Freight brokers CAN NOT perform any brokerage service under a different name than whats on their MC Registration.

Transcription

1 In the event that a carrier (brokers) their excess loads to another motor carrier (sub- hauler) there is no Brokers License required; however, both parties are required to share 100% labiality for the cargo. This is where many Truck Brokers think they are not liable for freight that they sub contract from one motor carrier to another motor carrier. Carrier Requirements: Carriers are looking for the best price they can get for shipping the cargo. The motor carriers also have to face cost constraints similar to the shippers. The carrier company has to take care of many operational costs such as truck maintenance, employee salaries, fuel costs etc. If they learn how to manage such costs efficiently they can turn any deal into a profitable one. Knowing what functions a freight broker CAN NOT perform are just as important as knowing what a freight brokers responsibilities are. WHAT A BROKER CAN T DO! Freight Brokers CAN NOT take possession of cargo. They are not freight forwarders or carriers. They can only facilite the arrangement of the delivery. Freight brokers CAN NOT perform any brokerage service under a different name than whats on their MC Registration. Freight brokers CAN NOT represent or act as a carrier. Freight brokers CAN NOT receive commission on freight where the broker has a beneficial interest in the shipment. Freight brokers CAN NOT offer anything of value to any shipper, consignee or sonsignor. To facilitate a smooth process, a freight broker is required to make a win- win situation for all. With his excellent negotiation skills he is required to devise a transaction in which the broker, the carrier and the shipper all are satisfied. Broker Requirements: The broker looks for shippers who are in need to ship cargo and then they look for reliable carriers who are able to cover the loads. It s the freight broker s responsibility to do perfect load and carrier matching, keeping the shippers cost low or within their budget. With the start of the new business, a broker might need to do a lot of research on the phone and Internet to gather a database of carriers and shippers. However, included with this course you will have a database of 350,000 shippers and carriers to help with this process. The key role of the broker activity is to make reliable relationships with the shippers and carriers, and provide the shipper with different options for the fulfillment of delivering their cargo. This is an art that will greatly determine broker performance and start bringing in recurring business. The next important step to survive in the business is do a credit check to play it safe with a new shipper. Try to avoid problems before they happen. Even if a shipper has good credit, it may take from 45, 60 to even 90 days before receiving a check from them, so you either need to have GREAT cash flow management or you can factor your invoices with freight factoring companies that will pay faster just less their processing fees. 4 Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, scanning or otherwise, except

2 Do a similar credit / background check with new carriers. A broker needs to pre- qualify the carriers, which mean they should have all the needed operational and insurance documents ready. No too many traffic citations or Highway Patrol Inspections. You can also use the SAFER Web service to check if a carriers s authority is valid Search the SAFER Web service by the carrier s USDOT#. Cargo insurance is not required for freight brokers to have as they use the cargo insurance of the carrier. But Contingent cargo insurance should be purchased as a backup insurance incase the carrier s insurance does not pay or pays for only partial of the insurance claim. This is always a great backup to have to protect you and the shipper, and many new brokers get into financial trouble because they think they don t need any type of insurance coverage. Chapter 2 Things to Know before you Start First thing to start up the business professionally is to decide the form of business and giving it a name. Incorporation is not mandatory but recommended. Other forms that can be well considered are the sole proprietorship, partnership, Sub Chapter S Corporation and the Limited Liability Company (LLC). Incorporation can be easily processed without hiring an attorney. You can search for the Articles of Incorporation over the Internet. They are not more than two pages in length. Forms of business you can consider for your freight brokering business: 1. Incorporation 2. Proprietorship 3. Partnership 4. Sub Chapter S Corporation 5. Limited Liability Company The Federal Identification Number (FEIN) is needed for incorporation or partnership businesses. You need to apply to get the FEIN. However, for Sole proprietors Social Security Number is sufficient for completing the paper works. Regarding the selection of the business name, it can be your own name or any other name you would like your business to be called as. The name has to be unique and the broker needs to enquire that the name is available and not being used by someone already. The terminology used is doing- business- as name or the fictitious name. A country or state level search can be done to confirm its availability. If the business you are planning is a partnership business then it is highly recommended to work out the partnership agreement. The partnership will form an outline for the scope of functions and expectations of each of the partner. Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted on the RightNowLoads.com website, or as permitted by law without the prior 5

