freight for free. Like and it is a big aspect of this business that lots of people I think parties carriers and shippers just completely overlook is the cash flow aspect of this.

Speaker 1:

Yeah, I mean, you're absolutely right. And two things to point out on that Number one, there's a reason. So you know, you and I, we teach the TIA's new broker course we do 50% of the coaching, overlooked aspects of doing freight brokering is being in the bank. And the other thing I wanted to add in is we're going to talk about one-on-one level stuff today. These are considerations that when you hire a new rep and you're like, well, yeah, just make 100 calls a day, right? Well, it's way more than that, right? You have to think about what is a good customer? What are some of the questions you should be asking? What are some of the considerations? Why? Why might it seem way too easy to close this customer when other ones are hard? Well, it may be because they're no one else wants to work with them, because they pay in 90 days or their standard terms are at a minimum 60 days and they may, you know, slow pay those. And the margin might be thin. And you know, the list goes on and on and on. So let's start there.

Speaker 2:

Yeah, let's just start with things that can go terribly different or horribly wrong from what you expected, right? Because I think that's just a really good starting point. And then we can talk about things you can do preemptively to either prevent them or to get ahead of them and plan for them, because you're not going to be able to prevent everything and some companies you're going to want to do business with anyway, but you're going to want to understand these things ahead of time, right? So I'll start with exactly what you just said. I had a group of agents it was like last year and the year before that was working through another brokerage and I was managing their agent department a bit with them with a few other people. There was probably 13 or 14 folks, I want to say. A good portion were in Columbia, the other portion were in Florida and in the US, and they all worked under one broker agent, right, and basically they were sub agents. He had been a broker for you know him. He had been a broker for I don't know, probably like 15 years. So this is somebody with experience, somebody that has done it, somebody that's gone and built other brokerages and then decided he wanted to build his agent program underneath this and what happened is exactly what you just said, right.

Speaker 2:

So this was and again, it wasn't an easy market to start from scratch, to build a book of business. They had relationships and every broker out there hiring has heard this. Like, I got customers, they've worked with me, they've known me for years, we can bring them over, we're going to do this amount of business in this amount of time. And then what happens is is one, there's a portion of those customers that just aren't going to transition. They are either. Their boss won't let them onboard a new company. They have already started using somebody else. A number of reasons, right, yep. And then what happens is you've got stress and pressure to be able to get new business. So, to your point, they're going at mostly produce, every produce company that they can find that they think they can get in the door as quick as possible, right?

Speaker 2:

So when you are going at companies and looking only at the short term, meaning, like most of their calls, their sales calls, are like who I can move a load with this week, today, tomorrow, next week? Right, today, tomorrow, next week, right. Very few of those conversations are hey, let's find a fit somewhere over the next few months or year to see when it might work out, and playing a long-term game. So it's all, short-term, it's all. What can I get now?

Speaker 2:

And what you end up with is are a lot of small companies why, there's no red tape. That's not necessarily a bad thing, right, they can onboard you fast, but typically they're going to be more price sensitive. Okay, so you're going to see usually lower margins, and we get this question a lot oh, should I move a load for break even to get my foot in the door? Honestly, sometimes that might make sense. Most of the time it's very hard to get real margins later anyway, because they feel like you bait and switch them.

Speaker 2:

So you know, I would say, out of these 11 or 12, you know sub-agents under this one agent, right, like they brought on probably I don't know, I want to guess five to $7,000 a week in GP over like two to three months. Now here's what happened, right, one, not a lot of good SOPs were put in place like standard operating procedures, meaning like when they were getting load tenders, they were an email it's hey, pick this load up here. Bills of lading were vague, didn't have all the details on it, didn't have rates on it. Tenders like the rates might have been text messaged instead of put in the email in the same place, and saved right.

Speaker 1:

Or, even worse, just verbal and you're going off of the lake hey.

Speaker 2:

I'm good with this. So here's what then happens. A few problems arise when you don't do these things correctly or in any standard way. When the invoices start going to these customers, they don't remember what they said on the rate. So they go oh, I'll look at that later. And then the company just doesn't pay that bill that fast. Or then it goes to their accounting department in some cases and they go this isn't enough to substantiate a freight bill. Oh yeah, we know it was moved, but where's our company agreeing to the rate? We don't see check-in and check-out times. It wasn't signed correctly. We only see one signature on this.

