Came back with a bank window down yelling now money anything hey oh got the foot on the gas pedal to the metal when I'm getting to the back hey Got the foot on the gas pedal to the metal when the lane moving fast hey Let them all cross if they hate them let them make a bigger balls hey.
What is up, ladies and gentlemen? We are back. We are live. It is the Freight Coach Podcast, the top podcast in transportation, coming to you guys every single weekday, 8:30am Pacific, 10:30 Central, to break down some industry headlines. But most importantly, you guys provide some actual insight into what you can do with all of this information. If this is your first time tuning in, welcome. This is the real side of freight, ladies and gentlemen. And I say that before every single show.
And what I mean by that is I only speak with transportation professionals because at the end of the day, you guys, I want to talk to the right individuals who have done what you're looking to do or who are currently doing what you're trying to achieve, so you can take that information, apply it, utilize it, and see a meaningful difference in your business and your life. Happy Friday, everybody. And it is the proprietary, trademarked, yet not trademarked term Financial Fridays with my friends over at Denim Don't Sue Me. It's not actually trademarked, but this is our monthly show, you guys, to help everybody out with the financial acumen inside of your business.
Because our topic today is one that I'm like, it makes my blood boil thinking about it, but at the end of the day, you guys, it's something that you're probably going to go through, but it's also a process that you can work through as well. We're going to talk about collections. And you guys know who's back today to talk about this? My man, Sean with denim back on the show. Sean, thank you so much for joining me.
Hey, I am pumped on a Friday to follow Jeremy of Peregrine, my best friend, and I am so glad to be running up right after him Friday on Friday. Good Fridays for the Freight Coach.
Dude, it Jeremy is his story. Everything that episode, it's fascinating. And you know, because like, me and him were chatting on the phone prior, obviously, to. To going live on the show and everything and just kind of like hearing his story and like, his vision for where he's taking his company. Dude, I just, I love that stuff and I just love talking with people who are passionate about what they're doing. Man, it really gets me going.
He cares a ton about people and he toes that fine line that we all try to find and navigate up making some money, being a good person, doing right by the world, doing right by your partners. And I think he does a good job of kind of hitting all those topics, dude.
100%, man. And, you know, speaking of hitting a topic, I'm like, actually kind of shocked out of all these financial Fridays that we've done that we're like just kind of getting to collections today and kind of building a system around that. And, you know, I, I want to go on a soapbox here a little bit. There is nothing that is a bigger.
Great. I'll get my coffee. I'll grab a sip. My coffee for this one.
No, do it. Do it as a founder. When you're out there and you work so hard to get business, to get your, you know, to your dreams off the ground, you get that revenue that's coming in and then inevitably you get stonewalled by somebody, right? And like, I will say this is why. This is one of those reasons why I'm always about having a lawyer, having a contract because I've been burnt, right? Because of, you know, for whatever reason, it was just young in business and you want to trust everybody when you're going, especially when you're not having any customers or revenue to. You get a customer and then you think this is the greatest customer of all time. Nobody ever does anybody wrong. Nobody ever doesn't pay you. And then it gets to that point, right?
And there's just not a worse feeling when you have to reach out to somebody to ask them for the money that they owe you that, you know and they both know are owed to you for the service that you provided. Knowing damn well if you did not provide that service, they would have fired you in a heartbeat. So that's my little soapbox about that.
You made the sale, you did the hard part, right? Should all be smooth sailing from there. No problems ever, right? No.
Ever not? Yeah, no, no problem. No, none of that stuff. And, you know, it is. It's like, it's just such a thing because it's like you think all business is good business and, you know, every customer is going to, you know, pay you, and you're never going to have to worry about everything when that revenue starts. And it's just like, man, it's just like another hurdle. Like I, you know, I'm starting to realize more and more like the dude, the work is not the hard part, right? Like moving freight to Me going out there, Colton, that's not the hard. It's all the other bullshit behind the scenes, Sean, that just makes my hair even more gray than it already is as a 38 year old male.
