Avoiding Costly Mistakes and Payment Issues in Freight Brokerage | Final Mile 62

Ben Kowalski & Stephen Ruhe answer your freight brokering questions and discuss:

• Receiver Issues
• Double Brokered Loads
• Dispatching
• Paying Carriers

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Chapters

• 0:00 Avoiding Claims and Double Bookings
• 6:48 Preventing Double Brokered Freight Payment
• 11:10 Payment Options for New Brokerages
• 23:29 Addressing Payment Issues With Carriers
• 27:42 Navigating Challenges in Freight Payment

Transcript

Speaker 1: 0:19

All right, welcome to this week's episode of the Final Mile, where we answer all the questions we get throughout the week, whether you're emailing them directly to us, youtube comments, facebook group. We try to pull them from everywhere you send them. We've got four today one on park loads and claims, one on double-booked carriers for a load. On double booked carriers for a load. We've got a third question on dispatching as a possible entry into freight brokerage. And the last one we're gonna talk about are how and what you can do paying carriers as a new startup brokerage. So let's jump right into it. And the first one we've got what happens when the receiver says load should have been tarped and files a claim? The carrier rate con did not specify that the load must be steven. What are your thoughts?

Speaker 2: 1:14

you're running into this what do you think?

Speaker 2: 1:17

so I don't do flatbed um, but I've ran into similar situations and I I know on a previous podcast. I can't remember exactly what the company's name was, but uh, we'll, we'll find it and put a link in the description below. But, um, so the BOL is what dictates the if something needs to be tarped or a temperature or whatever. So if the rate confirmation doesn't specify that the load needed to be tarped but it specifies on the BOL, the carrier would then be held liable, while the rate confirmation is a contract, and I'm sure there's probably some aspects that I'm not aware of, but ultimately, if you as a carrier are picking up a load, your driver should be inspecting that BOL, make sure that the requirements that were given to the driver, either from the dispatcher or the broker, match what's on the BOL. And if they don't match, they need to get clarity and then run it per the BOL, unless they can get something in document and then on writing on that BOL that states otherwise.

Speaker 1: 2:18

Correct. One of the first things we teach anybody when they're working at a brokerage is that you should be check, calling that driver Once they're loaded. You should be speaking with them and one of the first questions we ask on every load is hey, can you check the BOL and make sure it matches everything we put on the rate con? And the reason we do that is to exactly to your point. See, if there's a discrepancy, we're going to immediately go to the customer, the shipper, and verify why that could be there. So in reefer loads it's always the temp. Hey, can you check the temp on the BOL and does it match what we send in the rate con? If it's different, we are immediately going to reach out to the customer or the shipper and say, hey, please verify which temperature there's a and see from what you tendered to me and what the BOL says that they gave to our driver. To clarify Again, the best way to not have a claim is to prevent it in the first place. Again, I used to move a lot of tarp loads and a lot of flatbeds. We would do this on every one Once the driver's loaded, calling the driver and verifying hey, which PO did they load you with Because, again, a lot of the flatbed loads we did they're exactly the same and they look the same but they're different POs, Sometimes they're different steel, Sometimes it's a different order number and oftentimes at one of the shippers we worked with like they would mix them up and then once it got delivered, it was a huge issue. So we would just literally ask the drivers hey can, does the PO match what it was on the BOL? Does it match what was on the Raycon? Okay, hey, did you match the requirements on the BOL? Does it also say TARP? Does it need a TARP? What is the size of the TARP? Right, and if it doesn't on the BOL but it did on the Raycon, again going back and making sure that the customer's tender says this If it says TARP, the BOL doesn't pick up the phone. Call. Verify before the guy leaves. You do not want to find this out later.

Speaker 1: 4:03

We had a guy I was talking to like a month ago. They drove literally across the country with this reefer at 31 degrees, with lettuce in there and like froze the whole thing, and it was a huge claim. Well, like that easily could have been prevented with a phone call to the carrier at loading or a check call later that day, Damn, twice a day. You should at least be asking the driver hey, what's the reefer temp, you haven't any issues with it to make sure he doesn't drive for four days with the wrong temperature. And then there's a claim because that is preventable, right?

