July 22, 2025 • 16 mins
Nate Cross & Ben Kowalski answer your freight brokering questions and discuss:
- Broker vs Dispatcher: We break down the differences between a freight broker and a dispatcher, and whether one person can legally and effectively perform both roles.
- Fraudulent Carrier Scenario: A listener shares a case where a broker paid a fraudulent carrier and now refuses to pay the real trucking companies who actually moved the freight. We discuss legal and ethical options to resolve the situation.
- Insurance for 1099 Agents: Should a 1099 freight agent carry insurance?
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
All right, welcome back for the final mile.
This is our segment where weanswer your questions that you
guys send to us each and everyday, it feels like at this point
, through YouTube, the website.
We appreciate it, so we can'tget to every single question.
We try to answer a lot of themon YouTube or on the show or via
email, but we got some goodones that we'll get to today.
(00:22):
Make sure to check out all ofour other content at
Freight360.net and on YouTube,and you can check out the
Freight Broker Basics course onour website as well for an
educational option.
And please check out thesponsors in the description box.
That will help support ourchannel.
All right, ben.
Our first question Does abroker and a dispatcher play the
(00:42):
same role?
And, if not, can one person bethe dispatcher and the broker?
So I'm assuming the way thatthey're using the word
dispatcher can be taken multipleways.
What I want to say is if you'rea dispatcher for a trucking
company, like an independentdispatcher that represents
trucking companies, you are nota broker.
(01:04):
Those are two different things.
Brokers are things.
Brokers are licensed.
Dispatchers are not licensed.
There is some um, tia, industrystandard like guidance on
dispatch services, but there'sno like legal groundwork for at
this point.
Can you be both?
You could be both, so what'syour?
(01:27):
How would you take this Cause?
I want to make sure we're nottalking about like the
dispatcher inside of thebrokerage who's actually like
contracting the truck andtracking the truck.
Speaker 2 (01:34):
When it says the same role I'm going to.
I'm going to zoom into the wordrole and try to define it from
there, right.
So role could mean a fewdifferent things.
Like if you're meaning the roleis like what you're doing all
day.
Meaning like you are connectinga carrier with a shipper that
has a load right.
Like that is different for adispatcher than a broker right.
(01:57):
So for a dispatcher, the way Ialways understand the guidance
is you do not have the abilityto choose between motor carriers
for any given load as adispatcher.
As a dispatcher, you arecontracted with a trucking
company and you are able tosource loads for that trucking
company and book their trucks onthat load.
(02:20):
You are not able to book ofmany multiple MCs for one given
load.
You work for the truckingcompany, you book loads for them
as a dispatcher.
The thing that makes it a littleconfusing is under the guidance
, my interpretation is that,like you are able to dispatch
for multiple trucking companiesbut they need to have a
distinguishing quality.
(02:41):
Meaning like, yes, like I havea reefer company I'm a
dispatcher for and a van, solike if I have a van load it
only goes here, a reefer loadonly goes there the guidance
clearly states that, like you,can't be a dispatcher for six
different dry van companiesbecause now you're operating as
a freight broker without alicense.
So to me that is thedistinction and rules.
Distinction and rules.
(03:07):
A broker allows you to work,with your license, any shipper
and vet and work with anycarrier to move that load right.
A dispatcher is constrained oronly able to work with typically
one trucking company unlessthat trucking company can't
provide other services likemaybe drayage, maybe intermodal
or maybe like, or maybe like ordifferent areas of the country.
Speaker 1 (03:25):
Yeah, correct, what this trucking company only is a
dispatch service, basicallyhaving a load from a broker and
being like, hmm, I got these sixtruck companies available this
one pays me this much and youknow it's like, uh, if you're,
if you're, they're then havingsome control over, um, you know,
carrier selection, that is afreight broker's role and that's
(03:48):
our license.
Speaker 2 (03:50):
The ability to vet and determine the carrier
selection.
You can determine the carrierselection, but it has to have
differences Like to your point.
Like I can use this truckingcompany and they're all vans
because they only operate in thenortheast.
Oh, I need to move this load inthe southwest.
I can use that trucking companyI'm contracted with for that
load because one can't do theother one's load.
Speaker 1 (04:11):
If you could pick between the two.
Yeah, the dispatcher cannottake paint.
Money cannot run through thedispatcher.
Speaker 2 (04:16):
Right, right.
They have to pay the truckingcompany.
The trucking company pays thedispatcher.
Speaker 1 (04:19):
Yep Brokers, the money runs through us, so all
right.
Next question I think this isfrom a shipper, actually.