This is that, this is the difference from being a business owner and a W2, right. It's stuff like this because as a W2, you did your job right, money, like, you made the sale, moved the freight track and trace. Everything was on time, no problem. And as a business owner, you are sweating, right. To be able to get paid and to make sure that money hits your bank account. Right. The difference between an accounts receivable and cash are very different. And so, yeah, that's my hope for us to talk about today is like how to make that conversion and how to do that in a way that is, retains your relationships, doesn't turn you into a bank, which I know we've talked a lot about, and allows you to be able to. Yeah. Maintain a healthy kind of profit and loss.
Yeah. And you know, and that's the thing, man, is it's like, it's so glorified out there about going out and you know, again, I'm never going to tell anybody to not follow their dreams and not go after what they want in life. But dude, you have to have a thick, deep stomach to deal with some of the scenarios that are inevitably going to be on your shoulders. And it's like, you know, I always use the example, if you don't have the stomach to be owed $15,000 on the 30th and have, you know, 12 grand due in payables on the 1st and you don't have any money to pay it at all.
And maybe your credit cards are maxed out or you don't have any way, if you don't have the stomach, if that thought makes you sick to your stomach, maybe ease into going out on your own if you're thinking about it.
Yeah. Which like, I think they call it like picking up nickels in front of a steamroller. You know, it's like you sometimes you got to be careful with all that. The thing that we hear from our clients sometimes too is the opposite is also true where they work with a factoring company and they fucking hammer your customers. And your customers are pissed because they're getting nonstop emails from the factory company who really want their money back because they're the ones that outlay this cash. And so they're assuming you're a deadbeat right out of the Gate, regardless of whatever your situation is. And all of a sudden you get a call from your shipping manager who's like, hey man, I keep getting a coffee factory. Can you tell them to like, ease off or we're going to find somebody else to work with?
And so you're on. You can't do and do it right either way. Right. You've got to find a way to be able to maintain those relationships also get paid on time and, you know, make friends and influence people or whatever the book is, you know.
Yeah, so how what is that happy medium? Right? Because I, you know, to me, yeah, I feel like being able to properly bill somebody and do that. Like, that's a massive component of, you know, doing business, especially as a broker out there. So what is that happy medium? Are you guys, when you guys are out there working with your broker customers, Sean, are you guys asking them like, hey, what are these payment processes look like with your customers? How do you want us to reach out to them? And then after, you know, say you onboard one of your current customers, are you contacting their shippers? They're like, hey, listen, we want to establish some, you know, some positive rapport, right? Like, how do you want us to reach out to you?
I just want to verify your billing just because, I mean, dude, you're right. Like, you don't want to be the reason why your broker customer loses a shipping customer and then you as a factory company lose a broker customer from that.
Right, exactly. And they go ahead and take a walk, too. Here are a couple of things that I'll say. First of all, man, this is not a problem if you run a lemonade stand, right? People come up, they buy their lemonade, they give you the cash, they walk away. This would be a really nice business to be in. But we are in the world of B2B. And so we run on terms and invoices and payables and receivables and all that stuff in a B2B setting. And so what we like to tell folks is, same way when you hire an employee, a lot easier to talk about the breakup when you're in the honeymoon phase, right? It's a lot easier to talk about the closing of that kind of cash conversion cycle when you're in the beginning of just establishing lanes.
So what we like to say to folks is that when you get on with a new customer, start it off right by, you know, what are your invoicing terms? Who's a good contact? How often do you pay? What's the Process, like, how. What sort of ID numbers do you need? I think that's something that Jeremy and I have spent a lot of time talking about is like, if you don't get the right ID in the right spot of the invoice, when Joanne runs those checks every Friday and she prints the paper out from your email and flips through them, if you're not on the thumb side, jolly, you're fucked, you know?
Yeah.
Like, so you got to make sure that you get on the right. You got to meet. Meet your customer kind of where they're at. So a couple of things I would say to folks right out of the gate, right? Start off getting the full set of understanding. So, like, everything that goes into what sort of equipment you want to run on, like, how often you want to receive communication, you know, all that sort of stuff. Keep that set of interview questions all the way going all the way through to invoicing, reminders, outreach, et cetera, so that folks know what to expect from you and you can be a good partner with them. Because, like, I think we. We always want to assume the best in people that, like, hey, just forgot we're at the bottom of the pile. Didn't do the right thing. Something.