Speaker 2:

So, little by little, these invoices just start getting held and not getting paid. Then you have this whole other bucket of these are small businesses. A lot of them didn't have the cash to pay their bills on time. So these things just start getting longer and longer and longer, right. And when you're running the whole business, you're like oh wow, this group of agents did call it 35 grand in gross profit that month. Well, how much did we invoice? We invoice for like 15 grand, why? Well, some of them didn't get the BOLs from their carriers in time and if they did get them, didn't upload them in the TMS correctly. And if they did get them, didn't upload them in the TMS correctly, didn't have supported documentation of the rate agreed to, to attach to the invoice, which is the proof the broker is going to send to that customer. So they know we agreed to this rate for this shipment on this date and this is what we'll pay. So then they don't pay it. So then, little by little, percentage by percentage, you keep running freight and more and more invoices don't get paid right. Then it gets to a point where the company goes well, hey, like we're now owed it was in the six figures, like $120,000, that is all over 60 days. Well, what are we gonna do? And then everybody on the team is focused on making more money today, and then they never want to pay attention to it. Oh, we'll get to that, we'll get to that.

Speaker 2:

Another week passes. Another week passes well, these are 90 days. Another week passes well, these are 100 days. Well, now nobody could get paid. Well, why are you going to hold my cash? I got to pay my agents. They're going to work every day. Yeah, they're going to work every day, focusing on moving business today and in the future, but nobody is going back and taking the time to fix the things that should have been done in the first place.

Speaker 2:

So what happens? They stop getting paid, then they get frustrated, then they want to go work somewhere else, but the brokerage is left holding this big bag of garbage that you've got to work through and figure out. What did we need? On every one of these invoices Is the customer not responding? Can the customer not pay the bill because they don't have cash? Do we have the right documentation? Did the carrier send the right paperwork? Oh, no, carrier didn't send that. What was 90 days ago? What is the likelihood that trucking company still has that paperwork, or that driver still has that paperwork? Slim to none. So now what happens? Right, the brokerage still had to pay the carrier. So they're out that cash to pay the trucking company and they're just sitting waiting to recoup this money.

Speaker 2:

And this is just like one example of why it's incredibly important to follow standard procedures just running a load, documenting the rate, getting that in writing. And this is the most important part, and this is one that really bugs me, because I see the worst habits around this If you get a tender from your customer, I don't care if they text you, I don't care if they call you over the phone and you got to go move that load. It takes 30 seconds to send an email with the details. They said to you over the phone hey, per our conversation, or I just spoke to you we're moving this load from here to here, this date to this date. This is what we're moving. This is what we agreed to on the rate. Please confirm.

Speaker 2:

Your customer only has to respond with confirmed in an email. You can save that email as an attachment, upload it into your TMS. Now you have written proof. Now there's's no dispute, there's no problem. Later you have everything you need in one place. And it bugs me because, like it's just laziness, right, it's just oh, I got to get to the next thing, oh, I'm too busy to get to this, but like you can't run a business if you don't get paid for the work you're doing, you got to go pay the carrier. They got the documentation you send to them and that's the whole. Other one we'll get into next is sending the right documentation to the carrier. But this is just the customer side of things just go horribly wrong because people don't want to pay attention to details. And this one really irritates me, because there's really no excuse for not doing those things on the front end.

Speaker 1:

Yeah, I think having, like you mentioned, sops, your standard operating procedures and I think those are so important for all, like all, really all facets of the of the company. But customer setup specifically, one of the things that I've done is, you know, a lot of companies will just say, all right, we'll do a credit application, have them fill it out and sign it. My philosophy is that just because somebody signs a credit application doesn't mean they're going to actually abide by those terms. So what we have done, I have a credit application that we can use if we need to. They can put references down and stuff like that. But we have a customer setup form and a customer setup packet and when the broker uses those documents, it has everything that their customer might want. So the packet has W-9, insurance documents, payables information, so like remittance information, bank account, ach, all that stuff. But more importantly, the single one page setup form has all the little details that, as long as and I have like certain fields highlighted like these are required, you need to get this information, whether or not the customer fills it out or you get it from them.