3 How to get Freight Broker Authority, Registration and Insurance done? Becoming a freight broker requires the applicant to submit three (3) forms to the FMCSA. The first is Form OP- 1 and this is the application for broker authority. Broker authority is a license granted by the Federal Motor Carrier Safety Administration and it is required to operate as a freight broker within the United States. Applying for broker authority requires the applicant to submit his name, business contact information, and the legal name of his business as defined in his home state if he plans to operate his brokerage under a business name instead of his legal name (DBA) name. The filing option for "broker of property" should be selected when filling out the OP- 1 form. There is a $300 non - refundable filing fee for the OP- 1 form. Once OP- 1 is accepted (4-6 weeks) the second form is the BMC- 84 or BMC- 85, which is used to provide proof of a surety bond (BMC- 84) or trust fund (BMC- 85) for $10,000. The last form is the BOC- 3, which is used to register process agents, there is space on the form to enter the contact information for all process agents from every state if needed. There is a $50 filing fee for the BOC- 3 form. There is no filing fee for either the BMC- 84 or BMC- 85 forms as they are just legal requirement to provide proof of coverage. If you have not fulfilled all the broker requirements within 20 days of filing your OP- 1 application the FMCSA will issue you a notice that you have 60 days from the date of the notice in which to meet all the requirements or your application will be dismissed. Which means you have to complete both the BOC- 3 and BMC- 84 forms to be an active broker. 6 Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, scanning or otherwise, except

4 Chapter 4: Start Up Requirements The business set- up requirements for a freight broker are very basic and inexpensive. A toll free number is highly desirable but not essential. We recommend using RingCentral.com for ALL your telecommunication needs. Using the RingCentral.com service allows you to have a virtual office. You can make UNLIMITED incoming and outgoing calls within the US and they give you a local fax line that will send PDF fax documents to your , and you can get this package for around $30.00 a month. The also have more features you can read on their website: Start up requirements include: 1. A personal computer. 2. High speed internet connection: cable or DSL. 3. A telephone with RingCentral.com. 4. A reliable fax machine or RingCentral.com 5. Filing cabinet 6. Load Board membership (FindFreightLoads.com) 7. Microsoft Office (Word & Excel Mainly) 8. system (Gmail or Yahoo) 9. Website (Included with course) Chapter 5: Searching for Shippers The big question is WHERE TO FIND SHIPPERS? Searching for Shippers is among the initial stages of the freight brokering business. However before you begin marketing to them you first need to make sure you have something to market, and having a good website is a good place to start. Your brokers course includes free website templates. Even operating as a small freight brokerage you will need a professional website to give the impression to your clients and shippers that you are an established freight brokerage company. When you market your services to shippers they will want to see your website and more than likely, based on how your website looks, will be one of their deciding factors if they want to do business with you. Your website will be the key to describing all your services, testimonials, and contact information. Your brokers course comes with a shipper and carrier database of over 250,000 profiles in excel format. From this list of data you will be able to send out s, brochures to their business address and make phone calls to setup appointments. Plan a marketing strategy rather than just making indecisive searches or phone calls. Pick your target area, set goals and work from there. marketing is always good to start because you can reach a lot of clients with little effort, but making calls and setting up appointments is where most of your leads will start to convert. Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted on the RightNowLoads.com website, or as permitted by law without the prior 7