How can we get in to make this process easier for you and us? We're not trying to. We're not assuming anybody's, like, nefarious kind of out of the gate. And so maybe you earn that title over time, but at least right out of the gate, you don't. You don't assume that. And so a lot of it is. Is process, process. So that's like, what I would say to people just, like, at the start of the relationship, really important thing to emphasize.
Yeah. I mean, I'm right there with you, man. I feel like having that out there. And then even go as far as, you know, if you don't have a contract, for whatever reason, for the love of God, please get a contract. Have clearly defined payment terms out there. And then, you know, another thing, too, that I found success in is offering multiple payment options, right? So whether it's ACH, Direct deposit or ACA and direct deposit are kind of the same thing. Excuse me. But then, like, credit card payment and everything, too, because, you know, some of these businesses that are out there, they like to maximize their credit card spend. They like to also throw that out.
They'll time it out to where it's like, hey, if their credit card bill closes on the 15th, they pay all their invoices on the 16th to get another 30 days of cash reserves built up before they have to pay that stuff out. And you know, as a business owner, yeah, it costs a couple of points, right? Like if you use, I use QuickBooks, right. So there is a credit card processing fee that comes along with that. But I get access to my cash faster and more of my customers prefer to pay via credit card. I just want to find a way, how do you want to get paid or how do you want to pay your invoices? And then I set that up that way and you know, again, I, I, I look at it from a cash flow perspective.
I would rather get my money for 2% credit card processing fee or whatever the hell it is earlier than have to wait an additional two weeks. Because again, you know, there's a lot of alarming stats out there of small businesses. But you know, cash flow is like the number one killer of small businesses out there. So you want to make it easy for your customers to be able to pay you 1,000%.
And yeah, I think establishing, I think in addition to multiple methods of payment is great. I think getting an understanding of them, like sending an example invoice of like here's what we typically do here, like give them a sense of, to expect from us. Does this work for you? How can we make any changes accordingly and then get a sense for that? Some, some people want you to upload it into a portal, that's fine. We do that on behalf of our customers too where they're a really big company and you just enter it right into their kind of pain and port information. That's the best way to be able to cut the line. Right. It's just like everything goes right in and you're kind of ready to go.
Now if you don't have documents, you don't have receipts for stuff, you don't have the IDs that you need. That's a really great way to watch a 30 day invoice turn into 60, 90, 120, whatever. And now all of a sudden you've got to be able to float some carry cash somewhere in between. And there's a lot of responsibility and there's a lot of work that it takes to be able to close that gap. So those are things that we want to say up front. Like it all starts at the invoice, got to make sure that it's in a place where they can receive it and then after the invoice is sent, get a sense for your customer and like sometimes the level of organization varies, that shipping Company.
I know that's a shock to people but like a reminder is like not the worst thing. Even on a 30 day term. If at 20 days you're like hey, just want to give you a heads up, invoice is due in 10 days. You know, nothing for you to do here. Just want to make sure we're on your list. Right? Yeah, like there's some people prefer that. Some people say don't contact me at all until it's late. We got a shit ton of stuff to do. And like that's also fine as long as we're on the same page. So like you're still going to pay on time then that's fine with us.
Yeah, and that's the thing is you know, again I utilize QuickBooks. There is a feature in there where you can go in and set that reminder if it's you know, five day with it, you know, if it's day 25 of day 30 of your payment terms just sends an. And it's completely professional, you guys. It's not like where's my money or anything like that. It's completely professional saying hey, just a heads up. Because again like as the more you work with people, the more you realize that like hey, they don't just sit around and wait for you. You know, as much as you want that to be the case, it's just not it.
And they cannot wait for this freight coach invoice. I cannot wait for it and I'm gonna pay it immediately. It's.
But you know again, some people, they prefer a reminder where it's like oh my bad, I didn't, you know, things happen throughout the month and I think it's the best way to go about there to help you out. And you know, another thing too, you know, if we're talking about multiple payment options and stuff like that, like you know, I'm also thinking like as a broker, quick pay, right. Like it's one of those things where offering that to your carriers and everything else that's out there because you just never know from that perspective. You know, there's like, there's an incentive. I think that's why a lot of people out there want that quick pay option because they will gladly give up a couple of points to get their money faster. Right.