Speaker 1:

This is what we need on ironclad Right and it's like name of the company, their address that we can be able to see them in a credit database. Right, where are they? You know, basically, who's paying the invoice and what's their address. Um, speaking of who's paying the invoice, who is my payables point of contact? I need a name, a phone number and an email address that I can, an email address that I can send invoices to, and I need a name and a phone number that I can reach out to if I'm, if I need payment update or um, that's a huge one to work out into that in the past week, where it's like who's our AP person?

Speaker 2:

Oh, we got an email address. Well, what's our accounting person telling us? No one's responding back to the operations person. Who do we speak to over there? Well, we don't know, Okay, like very simple things that honestly should be common sense of, like how about we get a phone number for their accounting department, in case we need to get an update on something and you need to have a conversation about something, right, yep?

Speaker 1:

And I want to add in the other part too, is like I've got a field that's like special instructions, right, and it says like, for example, any special required documents for TMS, required for us to submit paperwork for invoicing. We've got, like you know, is there a certain update that we've got to set up.

Speaker 2:

Yep, can you pause right there, because three or four issues I've run into in the past year with clients and things on just that one, right, had a client that was like I am having a heck of a time getting this customer to pay the bills. Ask them for their onboarding agreements oh, I don't know where that I'm like. Okay, well, did the shipper send you anything? Go back and look when you first moved your first load. Look at emails that they sent you right before then. Oh, there's a document, let's look at that document. Okay, in that document what we found was exactly what you just said you needed to go into their TMS and you needed to do specific steps in order for them to pay an invoice.

Speaker 2:

So, one nobody read it. Two nobody went and looked back. Three, when these invoices hit 30 days, nobody thought to go and look back. Nobody called anyone at the customer to ask are there any steps we need to do to make sure these invoices get processed? These invoices hit like 85 days before anyone thought to look back at the very beginning and see is there anything we need to do to make sure these invoices get paid? And then, when you found that you had to go in and this is the kicker, right. So say you don't find this out until 80 days. Now you go in that TMS and you do all those steps. It starts that clock at day one. So even at that point you've waited 80 days basically to start invoicing, which means you are definitely not seeing your money now until 110 days, right, yep.

Speaker 1:

Exactly. But yeah, I mean, and the other thing too is, does the customer have any specific paperwork that we need to fill out, whether it's a company profile sheet or a contract, for that matter? And I think the contract review process is that's a whole nother conversation. But you'll find situations where novice brokers, or maybe someone that just started their own company, they don't know what they're signing, they don't really know what they're agreeing to, they don't understand the contract language and all that stuff. And again, it's a whole nother legal topic and we'll we'll we'll have some content on this later this year. But you should understand what you're agreeing to and not just like the risk that you take. But a lot of times that contract will state those requirements in there. Like, like we just mentioned, you must do X, y and Z. The same thing when, like, if you do a bid, that bid packet usually has a slew of instructions on not just how to do the bid but how the actual awarding and execution of those lanes needs to happen in order for it to all be kosher. So really, really important. Kosher, so really, really important.

Speaker 1:

And this is why I don't want to get too off topic, but I'm a huge fan of when you hire a new team member. I think it's really important to expose them to just about every department or area of the company when they're getting trained. I remember when I first started off working for an asset-based company, I spent a week working in the back office literally with the office manager, understanding here's how the invoices come in and how they get paid, everything down to how we pay our light bills, because that's the stuff that you wouldn't think about otherwise. Right, the only expense we have isn't just paying a carrier, it's all the other things around us. But I spent time. I literally sat in the truck and drove around to understand what it's like when that driver gets on site and the things they have to deal with when they're checking in for an appointment.

Speaker 1:

Versus first come, first serve, why does a liftgate matter in some instances? So, obviously, if you don't have assets, that's not as realistic or probable for you to do for someone new. But have them exposed to things like the claims process, the credit process, however you decide. Your company has its carrier onboarding done or approvals done. Have somebody that's new understand and sit with that person of what they're dealing with every single day, even like the mundane, like people that some sometimes they're called like exporters or like billing or whatever. Like everyone, every company breaks up accounting a little bit different, but like the people that just receive paperwork Right and they match it up against the TMS Right, good one.

Speaker 2:

OK, so this is another a good one. Okay, so this is another really good one. Right, and it is very often overlooked. Now I'm going to make one little point is that this is also how you set up your incentives matters and how easy these things are to get done in your business. I'm not going to go into incentives, but just from a high level right, if Nate is a broker that works for me and Nate gets paid commission, but Nate does not get paid commission until his customer pays their bill. Okay, the money comes back into the business. What that means is, all of a sudden, if Nate doesn't do the things we're going to discuss in a second, nate doesn't get paid. Well, that means Nate cares a lot more about doing these things correctly, because if not, he literally doesn't get paid for the work he does.