5 The first goal is to look for shippers who need shipping services. As a service industry, you have no storefront for a customer to visit or a product to hand them for examination. Your website acts as a "virtual" storefront for you. Marketing Campaign Should Include: 1. Telephone calls 2. Brochure distribution 3. Promotional s with cover letters 4. Marketing over the internet using social networks like Facebook, Twitter, Craigslist Ads and Transportation Blogs To choose a niche, first consider what types of shipments and/or shippers you'd enjoy working with. FIND YOUR NICHE! There are many valid reasons for choosing a well- defined market niche. By targeting a specific market segment, you can tailor your service package and marketing efforts to meet that segment's needs. You'll also develop a reputation for expertise that attracts new customers. Your next step is to conduct market research to determine if there's a sufficient demand for the services you want to provide. If there is, move ahead with your marketing plan. If there isn't, consider how you might adjust your niche to one that generates adequate revenue. Don't limit your specialization plan to the commonly accepted areas; instead, find your own niche. Chapter 6: Using Truck Load Boards Load boards or loading boards are the most widely used websites by the freight brokers to post the shipper loads available with them. The post is to search for the trucks ready and available to cover the loads. The load boards are also commonly used by the carrier companies to post the availability of their trucks. This will get access to search for broker and loads matching their post request. The loading boards work very efficiently and can come up with your loads solution within a couple of minutes. Different load boards work differently. Some might offer to post load as well create another post to search truck simultaneously. Some might forward the broker loads post automatically to large number of other load boards for quick and precise truck loads matching. The load boards these days are power packed with many customized services, but the primary one for the freight brokers off course being posting loads and searching for available trucks to cover these loads. 8 Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, scanning or otherwise, except

6 Chapter 7: Rates Calculation Freight charges are based on a number of variables, but the two main factors are the weight of the load and the distance it must travel. Rates are also affected by the type of truck needed, whether the driver needs to make one or more stops to pick up the freight, and whether the driver needs to make more than one stop to deliver the goods. Each shipment is entitled to one pickup and one delivery with no extra charge; you can usually negotiate the rate for additional stops with the carrier. Before you begin shopping for rates for specific shipments, get an idea of the current "going rates" for the types of shipments you're likely to be handling. You can do this by requesting copies of tariffs from several carriers and studying them. Below are the different methods to calculate these rates. Also using load boards and calling for rates on posted loads is another way of getting information on current market rates. The National Moto Freight Traffic Association (NMFTA) classes products according to four characteristics Weight, Handling, Storability and Liability. There are 18 freight classes ranging from class 50 (the least expensive) to class 500 (most expensive). For more information on NMFTA classes visit: 1. Flat Rate: The shippers might have the load to be hauled from one state to another. The broker can set up a flat rate for this. For e.g. the loads are to be shipped from Miami FL to Houston TX, then the broker can decide upon the flat rate to be $ Rate per Mile: The shipper can decide upon the rate per mile. For, e.g the rate per mile is $1.5 and the carrier covers 2,500 miles then the total cost to cover the loads will be $ Rate per Unit: The shipper can decide to pay the borker per unit price like the payment for a carton of juice cans to be delivered is $ Rate per Hundred Weights: The shipper can also choose the payment option of pay per hundred weights. Say if $6.25 is the price per hundred weights and the total weight of the loads to be shipped is 32,000 lbs. Then the total amount the shipper will pay is $2000. The broker should find if there is any extra cost involved in the shipment such as extra picks, unloading fees etc. The broker should possess good negotiation skills to ask the shipper for some add- ons like fuel surcharge etc. above the regular rate. With shooting fuel prices more and more truckers want the fuel surcharge payment to be covered in the deal. The broker needs to be aware of all the loading techniques and regulations. He should be aware of the loading terminology like Full Truck Load (FTL) and Less than Truck Load(LTL). He should keep himself well informed to avoid any future problem related to loads hauled. Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted on the RightNowLoads.com website, or as permitted by law without the prior 9