Speaker 1: 4:34

The only thing I would add to that is I think there is also some protection in brokerage insurance under what's called like errors and emissions, but again, I haven't had any of them play out and we're going to have Cameron on soon to talk more about insurance policies for fraud and these things, so we'll dive a little deeper. But I think that kind of covers that one. If you're a carrier, right, Like, as a carrier, you should also be looking at the BOL, making sure your drivers are looking at the BOL, and honestly, it's also helpful to, just like I would. If I'm a driver like, I would still at least ask, like, if it is a commodity that looks like it probably could get damaged or harmed, being wet, just ask the question to the guy loading you.

Speaker 1: 5:15

Hey, I noticed it doesn't say tarp, but like, this looks like raw steel. And if I'm going across the country, can this get wet? And if they go oh no, it can't get wet. Okay, Well, should I be tarping it? And then the driver can absolutely call the shipper, call their customer or call the broker to verify before. You do not want to find out after the fact. I know everybody's under stress and you need to get things loaded quickly, but a simple phone call or a message could prevent a lot of these issues beforehand or a message could prevent a lot of these issues beforehand.

Speaker 2: 5:47

Yeah, complacency is. I've said this a million times complacency is the root issue to most fraud issues, to claims, whether it's the dock workers, the carrier, the brokerage, complacency is where your pitfall is Assumption.

Speaker 1: 6:00

Yep, assuming they didn't tell me, so I'm good, all right. Next one one of my loads got double booked. I think it means double brokered maybe, but it says double booked. I already paid the carrier that I thought was the correct one, and they sent me the bol once they got empty. So I paid them. Okay, it turned out I paid the wrong carrier. Five days days later I receive a phone call. So I'm not sure what to do next, because this carrier is asking me for money or he's going to claim on my bond. Do I fight it or pay it? What would you do in that scenario?

Speaker 2: 6:35

Well, it depends if you want to keep that customer, If you want to keep the customer, you're going to pay it. If you don't want to keep the customer, then I mean I guess you could write it off, but why would they lose the customer?

Speaker 1: 6:46

Walk everybody through that.

Speaker 2: 6:48

So the uh in terms of freight payment, I can't. I don't know what the regulation is, but the company that hauled the freight is entitled to payment, regardless of if it was double brokered or not. So if you paid the double brokered carrier that rebrokered it, your customer, who is responsible for the payment of that freight, is going to be held liable for that payment. And just because you already paid a carrier does not get you out of paying that again.

Speaker 1: 7:23

Correct and I actually talked to the client about this this week. The part that is really hard to determine is if the first year had the signed bill of lading that it was delivered right. Most brokerages use that as the verification that was the carrier, that brand, and then that's what they use to make sure they pay the correct carrier, right, that brand, and then that's what they use to make sure they pay the correct carrier right. Now again, if it's a double brokered load, like there is the chance that somehow the fraudulent party in the middle got the bol from the legitimate carrier, sent it to the brokerage, got the money right, pretended to be somebody they weren't, and then the real carrier never gets paid and they call back like 40, 45 days later or a week later or whatever. Right, and I've seen those happen too right. So one I think to prevent these things, you really want to be using a vetting tool for sure, like Highway, to make sure you're doing business with a company you think you are, to make sure they haven't that carrier hasn't been hacked to their phone number, their email address See, that happened in the past two weeks, right, and I think you should be using a second one like carrier 411. And you really should be looking at these things before. You also should be making a phone call to some verified phone numbers before you book and send that tenant to the carrier, to make sure the company that called you isn't somebody pretending to be somebody else. Find the real phone number, call them and see if they know about the load that you wanted to book. Right, because that simple phone call prevents a lot of this.