Speaker 2:

Right, and everyone talks about incentives and what you should pay. I think if you think about incentives very simply, it should be you get more when you do the same things the business needs you to do, right, just keep it simple. Business needs paperwork correctly, accurately and put in the right place in order to invoice the customer to get the money in. Nate should care about that, because Nate is usually the one, or Nate's team, talking to the trucking company and the shipper. So you need this information and you need it done correctly and I need the person who's talking to these people to care as much as the business does, because it should matter to both in the same degree. Right? So that incentive helps make sure Nate cares about the same thing the business does, right? So let's just take the one you just said on carrier pay or just TMS for just basics of running a load.

Speaker 2:

Okay, so Nate gets a load. Nate doesn't talk to his customer, so Nate doesn't know. Let's not use your name because now it just sounds like super negative, but like let's just say that the broker, right, did not get the details from his customer on what the detention policy is, what the layover policy is, whether it's appointment first come, first serve, lumper, or any of these invoicing details. Okay, nate goes and runs a load and then the carrier says I checked in by when you told me to. I was here six hours. I'm requesting detention. What's your detention policy? Nate goes, I'm going to go ask the customer. So the carrier now is going to deliver that load and then he's going to go. Okay, well, I'm going to invoice you for detention.

Speaker 2:

What else does Nate do in this scenario? Nate doesn't ask the driver to send the BOL at the time of delivery, so he doesn't have the paperwork to send to his customer. So what happens next? Nate goes to his customer hey, I need to request detention for this driver. Customer's going to email back Nate Okay, can you send me the paperwork?

Speaker 2:

Nate now has to wait for the trucking company to send the invoice three days later with the BOL. And then that comes back in. Nate looks there's no check-in and check-out time. Why, nate didn't tell the driver that was required for detention. So the carrier has increased their invoice for call $250 in detention. Nate sends this paperwork three days later to the customer. Customer goes hey, you don't have your check-in and check-out times, I can't pay that. Now the carrier is going dude, what's going on? Man, like I sent you the paperwork and he's like you owe me detention. Now the business can't invoice the customer yet because they can't figure out what they're doing with the carrier and they don't have the right paperwork to invoice the detention. So either the brokerage loses money to do the right thing to pay the carrier, or doesn't pay the carrier. Carrier leaves a bad review, never works with them again. Carrier's pissed off, all because we didn't know what happened.

Speaker 2:

Second scenario Now, in the second scenario, the carrier sends in the right paperwork with a check-in and check-out time. Nate doesn't talk to the shipper, so he doesn't know what their detention procedures are. And they say, oh, at that facility we don't pay detention. He's like well, what do you mean? Like at the other facility? Yeah, it's in our onboarding documents. We pay detention at our facilities, but when we deliver to a customer there's no detention. So you just need to quote that in your rate. But what do you mean? You didn't tell me that you sent me the load over. You didn't tell me that you wouldn't pay detention there. Well, you didn't ask. Now, what does Nate do? Right, like. These are things that happen real time, every day, when you don't get these details in the first place. Or like here's a third one that we've seen Okay, there's a claim on a load, or the load is being held hostage or the load was stolen.

Speaker 2:

And Nate goes to the customer and goes hey, I think there's an issue with the load. And the customer goes okay, well, this is really important. Let me know, that's a high value load. Nate's like what do you mean high value load? Yeah, that's a $250,000 load of apparel. Well, I didn't know that, I just thought it was like a bunch of shorts or something we were shipping in t-shirts. Yeah, they are, but that's 250 grand. Then Nate goes and looks at the carrier Well, they only have $100,000 insurance. Wait a minute. Customer's like well, hey, when you sign that agreement, we also have in our agreement we have the right to withhold all other payments until that claim has been paid.