7 Your income is generated by the commissions you earn on each load. You'll be paid one of two ways: You can bill the shipper the amount you're going to pay the carrier plus the amount of your commission, or the carrier can bill the shipper directly and then pay you a commission from its revenue. The most common way to handle billing and commissions is to have the carrier bill you and then you bill your customers. Freight rates are based on many factors, including 1. The distance the shipment is moving 2. The shipment's weight 3. The density of the commodity being shipped 4. The commodity's susceptibility to damage 5. The value of the commodity 6. The commodity's loadability and handling characteristics All of the above factors go into establishing the classification of a commodity. The NMFC, or National Motor Freight Classification tariif, contains all product classifications. There are eighteen possible classes ranging from 50 to 500. The higher the class, the higher the rate for every hundred pounds you ship. Most less- than- truckload rates are stated as a rate per hundred pounds, or per hundredweight. Rates are structured so that as the weight of your shipment increases, the rate per hundred pounds decreases. For example: a shipment weighing 100 pounds may cost $41.00 per hundredweight, while a heavier shipment- - say, 500 pounds- - of the same commodity (moving to the same destination) may only cost $35.00 per hundredweight. But doing the math, we see that the total charges for the 500 pound shipment are higher (5x$35 is greater than 1x$41). For very light shipments, most LTL carriers state a minimum charge. This sample rate matrix illustrates how a carrier's rate table might look for rates between two zip codes. Weight breaks are indicated across the top. The classes are listed down the left side. Types of loads: 10 Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, scanning or otherwise, except

8 Set- Up Information Package Includes: 1. Motor Carrier Number 2. Surety Bond Papers 3. Insurance Certificate (Contingent Cargo) 4. W- 9 Form 5. References Chapter 8: Broker- Shipper Set Up To start the business relationship with the shipper, the broker needs to first get set- up with the shipper. The set- up process involves faxing the shipper an information packet, including all important documents such as their motor carrier number, proof of surety bond, insurance certificate in case the contingent cargo coverage is purchased, W- 9 form and all other crucial information the broker want to include or the shipper may have specified. Once the shipper has accepted and verified your information you can now start business with them. This packet IS NOT like your marketing packet that you will send out to potential clients. This Set- Up packet is specifically when a shipper agrees to do business with you or wants more information about your brokerage. Some professional freight brokers will also send a broker- shipper agreement. However, this move is very rarely done in the case of new brokers as they still do not have much experience or references to sign such agreements. The agreement ensures the shipper that any of his loads, will be covered by the broker. Included with your course are sample broker shipper agreement contracts, and if you are a creditable broker you can make demands in your contract that you can fulfill. Before starting up with the business, the shipper might ask the broker to give his quote to deliver one or large number of loads. In the previous chapter we reviewed rate calculation, so you will have to have your rate sheet prepared prior to sending the Set- Up package incase the shippers request to include your rate sheet. Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted on the RightNowLoads.com website, or as permitted by law without the prior 11

9 Chapter 9: Executing the Delivery The first step to execute the successful and profitable delivery is to take the order from the shipper correctly. All the instructions mentioned by the shippers should be well understood by the freight brokers as they have to further communicate the information to the carrier or the load dispatcher. If any instruction is not clear or there appears any doubt after the call has ended, do not hesitate to call back the shipper. This will help avoid unnecessary complications that may arise due to improper delivery later. Once you are setup with your shipper, the will notify you on what lanes are open and what carriers and trailer types are need. The shipper will give you a rate that he wants to pay for the load or he will ask you to prepare a quote for his open lanes. After getting all the details from your client you will know what to offer the carriers when they bid on your load. Todays broker rates are anywhere between 10%- 20% of the load. The shipper will fax their rate confirmation sheet to you for you to sign and fax back. At this point you need to get quotes on your loads and to find carriers if you don t already have your designated carriers available you can use FindFreightLoads.com load board to post your freight and look for carriers. This way you will be able to get quotes and rates from different carriers before booking with them, and you will be able to check their driving record, cargo & liability insurances. When finding carriers on load boards you will have to do screening to see if they are qualified to haul the load. You can use the SAFER web services on the FMCSA website. Also, you will have to fax them a Carrier Set- Up packet that will have a broker- carrier agreement form and rate sheet. Once you have found a carrier and you feel confident that the carrier meets your requirements to haul the load you will notify the shipper that the load is COVERED. Once the carrier has signed the rate confirmation they are ready to haul the load and you may give the pick up location of the load. Included in your course are sample rate confirmation sheet and broker- carrier agreements. After the load has been successfully delivered you then shoud contact the shipper and inform them of the status of the load. The carrier should fax you the signed bill of lading to verify the delivery to the recipient. If there are any problems with the delivery of the load, it s a Freight Brokers job to notify all parties involved of the status of the delivery. 12 Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, scanning or otherwise, except