Speaker 1: 8:50

However, it doesn't prevent all. And if you still get in the scenario right, the only real way I think you can actually protect yourself from having to pay somebody twice is QuickScope, because QuickScope is the product where you can put the pickup number in and the MC and that driver has to take a picture of their truck at the shipper before it releases the pickup number. It is really the only tool or only piece of software I've seen that will verify at pickup not just at booking that that truck that was sent in is the one that should be moving that load, because it is a risk that you pay a wrong carrier because somebody was able to hack a motor carrier's FMCSA pin, change the phone number and the email address and steal tenders and do these things Like that is pretty common. Now the other way you can do this is to talk to your shippers and make sure, hey, can you guys just verify the MCs that are loading this truck every time we send a load Like even just writing it on the BOL or emailing it or texting it or keeping a log at the shipper, whatever that is. Because the only real way to work back through this to make sure you're paying the right carrier is that the person that loaded it can tell you which MC and truck actually did load the freight.

Speaker 1: 10:04

Because, again, if the legitimate carrier sends the POD to a fraudulent party that they didn't know was fraud, that criminal is literally going to use that same document to get you to pay them. And then you still owe that carrier money that moved the freight. Because, to your point, the regulation states the people that own the cargo, the beneficial cargo owners, owe money to the company that physically moved their goods, because that's who benefited from it. It doesn't matter if that shipper paid you and you paid the wrong company. At the end of the day, that trucking company is owned by the people that own the cargo. That's who owes them money. So, to your point, if you don't pay them, they absolutely can go back at the shipper and if the shipper's already paid you, they're going to have to pay them twice and they're probably not going to use you again.

Speaker 2: 10:47

So the one thing I thought about when you were talking was they mentioned that five days later they got a phone call and usually it's been a long time since I've had a load double brokered. But usually if you get a double broker load and the carrier wasn't paid to your point, you may not find out for 40, 45 days to a non-payment. The fact that this person found out in five days Could have been a quick pay.

Speaker 1: 11:13

The carrier that they booked probably was expecting like a one or three day quick pay and I'm guessing the fraudulent company promised them a three day pay and when they didn't get it that company didn't answer the phone. So then they called the shipper. The shipper said they gave that load to that broker and that's probably how they found them, as my guess it's usually all plays out.

Speaker 2: 11:30

It could have been, but I I read a story not too long ago, yesterday, where a guy was, uh, went to prison because he was, um, sending fake invoices to Google and Google was just paying it. And I was saying I've never seen this happen in our industry, but I mean.

Speaker 1: 11:46

I have. I saw it happen a month a month ago. Uh, somebody hacked a shipper system, changed the invoice um wire details and the domain name on the invoice and they got the shipper to pay a fraudulent invoice that looked like the brokerage invoice.

Speaker 2: 12:01

Yeah, so it is happening. So, yeah, I would. That's the other thing is, you know, I would verify as much as you can before you make another payment. But yeah, if that is the case and you are liable for that payment.

Speaker 1: 12:12

Number four do you feel it is important, when new to the industry, to first dispatch before getting into brokerage? If that is your main goal or objective, what do you think?

Speaker 2: 12:24

So actually I responded to this comment on our YouTube channel. But dispatch is an important piece and you're going to learn the carrier side faster than just getting into being a broker. Now, whether you're working as a dispatch service or working for a carrier, the other option I put in there is carrier sales. It's going to be more carrier oriented. You're going to learn more about their side of the industry Hours of service and equipment types and stuff like that. That's all valuable information that you can take into being a brokerage. Do you need it? No, but will it put you a leg ahead? You're a competition that's also calling that person. You can speak more to their needs and the equipment types of what can and can't be done.

Speaker 1: 13:13

Agreed. Now I'll speak from personal experience that, like I think one of the most valuable things I learned that made me more successful earlier on as a freight broker was when the first four months or six months at the job all I did was cover loads for the brokers. And dispatching as a dispatcher with motor cares is very different than covering loads for a freight broker and technically dispatching for a freight broker right. Because when you work as a dispatcher for trucking companies, yes, you do learn valuable information. You learn equipment types, scheduling, appointments, how carriers move, what and how is important to them, like that is all valuable. But the one thing you don't get is the experience and practice of negotiating right with the open market, like how you actually cover load, how quickly you have to do that sometimes, how posting loads and calling posted trucks or sending emails to carriers when you got a load move in an hour and a half. You just don't get that practice and that is one of the more important skills, I think, for a freight broker. The second thing is when you do that job and you're booking loads and you're responsible for the carriers you're booking, that is what I feel gives you the real world experience of what a shipper goes through, because there is nothing that I can say or explain to somebody that will translate into what it feels like to when you book a load for an important customer and an important scenario and that truck's supposed to be there in an hour and a half and they just vanish or disappear, don't answer the phone, fall out and don't call you and they just vanish or disappear. Don't answer the phone, fall out and don't call you and you feel this pit in your chest and you are terrified because this customer is desperately in need of that truck to pick up on time. They've told you how important it was. You spent a ton of time and effort to get them the right truck and then you're left with no options and you got to have that difficult conversation.