Speaker 2:

Now, as the brokerage owner, I'm like Nate. This company owes us 200 grand and all the loads they ran in the past two months. They're not paying our bills anymore. What's going on here? Oh well, we got a claim. Well, what's going on with the claim? Well, the carrier only has 100 grand insurance. Oh wait, I forgot to look at that carrier's insurance. The truck that ran that load actually isn't listed on their scheduled auto policy, so they don't even have any cargo insurance and the shipper isn't going to pay us 250 grand because we got a damaged load and we signed the agreement that says they can withhold all other invoices until that's paid. And we signed the agreement that says they can withhold all other invoices until that's paid. Now the business is out $250,000 because we didn't ask how much is this load value. Two, we didn't vet the carrier's insurance and, three, we didn't make sure that carrier's truck actually was insured and was the one that was sent to pick up that load.

Speaker 1:

Yep. So this is a great point right, and I talked before about how I utilize a setup packet and a setup sheet for customers. The same thing. And we actually have this freight on our freight 360 website. The dispatching checklist that we put out a couple of years ago and I'll just read off like this, goes to the carrier side of the equation. These are the things that for somebody that's new, you know, and again, if you've been doing it for a while, this becomes like second nature to you. But just example, I'll just kind of rattle through some of the things that you should be verifying is pick up information address, date and time.

Speaker 1:

Is there an appointment delivery Right? Address, date and time. Is there an appointment required? The information about the freight what's the commodity? What's the required trailer type? The size 48 versus 53 feet can make a big difference. Do they need tarps, straps, et cetera? What's the value of the shipment? That is literally right on our dispatching checklist. Carriers pay. What's their base rate? Is there any extra pay, such as lumpers? Are there any fees, such as late deliveries or detention et cetera? Then we've got all the driver's information, down to the tractor and trailer number. And, to your point, depending on your vetting software.

Speaker 1:

You may want to verify VINs of the truck picking up your load to make sure it's on the COI, if they have a scheduled auto policy, and then some other various things. What are the requirements for tracking and check calls, any special insurance requirements or exclusions that you have to check for? These are all things that if you haven't been doing it for a while you really should have some for just the 101 level stuff. You should have some kind of way to reference that so you don't forget it. So when I'm on the phone with a customer verifying the load details, I've got that dispatching checklist that I can verify value of the shipment, what is the commodity, so I can make sure it's not excluded. Is there a detention policy? Are there fees for late pickup, late delivery et cetera? Is there lumper or driver assist? A lot of the asesaurals we talked about on the last episode, which, by the way, we got some hate from some carriers out there.

Speaker 2:

But anyway, I wanted to point that out From those comments, the hate from the carriers. Like at no point in time in that whole conversation were we suggesting brokers should make money off accessorials, they should be passed through. And nowhere in there were we suggesting that a carrier shouldn't be paid when they're owed. And it was clearly explained to them, right. I think the one point they seemed to argue over was like, well, if you canceled a load on us and we're still on that other load, like that's time on us and you should pay a truck order not used, again, in a lot of scenarios brokers will pay that.

Speaker 2:

No one's saying you need to not pay those at that situation. And like. The other thing is like this is the whole reason why. Like you need good relationships, whether you're a carrier or a broker, with the other party because, like, if you're working with that carrier over and over again, you're going to pay that. But on the other hand, if you're dealing with a carrier that canceled on you last Tuesday because they found a higher paying load and then booked a load with you this week and then argues with you that you're not paying a truckload or not used because they're late to pick up, like it's a two way street. Yeah, it's not one versus the other.

Speaker 1:

Yep, now, very good point, but I guess you know my whole takeaway on this is you have to remember, when you're hiring somebody, that they, their, their level of knowledge coming in is essentially a clean slate, right, and I I run into this actually a lot with guys that work with me is like my, one of the guys that helps me out, like he'll email me or text me. He's like I know this might sound like a dumb question, but and I'm like no, like nothing there, it's not a dumb question and I'll always make dumb questions are the ones you don't ask yeah, the ones you don't ask, right, um, but I will like, let's say I'll just make one up if someone's like, if someone's new, and they're like what, how does you know?

Speaker 1:

how does this um tonu thing work, right, right, like. What does it mean? I won't just answer it real quick, I will break it down. I'll take it as a learning opportunity and I think that is a great way to educate and develop your younger staff and team members is take real world examples of things that happen and then give very detailed context, you know, and different scenarios on how this stuff might apply in the future. The worst way to learn is through mistakes every single time, right? I think the best way to learn is to proactively learn from previous experiences, right, and share those with others on your team. So, very important stuff there. What else we got on that?

Speaker 1:

note or on the 101?