10 Freight Brokers Course Steps for Executing Correct Delivery 1. Take the information correctly from the shipper. 2. Communicate it to the driver correctly. 3. Ask Shipper again if there is any doubt about pickup and delivery job. 4. Clarify things like extra pickups, extra deliveries, fuel surcharge, delivery time, unloading charges or any other special requirements. 5. Make a checklist. For new brokers making a checklist before sending the truck for delivery is very important. It will help you carry out the complete set of task in an organized manner without missing out on important specifications. Shippers would be more comfortable in dealing with the brokers who are more assertive and know the ups and downs of the business well. They want themselves to be aware of any problems that might arise. Other crucial information for correct delivery is the instructions related to the pick up and delivery. The broker should also be aware of any equipment that is required by the shipper. The shipper will inform you if he has fixed any particular delivery appointments with his client at the other end. In some cases he might ask the driver to get an appointment on his behalf prior to the delivery. Sometimes, there can be specified timings like Thursday afternoon, or Sunday morning before noon. Then the delivery will have to be made available keeping in mind such time frames. The broker should learn form the shipper if any extra pick ups and delivery is required. If this is the case then he should communicate the same information clearly to the truck driver to avoid any misunderstandings. The truck driver will charge extra for any extra pick ups and deliveries, therefore Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted on the RightNowLoads.com website, or as permitted by law without the prior

11 Some deliveries involve lumper or unloading charges. The broker must keep him informed about such charges while preparing his quotes in case the shipper is not covering them. If you don t consider such thing then you will have to pay for such expenses from your pocket later, thus reducing your profit margin in the deal. To maintain strong relationship the broker should sometimes go out of their way to provide the shipper some exclusive customer service. For e.g., he can make arrangements for empty pallets when shipping the frozen products and can ask the trucker to retrieve them after delivery. The type of product that needs to be hauled and the estimated weight of the goods to be hauled is critical information which the broker should get from the shipper and communicate it to the driver as the trucks running overweight is not legally allowed. This information will also help the broker to select the type of truck to be used for dispatching. The broker should ask the shipper for to cover the fuel surcharge as more and more truck drivers these days require fuel surcharge to be covered. The key to the successful delivery execution is the detailed communication with the shipper and the driver. Preparations need to be done to complete the delivery to the satisfaction of the shipper; the driver and the freight broker i.e. you. Chapter 10: Negotiating the Rate Negotiating with Shippers Negotiation is the science and arts of Freight brokering. The broker is the main player in the freight brokering deal. The rate fixing is of key importance in this business. There are some factors of freight brokering which cannot be negotiated upon. These are the factors like special equipment needs, minimum temperature requirement for reefer trucks, and the delivery destinations. The factors which can sometimes be negotiated upon are fuel surcharges, pick and delivery time frames, extra delivery rates, pallet exchanges etc. Non Negotiable Factors: 1. Special equipments needed 2. Temperature control in reefer trucks 3. Delivery destination Rates are subject to negotiation depending on various factors such as the shipper urgency or the carrier idleness. It also depends on the demand and supply of any 14 Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, scanning or otherwise, except