So I think like offering some form of incentive out there to your people helps out a lot.
Yeah. There's one thing that's always excited us and some of our, one of our customers does this Brad at Amplify Super Sharp lives Down in South Carolina, he does a discounted early payment for your invoice for his shipping. So like if you pay on day three, I'll knock 2% off of your invoice, which is like fantastic, right? It's like the reverse, the reverse quick pay for carriers. We, we also on the other end of it, if you want to pay on a 60 day term instead of a 30 day term, you can add two points or whatever on top of your invoice too, right? So, you know, you can create a lot of flexibility to kind of meet people where they're at.
And I mean, we've talked about it all the time on these shows is like using cash flow as a tool and as a mechanism, right. If you've got the right partners that can support you so that you don't get kind of too strung out, ton of opportunity there to provide more optionality and delight. And like, Brad is a super smart guy and he's like, man, come on, denim, you guys should build this. This would be great. I'll build it with you. We can do it together. And so, you know, we're on. He's on the top of our list, right? When we get to that point, probably towards the end of this year.
No, I think that's phenomenal, right? And you know, again, it's like I, I just look at it is, you know, like you said, man, like we talk about often, dude, cash is king, especially in more situations than you can even imagine at that time. And nothing is worse, like I said when we let in the show, nothing is worse than having to reach out to somebody to better beg them to pay you for the work that you completed that, you know, they would have fired you for if you weren't providing quality service. Right? And that's just what we're up there because like, again, in the brokerage space, man, there's a million brokers out there, as they all like to say. And if you aren't doing a, an above average job for customers, dude, they'll find somebody else.
Yeah, I think there's, I think that's 100% true. I think you also have to remember at this point in the life of the load, so to speak, you need to maintain a level of equal business stature. Right. Because you did the work. And so if they're dodging you, number one, maybe it's not a customer that you want to work with again. So I think you should be mindful of that. But number two, you're owed the Money, you did the work, right? So that's kind of the second half of this, is the reminders and the outreach. This is where people. This is where frankly, prospects and clients come to us that they're like, I'm leaving my factoring company because they're killing my relationships with my shippers.
And, like, this is where you can get into a really difficult position where you, are you or somebody you work with, sadly, right, Is hammering your customers. So, like, you need to have an established, like, cadence and escalation protocol, and you need to use it for everyone, because if you get emotional, then that's when you can really get into a tough spot. So, like, put a plan together. Either you execute it or a partner or an employee or whatever executes it for you so that when you get towards the end of the month, you're not letting your emotions take over from what is like a normal business relationship and a normal business practice. So, like, a way that we talk to our clients about this is like, when do you like your first reminder? When do you like your second reminder?
Do they prefer phone or email? When do you want to start getting cc'd? When do you want to escalate to your business line partner, Right? Whatever the situation may be, you need to have an established plan because things get really emotional. Money gets involved, and so you need to be able to navigate the bureaucracy of the shipper that you're in. And you need to be able to call in, like, hey, I did this work for you. I can't get through over there on the billing side of the house. Like, can somebody please take a look at this invoice? Because it's getting ridiculous, right? And just, like, be clear about it's this many days overdue, it's this much money, it's for this load, right? So that people can kind of help you help them, right? When it comes to trying to get these invoices collected.
And so set that cadence, be clear on that cadence, execute on the cadence, and then loop in, you know, whoever's on the logistics side to help you out if they need to shoot an email over how.
What have you guys found to be? I mean, I don't know if there's a set way that works, but, you know, for anybody out there who's listening to this, that's like, dude, I'm in a problem right now. It's seemingly they're ignoring me. What works, man? Because, like, again, you're right, dude. You don't want to push them so much to where they Just stonewall you. And then if you're, you know, if your cash flow is struggling, right. You don't, you're sitting there thinking like, how do I not talk myself out of waiting another 20 days to get paid because I got 30 grand due here on the 1st and if this money doesn't come in, I might be bankrupt.