Speaker 2:

I want to circle back on something you said. Sure, I honestly think almost every broker should have to spend a week in accounting and I think they should have to sit there and process invoices to pay carriers. I think they should answer phone calls when the bond company calls because there was a deduction that was unjustified and undocumented. There was a deduction that was unjustified and undocumented and I think they should have to go and try to find PODs that are three months old from a carrier that they should have got at delivery. Right, because when you do the job, you have more of an appreciation for the work You're just passing on to someone else in your own company and to me, like that is a very hard gap to bridge. It's like when I've run brokerages, even over the years, it happens a lot. It's like, guys, we need you to be able to get the POD at delivery and that's the next one I wanted to talk about.

Speaker 2:

Right, like very simple things that are important. Right, because, like, what they don't realize is that just creates work for the other department and more work, right, and then it's like, okay, now you're hiring more accounting people and then the brokers are like well, like I want to be able to get more commission or I need more support to help me move my freight. Well, like, the company can't hire more help to track and trace or to do whatever you need to do more business If we're paying people to clean up things that should have been done on the front end. Right, like it literally is a process. Right Loads come into the broker, they get run, they give them to the carrier, the carrier sends them back, the brokerage then takes that paperwork, sends it to the customer. But if any of those things aren't done, you just created a whole other job for the people that just sit next to you on the other wall in your own company.

Speaker 2:

And now that, like you know, they're even more segmented with people remotely, there's just like no appreciation for what this side of the company does and it's just like constantly prioritizing moving another load without thinking about, like, hey, did we make sure all the loads we ran yesterday were marked delivered, that were delivered? Did we make sure that all the PODs from the loads we got sent sent? Did we follow up from the day before to make sure the carriers that said that sent them sent them? Right, like, and it's just like that workload just gets bigger and bigger every day. You don't pay attention to it until it's just this giant mound of shit that you've got to work through that takes weeks and months, and like all of it's unnecessary. And that's the part that always bugs me. It's like when you're responsible for all of it and you see what one department does to the other and like I've been on each of them right, like I was an accountant and then I was a broker, and it's like, even as a broker, like you're always trying to move more freight but like you can't just prioritize that and neglect completely everything else that you need to do for your job and expect some other department in your company to do it. Like I just feel like it's not just irresponsible but it's just like mean. I don't know.

Speaker 1:

Yeah, no dude you make. You make a great point and I have. I have a level of appreciation for the back office folks at at the brokerage I work at. That I didn't really understand years ago. But and working remote is tough too, right, like you mentioned, like with agents, like they don't necessarily see the headaches that go on, and I felt victim to the same thing with being remote myself and I go visit our corporate office quite frequently and you know I would sit in there and I would notice like grumblings about certain brokers in the company because they keep you know their requests come over, missing information or they're not responding. So I'm like okay, so now I'm starting to understand.

Speaker 1:

So one of the things we actually did I built out a like we just call it our help desk on our website where, like, if there's a request that comes in and it's for a credit, you know a customer setup or a claim or a carrier approval or you know something along those lines, it's now we have visibility, no matter where you are. So like, right, a form is, is tracked, a email is automatically sent off to the right person and is automatically formatted the way that that department wants it to be received. And if the broker doesn't fill out a certain field, they can't submit that form. It's kind of makes it foolproof. And then all this stuff is tracked in an online Google sheet so I can go in at any point in time and see the volume of requests coming in from each different team.

Speaker 1:

Right, and are they, you know? Do they have typos in their stuff? Does their message make sense? Is it clear and concise? And by being able to have transparency and be able to get ahead of that stuff, you can reduce the animosity you're going to have between and I'll just say this because this is how some brokers look at it they're like there's animosity between those that produce revenue in a brokerage and those that are an expense, because some brokers are like, well, I'm bringing in money and this accounting person is actually just a, they're an expense line item in the you know the ledger and it's like, well, if you want to look at it that way, but they're actually a force multiplier for you. They enable you to go out there and do more business because you don't have to do the billing job yourself. So, yeah, not to go off on a tangent there, but that it's a good one, it's not a tangent, it's true.