12 particular commodity. There can be many other factors, which govern rates fluctuations in this business. An establishing freight broker cannot put his terms forth but will have to ask the shipper what he would like to pay for the particular load dispatching assignment. However, with more experience and expertise in the field he can later demand what he thinks should be paid for the particular load types. Once the broker has proved his abilities to the shipper then he would be able to negotiate for better rates in future deals. The better the broker negotiates with the shipper, his profit margin is enhanced. This way he can meet his profit goals easily and work for business expansion or might pay more to the trucker if needed. There is no point in negotiating upon the destination point as the shipper will not change the delivery destination point just because the driver does not want to go there. Destination negotiation by the truck drivers are often meant to get the better rate then actually changing the destination point. Freight brokers should learn the importance to draw the line while negotiating. This can only be achieved if he knows what his initial costs are and what more he requires to make up to his profit margin. If he understands this concept well then he can easily draw the line for his negotiations. This will help him save his efforts and time. Most business around us which are running into losses are mainly because they are not aware of the costs they are running into like the fixed costs, operational costs or any contingent cost. They have not worked out meticulously on what type of profit margin do they need to have to run the business into profit. If they themselves lack the knowledge they end up doing deals which are not negotiated upon properly. The losing business thus ends up in self destruction in such cases. The financial analysis and strategic business planning is a complex thing. However, if they are broken down into simpler workable financial systems, then even the very basic business starter with no finance background can work upon it and lead his business to financial success. If the broker is well versed with his needs then he can polish his negotiating strategies to make profiting business deals. A good deal is one which has equivalent opportunities for the shipper, the carrier and the broker. Chapter 11: How to Book Carriers to cover the loads? When you book a load with the motor carrier, it will ensure the delivery of the load. Before the freight broker fixes a carrier or the company to cover the loads, the freight broker firstly approves the carrier which is meant to carry the load. The first thing to be assured is to check if the truck is available or empty or at least about to be. This should be checked prior the delivery is to be made unless it happens to be the following day. It is very important for the freight broker to check if the vehicle is authorized and has a cover of insurance and also a good record of driving. Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted on the RightNowLoads.com website, or as permitted by law without the prior 15

13 Before taking up a motor carrier, the freight broker needs to make a list of items which are to be carried. He can note it down in written or at least remember it. Once the broker is convinced with the information and other details, he can forward the details of the loads and other documental details required. The documents between the carrier and the broker should be made very carefully in order to ensure a healthy working relationship. Most of the agreements which are done between the freight broker and carrier on the internet always raise a question of authenticity and are hard to rely upon. Protecting your cargo with a motor carrier and verify their insurance policy with their insurance carrier prior to booking the load. Contact the insurance company! Even if the motor carrier sends their cargo and liability insurance certificate via fax or with their carrier packet, you will still need to take that next precautionary step to insure that the insurance certificate on file is actually valid. Call the insurance company on the certificated to confirm that the policy is current and that the minimum (Bodily Injury & Personal Damage) BIPD limit requirements are effective. Verify Liability & Cargo Insurance public.fmcsa.dot.gov/liview/pkg_ca rrquery.prc_carrlist Verify Authority napshot.aspx The documents and the agreement should have no loop holes in it and try to make it as much clearly as possible. No legal documents assure complete guarantee but it should not be a formality only. Lastly, before loading up the carrier, the broker should confirm that the documents are read and signed. The list of the dispatched goods is prepared by the broker and the load s list is faxed to the driver or the company who is to dispatch the goods. The broker won t wait for a long time for the confirmation from the drivers and would take only 10 minutes or so to get the reply. After the documentation procedure is done, the broker may directly call the truck driver and discuss the details of the loads. The broker should make an assurance that the load and delivery requirements have been understood properly and it is also important to have a proper communication between the driver and the broker till the load is delivered. Generally there is a need of telephonic conversation between the broker and the truck driver at least once in a day or morning to give the location details to the driver and ETA i.e. estimated time of arrival. Things the Freight Broker should check before booking the Carrier: 1. Availability of the truck 2. Vehicle authorization papers 3. Insurance coverage. 4. Driving record of the driver Carrier Insurance Requirements BMC- 91 is for Liability and should be between $750,000 - $5,000,000 BMC- 34 is for Cargo and should be around $5,000 coverage. 16 Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, scanning or otherwise, except