Yeah. So the first thing I would say is when you make a call or you send an email, it. Think of it as a, this is a two way conversation. This is not you saying, hi, do you remember me? Right. No. You want to, you want to ask a question, you want to pose a challenge, you want to get to a situation where they can give you information back. Right. So like, when should we expect this payment? What's the check number? When was it sent? Can you send me a proof of payment? I want to be able to make sure I'm looking for it on the bank side if I need to. Blame your bank. Yeah, banks get blamed all the time. Blame your bank. Hey, they can't find the payment.
Can you send me the proof of payment so that I can get in front of the. Oh yeah, sure, no problem. Proof of payment sent today, right? So like make sure that you get a two way conversation where you can get some sort of accountability from the payment department, the accounts payable department. The other thing that we see is you might get like, you know, J jeffersonipper.com email address and they left. They're on vacation. Your email's in an abyss. You might get apipper.com that's great. That way you always know your invoices are going somewhere, but where you escalate and where you remind and where you want to get in front of people, you want to maintain a larger kind of universe of people that you can reach out to that isn't a generic inbox and it isn't just one person.
You won't be able to have both so that you can navigate whatever kind of escalation patterns exist internally as best as you can.
So, you know, obviously, you know, credit checks, risk assessment, this is something that you guys do, I would assume probably more than anything out there, you know, because again, people enjoy getting their money. And how are there patterns out there? Or if you guys see a, you know, a customer where they say they were paying net 30 without fail for a very long time and then once like, and then there's a, you know, a 30, 60, 90 day gap where their days to pay started to stretch out to about 40, 45 days are you guys preemptively getting to your clients about this, Sean, and being like, hey, FYI, this is going up, like how does that work?
Yeah, and this is credit to. Our risk folks are really good at pushing us on this. It's a give and get, right? So if you're trying to send more invoices through to be able to get purchased, then like we're going to need a status on these invoices that we've already bought that are aging out. Right. So like our risk team pushes us a lot to be really thoughtful about our trade offs and what we are making for the invoices that we purchase and we'll push our clients towards the same direction. The other thing that we have is that we have, it's flexible factoring. So I think I've talked about this on the show before where we're. For every invoice that you factor with us, it's like a mini line of credit. How many?
If you want to get paid earlier and your customers pay early, you're going to pay a bit less. If you want to get paid earlier and your customers pay later, you're going to pay a bit more. If you want to get paid later and your customers pay later, you're going to pay a bit less. Right? So like it's all this kind of floating days that the money's out thing that will price you on. It's how we can be as competitive as some of the big factors out there with higher cost of capital. And we have found that pricing structure aligns incentives between our clients and us. And like the thing is, if they're watching their factoring fee tick up every day, then we're watching our cost of capital tick up every day for the money that we purchased on this invoice.
And so we find that we can get a lot more help from our clients if they're under the gun with us and they didn't just kick it over the wall and pretend like it didn't happen. So I think that's another important thing too is that make sure your incentives are aligned with your factoring company. The other thing that folks I think don't realize, especially if they're on a non recourse factoring relationship, is the non recourse doesn't kick in unless they file bankruptcy, which can be months and years. So like you're still on the hook for those invoices and it's not like if you just throw it over the wall, it's going to go away forever. So like Keep an eye on your own for the sake of your own business. Because there is no free money in this world as far as I'm aware.
We haven't come across any. If you find a money tree, send it our way because we'd be interested.
How, like is there any, you know, inside of your guys's, you know, platform or is there anything that you've seen to help people keep, you know, their reporting in line? Right. Because again, this is all perfect world controlled environment stuff that we're talking about right now. Right. But at the end of the day, you know, you're out there, you got a million things going. What your receivables are looking like might not be your top priority on a given daily basis. I would hope that it is. But at the end of the day, things happen, right? So like, are you guys out there kind of notifying people like, hey man, this is what's happening with this account. And then are you sending them reports and stuff like that or kind of walk me through that stuff?