Speaker 1:

Because there's more and more remote work. And I think you're going to see and even like, let's say you're not fully remote, and even like, let's say you're not fully remote but you have different branches, Right, let's say, you're based like, for example, TQL. Right, they're based in Cincinnati, but they've got locations all over the place. Side note I was actually. I was in our, in our pool here the other day over the weekend and one of the guys I was just shooting the shit with he's like oh, yeah, he's like, you know what do you do for work? Blah, blah, blah, blah. And I was explaining freight broker. And he's like, oh, he's like, is that like TQL? And I was like yeah, they're like a, they're like a big competitor. He's like, yeah, we're from Cincinnati, blah, blah, blah. I got, I got a giggle out of it that they're a household name there.

Speaker 1:

But anyway, but, like you look at a large company Right, They've got a corporate location and subsidiary branches Right. If you don't have a way, you use. You know companies in Colombia or in the Philippines or Mexico. There's plenty of them out there. You know breakdowns in communication can just be disastrous, so let's go through some of the processes are huge.

Speaker 2:

Yeah, 101 level things to do on every load. Right, you went through your dispatch checklist, but there are things you should have in writing before you move every load when it's coming from. What are the pickup times and terms? First come, first serve, by appointment, right, where is it going? When does it have to be there? Is it a window or is it by appointment? What is the commodity? And everyone goes, oh well, why is the commodity matter? It's just going in a truck. To your point earlier.

Speaker 2:

Is there an exclusion on someone's insurance because of the commodity? Does that carrier have an exclusion and their insurance for it? Like, that commodity matters and also the rate, just for, like, basics, like that all needs to be in writing and anything that is required to submit for that invoice Do you need to put in the BOL, does it need to have a certain amount of signatures? Like, because that information needs to get to the carrier, right, and that is important. Okay. Now the second thing that should happen on every load is, like, even though your shipper sends that to you, you should call both the shipper and the receiver and confirm those things, right, like, I'm sorry, and the equipment type and is there any additional requirements like flatbed tarp, what size tarp? Chains, you know, e-tracks for a van, like any special requirements that all needs to be in writing why? Because if you book a carrier and you didn't tell them and they get rejected, that is your fault for not asking as a broker, that is not the carrier's fault and you should pay them Right. And it is not.

Speaker 1:

Also think like reefer settings on a reefer.

Speaker 2:

Reefer settings single shoot, double shoot, right, continuous, intermittent, right. Like you need to ask these things and even though technically I think it's the shipper's responsibility to communicate that every human being ends up in bad habits with people they're used to working with, that kind of already know these things. So you've got to ask all these questions when you start moving freight for sure, and really should ask them on every load, because I can tell you when a claim comes up they're going to go right to those details. And if you didn't communicate into the carrier like that is on you for negligence, that is not on the shipper for not telling you they're going to look at you as the broker because the carrier's insurance is the one that's coming into play and the other one that, like I see lots of issues on, is like just calling the shipper and the receiver. Hey, just wanted to confirm your hours and to make sure we're good, because there are mistakes that happen in tenders. You send a truck and they go. Oh well, my shipper said you guys load to 430. And then the shipper goes no man, we close at three, we will load to 430. If a truck's here by three, we'll stay late to load them, but if a truck shows up at 415, we're not going to load them right. These are the things you need to clarify because you will pay the cost if you get it wrong. Same thing on the delivery right and like.

Speaker 2:

This happens so much just because people don't take the time to confirm these things. And then the other one is if you are confirming any appointment anywhere at any time over the phone, you need to also get that in writing. Why Well, I called the facility. They told me my appointment was at noon. Because people make mistakes. It's CYA like cover yourself. So if I call Steven and he goes, yeah, your appointment's set at one tomorrow. I'm going to send him again 10 seconds email. Hey, steven, can I get your email address? I'm just going to shoot that over to confirm that in writing. Yeah, no problem, ben, steven at XYZ company appointment confirmation one o'clock tomorrow. It's a reefer. Here's the PO, steven. All he has to do is respond confirmed.

Speaker 2:

Why does that matter to get in writing? Because if my truck shows up when he's supposed to and his loading doc goes, we don't have you on the schedule because Stephen got a phone call or his boss came in and interrupted him in between me talking to him and him putting that in the system. There is no way for me to prove that. Maybe if you've got a recorded phone call you can use those and they can help. But it is so much harder to go and cover yourself and get that shipper to pay for their mistake with a recorded phone call over an email. If I got an email I can just email Steven. Hey, my truck's there. You confirmed this yesterday, see attached email. Now Steven's got to go to his loading dock and say hey, I'm sorry I missed this. Can we work this guy in?