14 Chapter 12: Accounting Software used by a Freight Broker The department of transportation s body Federal Motor Carrier Safety Association (FMCSA) has framed various regulations for the freight broker. It includes keeping a track record of the accounts in order to separate the revenues generated from brokerage part in the business from the rest of the business operations. The accounting procedure generally includes a software package of general ledger required to keep a track record of the transaction related to finances. A list of accounts is prepared which includes details like revenues collected from the sales, income, assets, liabilities, infrastructure and finances required to carry on the various operational tasks. One of the software available in the market which is very popular these days is Quick Books Pro Software. It has some of the very good features but are little complex in nature. It is better to take the services of a good IT professional to do the entire task of setting up the accounting system. It is important to take the help of the expert especially when the broker is not well acquainted with the knowledge of general ledger software and other accounting features. There are many companies or individual vendors which are offering dispatch software packages. It is advisable to the brokers who are new in the business to spend decent sum of money in installing broker software. It is important to understand the peculiarities of the freight broker business for the broker and to get through the requirements of the business as well. Also he should see that adequate income is generated from the business and he can afford to invest a large sum of money. The software which is most economical in price will cost around 2000$ which is the minimum cost of a dispatch software. There are numerous software available in the market with variety of features to offer. The broker can create the databases of the shipping and the carrier using them. From the task of getting the order of the loads to the end of receiving the payments from the shippers, the software will help in managing all the records. The details of all the loads are kept by the freight broker including all the activities associated with the load. The confirmations from the carriers are also made very easy and efficient and are more accurate than the one done manually. Talking about the databases of the carrier and ship, good freight broker software will give a combined system of information and provide a database for both carriers as well as shippers. Besides there are many other databases as well which can be chosen as an option. No matter what software is been opted for, but it makes the complicated task of making database easy for the shippers as well as carriers. Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted on the RightNowLoads.com website, or as permitted by law without the prior 17

15 Accounting papers will be formed in this manner 1. As soon as the carrier delivers they loads, the invoice will be mailed to the broker. It will also include other documentation details like bill of lading, docket #, ticket of the loads s weight etc. 2. The broker will enter all these details in his accounting system once he receives the receipt. 3. Finally the invoices of the various bills will be forwarded to the customer including the bill of lading. Chapter 13: Various Accounts Details in Freight Broker Business The laws framed by the regulatory body of the department of transportation, Federal Motor Carrier Safety Administration (FMCSA) require that every broker keep a track and record of its transactions. The records need to be saved by the broker for at least the span of three years of time. The tax accountant of the broker will also try to push the brokers to make the documents and paper work organized. This will convenient not only for the accountant but also will be helpful in the audit. The best and the most forceful reason to arrange the paper work properly is that the broker can easily solve any query of the shippers or the carriers which may be of routine and daily task for the broker. There is a need to monitor the accounts which are received and paid just like monitoring the cargo loads. The brokers will keep two separate files one for the carrier and the other for the shipper. Brokers will need to keep a record freight charges collected by the brokerage and the date of payment to the carrier, as well as the name of the payor along with the bill of lading or freight bill number. Records must be kept for a period of 3 years by law. There should be a copy of the documents in every file pertaining to the loads. The carrier file should also possess the original copies of various important documents like agreement between the carrier and the broker, W9 form etc. 18 Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, scanning or otherwise, except

16 Chapter 14: How to Develop a Business Plan? Whatever action you are planning to formulate in business is a business plan and it is in a written form. The business man has the various schemes and plans in his mind even before starting up a business but it should be in a concrete written form. Business plan covers three important features in it: 1. Narrative: It includes what will be the business about, the way of its formulation and how to move it forward. It also includes the location, the preferred clients, which needs they will cater to etc. 2. Cash flow statements: it includes the financial activities which will be carried on in the business. The record of the statements should be maintained on a monthly basis in the first year of business and for 3 to 5 years it should be carried on annually as well. 3. Exhibits: It includes the various researches or studies done which are important for the business plan and be helpful in the business. Below are mentioned the benefits of a business plan: It will help you focus on the business. It is feasible financially for the business. It will help you know the requirements of the business. The entire cost of running the business will be shown. It will research the scope of the current market. It will also help you get the finances required for the business. It will show the competition in the market and how the customers can be attracted What are the requirements of the business in the location you are setting up the business? It Will show you how much it is costing you to run your business It will help you plan strategy to attract new customers towards your products? Hurdles you may overcome in the business. Helps you decide who should be hired to carry out the operations? The weakness and strength will be focused, so that there is a room for improvement. It will also be inspirational for the readers of the business plan. Copyright 2011 FreightBrokersCourse.com - (888) No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted on the RightNowLoads.com website, or as permitted by law without the prior 19