Speaker 1: 15:06

To me, that is one of those things that when you experience it, you'd never forget it, and those are the problems we solve as freight brokers for shippers.

Speaker 1: 15:15

So when you've literally gone through it, you can one relate to it. When a shipper tells you it, you can understand it and you can have a much better conversation when you have been through it, not read about it or watch somebody explain it to you, because there's just some things no matter how much you read or watch videos on like, it is nowhere near what it's like to physically go through the ups and downs and the feelings and the fear and the emotions related to it. And to me, that's what made me so much better at sales and talking to customers, because when you can talk through an instance like oh my Lord, this happened to me two weeks ago, and literally talk through this, that resonates with a shipper because now they understand that you understand them right. That's how to me, you can effectively build rapport is knowing what they go through and being able to talk about it. And if you're just dispatching for trucking companies like you just don't get that context, that practice or that understanding.

Speaker 2: 16:06

He's like you, just don't get that context, that practice or that understanding.

Speaker 1: 16:11

Yeah, yeah, I would agree, all right. Last one, great content guys. Can you speak about options to pay carriers as a new startup brokerage? Thank you, what are your thoughts?

Speaker 2: 16:25

There's a couple of options. I haven't had to deal with this directly, but I've seen and heard people talk about it, so some of your options. The biggest hurdle right is you don't have credit or carriers that are using.

Speaker 1: 16:42

Factor and companies may not be able to use you or you don't look trustworthy. So some of the options that you can utilize are you know?

Speaker 2: 16:50

paying for half of it up front. Once you have a picture of the BOL to kind of secure capacity, you can pay.

Speaker 2: 16:58

you know, on delivery there's a bunch of options, the biggest, factor is that if you're setting up these arrangements, especially if it's like Venmo or Zelle or whatever make sure you're doing it right, you verified it, you're not getting swindled, but also make sure that, because you're not doing it through an ACH or some sort of track payment, that they're reporting this payment to their factoring companies or to credit companies so that it does add to your credit Correct, and that will extend you know, that will shorten that window for you to be able to work with more established carriers.

Speaker 1: 17:36

So I'll go through this right, because I've been doing a lot of this this year. So the first is, like Ansonia states, that they will not establish your credit rating at all until you have, I think, at least four months of two debtors reporting each month. So you need to be moving at least two loads, basically a month, for four months, before they're even going to establish it, and I haven't had anybody be able to verify if it actually even happens at four months. Lots of anecdotal people have told me and other owners that it's sometimes six, sometimes it's seven, and I've seen no consistency in when that actually happens. And one that matters a lot because if you have no credit reporting on the load boards and you post a load, if you're a carrier, you're not going to call that broker. Why? Because there's literally no information. You don't know if they have credit, you don't know if they're real, you don't know if they're going to pay you. So if you can choose amongst 10 loads, that's the last one you're going to choose, unless you absolutely had to, so one. It's harder, for sure, to even get carriers to work with you until you have it. The other thing is you brought up a great one, which is you can pay them upfront, you can pay them half on delivery. The sweet spot I found talking to some owners of factoring companies is 21 days. So if you pay them in five to seven days, it's too soon and you actually don't get it reported to your credit. If you pay them in five to seven days, it's too soon and you actually don't get it reported to your credit. If you pay them in 30, it's a little too long. So if you are setting up your factoring as a new brokerage, you want to automate almost all your payments to be 21 days, because that is the one that is most likely to hit. Get reported and get reported faster, get reported faster.