Speaker 2:

And Steven is on the hook to pay the detention for the truck for his mistake, not me, because if it's not in writing it might as well have not happened. And like you might do this 50 times where the phone call was fine. The problem is the 51st because actually the first 50 make it more likely it's going to happen, because now you're in a bad habit you never get it in writing. Now all of a sudden you have all of these and let's go back to the earlier point invoices that aren't getting paid. Carrier is saying I showed up on time, here's my detention.

Speaker 2:

Shipper doesn't want to pay you your detention. You're arguing with your shipper that you talked to Steven on the phone. Steven says, I don't remember it, that invoice doesn't get paid for 45 or 60 days, and the carrier is calling you every day and a week later wants to file on your bond, or two weeks later is filing on your bond. Now your accounting person is talking to your bond, to Steven and the trucking company, all trying to fix something that you didn't spend 10 seconds to send an email for. These problems don't get smaller when they don't get done. They get bigger and then they create hours and hours of workload for the other person on your team responsible for getting you paid for the work you did.

Speaker 1:

Well said. What's the thing I always say is bad news gets worse with time, right so the more expensive too. So please, please, please, learn from the anecdotal mistakes and stories that we've shared today what else you got, yeah go ahead.

Speaker 2:

So the last one is and I get this one a lot is why do I need to get the BOL or, I'm sorry, POD proof of delivery when the truck delivers, the driver is just going to send it to their accounting department and they're going to send it to our PAP department anyway. Here's why you need to ask for that copy when you check.

Speaker 1:

And it can be a picture on a cell phone. Literally just take a picture on a cell phone.

Speaker 2:

Hey, just text me a picture. First and foremost, did that load deliver clean? Was there a rejection? Was there a partial rejection? Was there a claim? The sooner you know that one, the easier it is to fix.

Speaker 2:

Secondly and we were talking about claims a few weeks ago there is a timeline. If you aren't notified about that claim in a certain amount of time, insurance will say sorry, you didn't tell us in time, we're not going to cover it. It's a huge reason. Second, it is part of servicing your customer to let them know in a timely manner if something went wrong with their load. And if you're waiting for accounting to go, hey, this customer didn't pay the bill because it looks like there's a rejection from a load 30 days ago.

Speaker 2:

That is not exactly what I would call service and it's certainly not you knowing what is going on with the drivers you hired right and then, like the other more important one is like you need to be able to make sure while the driver's there, right, drivers are going to go run another load. They might run 30 loads between now and a month from now, like there's so many things that are going to happen they're not going to remember. So if that driver's on site and he goes hey, just want to let you know like I'm going to text you this BOL, but I was here four hours and I need detention. If he's there I can say make sure you get the receiver to sign that. Please have them initial it so I can get it approved and get you paid soon. Right, if I can deal with that while they're there. It is so much easier to fix than waiting for somebody to tell me a week or two from now.

Speaker 1:

Yeah, there's also a lot of tools out there now for capturing images and document uploading. I mean everything from Quickscope, trucker Tools. A lot of these platforms out there now have the ability for a quick picture to be taken. It's sent over, it's timestamped, all that stuff. Again back to your point about the proof of delivery or the bill of lading at delivery. About the proof of delivery or the bill of lading at delivery because they send it to you doesn't mean they don't have to still send it into the accounting team to verify. But it's just, hey, real quick, send me a quick picture or lump receipts.

Speaker 1:

Just want to make sure. Yeah, just want to make sure.

Speaker 2:

If I'm going to, pay you for your lumper. My customer requires the receipt. You have it right there because you just paid the guy. Can you text me a copy of that? Great, I mean, we all get receipts all the time. How many of you can find a receipt you got three days ago? I don't care what you're doing, right.

Speaker 2:

Like it's hard to find a receipt if you need to return a toaster oven to Target, let alone when you got a whole envelope full of paperwork as a driver driving all over the country. Right Like make it easier on yourself and the people that are working with you.

Speaker 1:

Exactly. Well, good discussion, Let us know too, guys, if you have any questions on you know, whether it's one-on-one level or anything else, we'll take those and answer them. On our final mile episodes that come out every Tuesday. But any final thoughts, Ben.

Speaker 2:

Whether you believe you can or believe you can't, you're right.

Speaker 1:

And until next time go Bills.

People on this episode

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Benjamin Kowalski

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Nate Cross

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