Yeah, we got a few things that we have now. So we have like an aging summary and aging detail so you can see where your invoices sit with your particular customers or on particular jobs. We also have your credit line so like where you're sitting in relation to how much credit you've been approved for a particular customer. Great way to have a credit line go up is to have invoices that aren't paid. Right. So we will start to flag invoices that you see. It's like, hey, just want to let you know we're towards the top of this line. Here's the aging. Help us out, right? And so we'll notify people in that way. We also have especially as invoices start to get really old, like 80 days, we'll send out emails like, hey, this is getting kind of bad, you guys.
Like, we really need your help on this. And then something that we're launching this month that I think folks will really be excited about, we're calling it like custom cadences for your collections or for your ar. So like if you come to us and say, I want you to reach out 2 days before due, 5 days after, call them 7 days email again, 10 days, CC me on the email. When it gets to 12 days, we can basically take like just rattle it off and we put it in a nice little package and our system automates that whole thing all the way through. So this, like, this is a way for our clients to be able to kind of be the anti factor when it comes to how you want your AR to be run for you on your behalf.
Yeah. And this is, you know, to me it's like I feel like you know, I'm going from the business development standpoint here, Sean. It takes so long to get a customer that the knee jerk reaction is always, hey, just give them more credit, approve them for more credit, stuff like that. Like they're good, they're good. And I've seen this, you know, as a business owner myself, but I saw that in my previous employer for the tune of a multi six figures being owed to them that literally almost bankrupted early on. And it like literally took them showing up at that facility essentially with a baseball bat. Hypothetical, complete lie. But like where's our money, right? So it's like the knee jerk reaction is it's bad and scary out there to find new business and it takes so long.
Just extend them more credit, increase their credit limit all of that stuff. I don't want to stir the feather. You need to rock the boat when it comes down to this stuff, man. Because otherwise if there is any sign that they're not going to pay you or your low priority on their totem pole, that's bad for you, right? It is, it like it and it gets there quick. And then again it's long term habits because if you do that with one customer, you're going to do that with all of them and then you're going to be sitting there wondering why am I owed millions and millions of dollars? Why does anybody want to pay me?
Who's going to come and help me collect on this? It's like it's you, man. Your, your name's on the door, your name's on the shingle. You know, you got to show some discipline. And like we had two clients who had a ton of volume from shippers in the, towards the end of Q4 of last year that started in Q1 and they're like, yeah, we dropped those guys. It's like good for you all. It's hard to walk away from business, but good for you for making a hard choice and taking a stand. Kudos to those folks.
You know, I think we're in it. We're in a good position here, Sean, with technology where like all of this stuff leaves a digital footprint, right? Like if there's lack of payment, if there's, hey, they're good for paying for like a 60 day cycle and then for the next 180 days they suck everything. There's things, there's a definite story to be told out there. And I know the excitement and the desire to get more freight. But at the end of the day, if they're not going to pay you, it's not worth the headache at all. It's not worth it because you're going to pay out commissions to sales reps and all this other stuff that comes in and then you're going to get double dipped at that point. You're have to pay a bunch of at that one.
So, yeah, and like, especially new brokers out there, the old saying is like, why do I have, you know, the joy of being able to get this business? Like, think about that. Think about your customer pay performance. Think about why, you know, you have the privilege and like, use that to just be thoughtful about your relationships that you're building.
Dude, straight up. Sean, thank you so much, man. Again, these are my favorite shows of the month. Like, I love hearing about this future. Chris is going to love having had these conversations for, you know, every single month to help protect my, because again, you guys, I don't have a, like, I don't have a retirement. This, this is it, right? So it's like I got to make sure that we can build this up the right way. But go to denim, right? Denim.com. Where do they find you, Sean?
Yeah, find us@denim.com. Find me on LinkedIn. I think I see myself. I'm right over here. Yeah. So hit us up. Happy to be helpful, take care of your customers. But yeah, equal business stature, you know, I love it.
Sean, thank you so much. That is going to be it for today, ladies and gentlemen. As always, if you got value in what you heard, subscribe to the show. You guys, if you're feeling really ambitious after this one, which you should be, rank the show on itunes and Spotify because that's how your network's going to see value. Because if you saw value, your network's going to see value as well. I appreciate you guys. I love you guys and we'll be talking to you soon. We are.