We all use numbers in everyday business transactions for a variety of things. For example, prices, SKUs, volume, weight, dates, and times can provide information to anticipate future orders or recall purchases. Outside of measurements and order descriptions, numbers can be used to represent a person. For example, social security numbers are a universal identifier for US-born individuals and residents, whereas credit score numbers represent responsible individuals.
Freight broker credit ratings are akin to the latter, utilized to determine how reputable and creditworthy a freight broker has been in their business dealings. According to FreightWaves Ratings, freight broker credit scores from zero to 69 are considered high risk, 70-86 are medium risk, and 87-100 are low risk. The following seven tips can guide brokers to remove credit risks and find more opportunities to build them through daily work experiences.
Pay Carriers and Partners on Time
Personal credit score gurus understand the value of on-time payments. Late or skipped payments quickly damage a personal credit score, and the same applies to a freight broker credit rating. Brokers can demonstrate the value in efficient cash flow for all parties by paying on time every time, with communication at every step of the way.
Avoid Overextending Freight Broker Credit
Building excellent freight broker credit can take time. By adding contracts gradually to the business, new brokerages can ensure they are not spreading their credit line too thin to be reliable. While learning how to sell as a freight broker is essential, too much momentum without available assets can raise broker risk levels and make the business less attractive to carriers.
Manage Freight Broker Cash Flow Correctly
While freight brokering is all about leveraging relationships between both carriers and shippers, it’s equally essential for brokers to have accessible assets. The right cash flow balance makes it easier to manage operations without incurring more debt, something that is an added risk on a freight broker credit check. Brokers who want to improve cash flow often pursue top-factoring companies to gain insight into cash flow and accounts receivable.
Pay Attention to Market Trends and Rates
Supply chain professionals focus on digital freight finance to keep cash flow high. However, like supply chain professionals, freight brokers must plan adequately for cash flow ebbs and flows by staying tuned into freight market trends and keeping an eye on spot and contract rates. This may seem good business principle, but mistakes have made it to a freight broker’s credit.
Use Credit Line Effectively to Grow Business
Because shippers and carriers alike will learn how to check broker credit scores, freight brokers need to keep a close eye on their scores and their competitors. Once labeled with a low-risk freight broker credit score, brokers must use their assets and credit wisely to grow their business intelligently. After all, a professional doesn’t become a freight broker of choice without continuing on the right growth track.
Keep Up With Monthly Premium Payments
Even when businesses have a high freight capital, industry-wide payment delays can strip freight brokers from easy access to it. With this in mind, freight broker credit success relies on properly managing premiums and loan repayments from lines of credit. In addition, auto-pay and scheduled reminders can ensure that a freight broker’s credit rating is not on the line.
Run Audits to Monitor Financial Health
Whether gaining freight broker marketing and lead generation insight or accounting expertise, outside assistance is essential to brokers trying to build or repair their freight broker credit. Freight auditors can provide analytics that reveals areas of weakness and actionable insight to boost financial performance. Sometimes all it takes is a second set of eyes!
Partner With HaulPay by ComFreight Today to Put Your Freight Broker Credit to Good Use
Once a professional understands how to check broker credit score, they are ready to move forward with better business practices to raise that score. With transparent digital freight finance, freight brokers can streamline their payment processes to stay on track with every load. If you’re ready to take the next step in your brokerage business, contact HaulPay for a demo today.