F
FreightFactoringUSA
Guest
I work in freight factoring so I see a LOT of new carriers come through, and the ones who struggle the most aren't the ones with bad trucks or no loads - it's the ones who don't understand cash flow. Figured I'd share some things that trip people up.
1. Net-30 is not your friend when you're starting out. Most brokers pay on 30-day terms. Some stretch it to 45 or even 60. If you're running a cargo van or straight truck and your monthly expenses are $4,000-6,000, you need to have that cash sitting in your account BEFORE your first check comes in. A lot of guys burn through their savings in the first 6 weeks because they didn't plan for the payment gap.
2. Always check a broker's credit before you book a load. I can't stress this enough. Go to FMCSA's SAFER system and verify their authority is active. Check their surety bond status. Every broker is required to maintain a $75,000 bond under MAP-21. If they can't show proof of that bond, walk away. Also look them up on Carrier411 - other carriers report payment issues there and it takes 2 minutes.
3. Keep a separate business account. Don't mix personal and business money. When tax time comes you'll thank yourself. Also makes it way easier to track your actual cost per mile, which most new expediters have no idea about until they've been running for 6 months.
4. Understand your actual cost per mile before you accept rates. Insurance, fuel, maintenance, tires, permits, phone, ELD - it all adds up. I've seen guys running expedited loads at $1.50/mile thinking they're making money when their actual cost is $1.35/mile. That's $0.15 profit per mile. On a 400-mile run that's $60. Is that worth your time?
5. If cash flow is tight, look into factoring. Full disclosure - that's what we do. But even if you don't use us, understand how it works. You deliver a load, submit the invoice to a factoring company, and they pay you within 24 hours (minus a small fee, usually 2-5%). The factoring company then collects from the broker on the normal net-30 terms. It's not free money - it's a tool. Use it when you need to, not as a permanent crutch.
6. Build a cash reserve. The goal should be having at least 2 months of operating expenses saved up. That way when a broker pays late (and they will), or your truck needs a repair, you're not scrambling.
Happy to answer questions if anyone has them. This is the stuff that keeps trucks on the road.
1. Net-30 is not your friend when you're starting out. Most brokers pay on 30-day terms. Some stretch it to 45 or even 60. If you're running a cargo van or straight truck and your monthly expenses are $4,000-6,000, you need to have that cash sitting in your account BEFORE your first check comes in. A lot of guys burn through their savings in the first 6 weeks because they didn't plan for the payment gap.
2. Always check a broker's credit before you book a load. I can't stress this enough. Go to FMCSA's SAFER system and verify their authority is active. Check their surety bond status. Every broker is required to maintain a $75,000 bond under MAP-21. If they can't show proof of that bond, walk away. Also look them up on Carrier411 - other carriers report payment issues there and it takes 2 minutes.
3. Keep a separate business account. Don't mix personal and business money. When tax time comes you'll thank yourself. Also makes it way easier to track your actual cost per mile, which most new expediters have no idea about until they've been running for 6 months.
4. Understand your actual cost per mile before you accept rates. Insurance, fuel, maintenance, tires, permits, phone, ELD - it all adds up. I've seen guys running expedited loads at $1.50/mile thinking they're making money when their actual cost is $1.35/mile. That's $0.15 profit per mile. On a 400-mile run that's $60. Is that worth your time?
5. If cash flow is tight, look into factoring. Full disclosure - that's what we do. But even if you don't use us, understand how it works. You deliver a load, submit the invoice to a factoring company, and they pay you within 24 hours (minus a small fee, usually 2-5%). The factoring company then collects from the broker on the normal net-30 terms. It's not free money - it's a tool. Use it when you need to, not as a permanent crutch.
6. Build a cash reserve. The goal should be having at least 2 months of operating expenses saved up. That way when a broker pays late (and they will), or your truck needs a repair, you're not scrambling.
Happy to answer questions if anyone has them. This is the stuff that keeps trucks on the road.