Speaker 1: 19:09

The next thing I want to point out is the other question I always used to ask was hey, you know, talking to a carrier, are you guys exclusive or non-exclusive with your factoring company, and what does that mean? That means the carrier either has an agreement with their factoring company that every load they run will go through that factoring company. That's exclusive or non-exclusive. They can pick and choose which loads to factor. Most are exclusive. Now what I used to think was if they were exclusive, they weren't allowed to work with a broker that wasn't on their approved list, right. However, it's the exact opposite. I was told again by the owner of a factoring company that there's like a regulation or a law that no company is allowed to have like undue influence over another company's business. And what that means is, if me, as a factoring company, and you're the motor carrier is my customer, steven, if I tell you, here's your approved list of a hundred brokers, if one do you want to work with is not on my list, that literally gives you the ability to work with them directly, outside of the exclusive factoring relationship. Now, what you need to ask that care for is called an NOR or a notice of release, and we're actually going to have him on the show in the next couple of weeks to talk more about this. But you absolutely can still work with a motor carrier that you're not approved with and pay them directly, right. But the thing I would say is I would suggest you still set up a factoring company, even if you have the capital as a new freight broker, because the factoring company, even though you're paying a bit of a fee it, you know it's getting reported, and also, if the motor carrier is a factoring company, it should be reported twice. So it makes it a lot easier and it's far more likely. You'll get your credit reported quicker if you are using a factoring company and the motor carrier is too, and then again set them at 21 days and you've got to have these conversations with every carrier almost on every load. And what I found is also helpful Don't wait until after you negotiate the load to talk about this, because then it seems like you're hiding it. What I found is most effective for me, just from practice and practical experiences.

Speaker 1: 21:08

I go right at this like, hey, steven, hey, I was looking at this load. I wanted to see if it would work for you guys. But hey, real quick, steven, I first asked if you're guys available for the load before I spend the time. He's like, oh yeah. And I'm like, hey, this could work. I'm like, hey, before we go any further, can you run our MC and your approved list, because I know we're working to establish our credit? Some of them are approving us. By now Some were still not on their list. Can you take a look at that? And then I'm telling them that what is likely to happen? So they're less cautious when they see it. And then they come back and they go oh hey, you guys are on our approved list. I go okay, hey, great, like who's your factoring company? And then I usually ask for a point of contact at the factoring company and I ask them if hey, can we pay you guys directly, if that's an option. If they say yes, good, we don't have to do anymore. If they say no, then I use that point of contact at that factoring company and I call the factoring company.

Speaker 1: 21:58

Explain the scenario. We're a newer brokerage. We've been around this many months. We're trying to establish our credit. Is there anything we can do to run this load with your carrier? We're willing to pay you half upfront. Maybe we're willing to deposit a little bit of money with you guys so you don't have to take the risk with us. But what are our options to be able to work with some more of your customers? And if you approach that and you take those extra steps and take the initiative to have those phone calls, a lot of them will work with you. A lot of the bigger ones still won't. And that is what it is. You're probably going to wait nine months to a year to work with the RTSs, the OTRs and the triumphs. Most of them have nine months to a year now before they'll prove you to work with their carrier base, even once you have credit. But those are the things that I've run into and have helped in these scenarios.

Speaker 2: 22:43

So an add-on question, since we're talking about factoring companies, something I've seen quite a bit over the last five years when it comes to aging reports let's say, for example, you get an invoice with paperwork from a factoring company with a carrier that you worked with, but the POD is not for that loan. Now they're going to set a timer because they sent you an invoice and the terms are net 30. But because you haven't received that paperwork, I'm not setting that timer and I'm reaching out to them. Hey, you need to send me the correct paperwork before we can consider this closed. But all too often that aging report doesn't reflect that change. Have you had to handle that situation? How would you handle that situation?

Speaker 2: 23:33

What does an aging report over 30? What does that do to a brokerage when carriers are looking at the report and they see days to pay is you know, 30 plus because of a factoring issue? Or like, for example, during COVID, the USPS had an issue with delivering mail. There was a bunch of brokerages that had their days to pay go up because they were sending checks in the mail. That got lost. That affected their aging and their credit score started to come. Their days to pay started to go up. So how do you do that?

