Are you thinking about taking on remote Freight Agents to work under your name and your Authority? Are you watching your Accounts Receivable and the risk associated?
There can be a lot of reward by hiring Agents for your Brokerage and you can grow your business significantly. However, there is also risk involved. Brokerages have to watch cash flow very carefully.
Generally, the brokerage industry runs on a smaller profit margin than many other industries so this can cause strain on cash flow. If your Accounts Receivable gets extended too far, it’s easy to run into these cash flow problems, and you might find a line of credit, loans, or even factoring is needed. It gets even more critical if a large customer goes bankrupt and can’t pay. Over the years, this is one of the main causes for brokerages to go out of business.
When bringing on Freight Agents, this Accounts Receivable risk gets amplified because you’re trusting another small business to do its due diligence on their customers.
In these cases, your brokerage should look at Accounts Receivable Insurance. Accounts Receivable Insurance protects a company when customers fail to pay what they owe. Usually, it covers a percentage of the receivable. The pricing of this type of insurance is based on the risk involved for the insurance company. Insurance companies have many ways of evaluating this risk including helping you establish credit limits for any new customer coming on board and growing that credit with the customer over time.
Freight Management’s Systems TMS fully handles Agents and Credit Limits within the software. You can lock down Agents so they can only see their own customers and carriers (if needed).
All internal financial reports can show you the breakdown of each Agent, so you always have a good understanding of your liability with your Agents. The TMS also has support to extend credit limits for customers so you can make sure your business always has a focus on the risk of your Accounts Receivable.
Please contact us at firstname.lastname@example.org is you would like to find out more about how FMS can help you manage your risks with Accounts Receivables.