Speaker 1: 24:04

yeah, well, to be honest, I would reach, like you said, directly to the factoring company. I would try to get ahead of it and, to be honest, if it's the wrong pod, I'm probably going to immediately send an email to the carrier and see if I can get the correct pod that day so that I can start processing it immediately. I'm going to jump basically sidestep the factoring company after I've notified them hey, this is not the correct POD, right? Please reach out to the carrier so they hopefully can do this correctly. But then to basically you know, cya cover myself. I'm going to go directly to this carrier and be like, hey, we got the wrong POD.

Speaker 1: 24:37

And the thing that I find is most helpful to resolve these is I don't make it seem like I need this. I make it seem like it's on a benefit of the carrier, because it is. I'm going to call them. I'm going to say, hey, look, jimmy, I want to get the correct POD so I can process your payment today. I don't want you guys to have to wait.

Speaker 1: 24:55

I can't even process your factoring request to your factoring company because they don't have the right one. I'm sure they probably just confuse them, but can you just send this to me directly and then I can start it today. So now they know I'm trying to help them, I get the POD. Now I'm going to send the correct POD right back to the factoring company. Here's the correct one I got from the carrier. From the carrier I can now start this into process. How it would affect them Again, I think it would be a ding and it would probably come back a few days late. But if you've got a lot of transactions it's probably not a huge detriment. But for sure you want to avoid that at all costs because your days to pay is very important in your ability to secure new carriers to service your customers.

Speaker 2: 25:34

Like you said, they go hand in hand If you can't do one you can't do the other right and it just happens like if you are a carrier, that's on a broker, that's on looking at loads on a load board, the two metrics you see are cs and dtp, which is credit score, and days, and that's the only that's, and there's not a lot of vetting tools out there for carriers. That's like the extent of it. So if that gets messed up from you posting loads or whatever, let's shoot yourself in the foot exactly you're causing. And then. So the other factor to that is like you know. So if the invoice is incorrect, because maybe you sent, maybe they had detention or a lump of fee that they forgot to add because they're just trying.

Speaker 2: 26:14

It's a cash flow thing. So they're just submitting their paperwork, so the factoring company will invoice them. The factoring company will invoice them. The factoring company will deposit those funds into their account that day and then the factoring company then gets paid many days later. And sometimes you'll run into issues where, like, the lump of fee wasn't on there or the tension wasn't on there. So you like, how do you? The brokerage needs to fix that. But again you can't pay the carrier what's not on the invoice without it being correct. So it's another.

Speaker 1: 26:46

It does and getting those fixed is a huge pain in the ass, even from a personal perspective. Like if you've got to get things corrected on your credit report. Like there's a process and I know it's like literally laws that define what they have to do. However, like it takes a long time. I had this happen to me just personally years ago with, like a medical bill that wasn't correct that I'd paid, and they literally like paid the bill and then somehow they screwed it up, sent it to collections, didn't see it, found it out years later it was on my credit report. Like it takes a long time to correct these things. Those companies don't move quickly on my credit report. Like it takes a long time to correct these things. Those companies don't move quickly. And if it does happen, like, go through the procedures, reach out to the credit reporting agencies. Reach out to like Ansonia probably I've reached out to like the bigger ones first and go, hey, like I've noticed this is showing up on my credit report.

Speaker 1: 27:30

This happened because of this scenario. What are the procedures to have it removed? Usually I have to send like a formal letter, give them written notice and there's a certain amount of days they have to verify this, reach out to that company, make sure it's true before it's removed. So definitely harder to fix after the fact. Like most things in life, right Things don't get easier. As time passes, they tend to get harder, sweet man. Any final thoughts, steven?

Speaker 2: 27:58

No, I mean, you know. Hit that like button, subscribe If you want to see your questions answered on the show. Leave a comment below um. Check out the Facebook group. Uh, I think we're almost to a hundred thousand in there now. There's a lot of the first three questions from today came from there. The other two came from our YouTube comment. You can also head over to our website and um sign up for the newsletter and shoot us an email that way as well.

Speaker 1: 28:25

Yep Again, whether you believe you can or believe you can't, you're right.