So we recently found out thatour broker booked a few loads
with a fraudulent freight haulerso a fraud carrier.
That broker still wants to bepaid for the loads.
They paid the fraud motorcarrier but doesn't know who the
(04:42):
trucking company who actuallydelivered the load is and likely
won't pay them if they comeforward Any advice.
So, all right.
This is a very common scenarioin double brokering where, like,
shipper gives load to, we'lljust pretend that me and you are
part of this equation, right?
(05:03):
So Shipper gives a load to youas a freight broker and I'm
trucking company, right, yougive it to me and you think I'm
going to haul it.
What do I do?
Is I give it to I without alicense or the authority to do
so.
I give it to some owneroperator who then hauls it.
I take payment from you and Ijust fall off the face of the
(05:24):
earth, right?
And you know whoever thatcarrier is to hold it at some
point is going to come aroundand want payment and per, like
the laws, like the, that youwouldn't have to pay them, right
?
The actual shipper isresponsible for freight payment,
which, I tell you, lose acustomer if you don't own up to
your errors.
(05:44):
Yes, so this?
This shipper is asking foradvice because the broker that
they used let's see the brokerwants to be paid but doesn't
know who it was.
So, yeah, I mean I wouldn't, Iwouldn't pay the broker, I'd
freeze their pay, but I wouldtry to work with them on a
relational piece of like hey, ifwe want to do business together
, like, we've got to haveprocesses in place to make sure
(06:05):
that who you're sending into usis legitimate.
Or I mean, depending on how badthis is like, just don't ever
use this broker again.
Like, because you are as theshipper, you are going to be
held liable to pay whoeverhauled that load of yours when
they come around and if thebroker says I'm not paying them,
they're going to come to you.
So yeah, I wouldn't pay.
Yeah.
Speaker 2 (06:34):
And again like I wouldn't pay.
Yeah.
And again like I would becurious how the shipper found
out the broker paid a fraudulentcompany and still wants paid.
I'm guessing because how thatarose, like how the shipper
found out the broker paid afraudulent company Right, but
hadn't yet paid the broker.
Speaker 1 (06:44):
To me is probably like a whole lot of things were
like the brokers like, yeah, Ihired this Trucking company and
a shipper, something happens,goes wrong.
They can't get a hold ofsomebody.
Next thing you know they'relike who'd you load?
Oh, we loaded ABC Trucking.
And it's like no, we contractedXYZ.
Like it was probably somethingalong the line, like something
must have happened.
(07:04):
And when they started goingback through the details they
probably realized like whoactually got loaded and hauled?
It was not the same as who thebroker booked.
Speaker 2 (07:14):
And the broker's like probably like, like, yeah, I
clearly one slip past me typedeal and I think if I'm the
shipper, I, to your point, wouldwork with a broker and try to
gather as much information asyou can, because what your real
objective here isn't to screwanybody as a shipper, it's to
just make sure the payment getsto the company that moved the
load Right.
So, whether that's me as ashipper, it's to just make sure
the payment gets to the companythat moved the load right.
(07:37):
So, whether that's me as ashipper, trying to figure out
from my loading doc do we haveany images, photos or
documentation of the truckingcompany that we loaded?
Does my receiver have any ofthat documentation or images?
Try to find the MC of thecarrier that actually hauled it.
Get them in the loop to contactthem to make sure they're
involved and the money gets tothem.
(07:58):
Because the only scenario atwhich I'm paying that broker for
that load is that the broker inwriting is going to release the
payment I give the broker tothe actual carrier, which
doesn't solve the broker'sproblem.
The broker, at the end of theday, if they want to keep the
customer, is already out themoney they paid the fraudulent
person and even if they get paidfrom the shipper, they still
(08:20):
have to pay the second carrierthat actually moved the freight
anyway.
So, regardless of how thisworks for the broker like,
they're out that money if theywant to keep the relationship
with the shipper as the shipper.
If you don't get those funds tothat trucking company that
hauled your freight, they willcome back eventually in the next
few weeks or months and they'regoing to reach out to you
because they know they picked aload up from you and they're
(08:40):
going to shoot an email or callyour facility and say, hey, who
did you guys arrange this loadwith?
Because we didn't get paid.
You'll look up the load numberand then you'll be able to close
the loop on what actuallyhappened.
That's usually how these kindof play out.
Speaker 1 (08:53):
Yep, all right.
Last one Do you think an agentworking as 1099 should buy some
kind of insurance?
What insurance?
Do you think Bad debt is not aconcern?
Okay, I actually get thisquestion.
I've got this question frompeople within our because Pierce
is agent based, so we get youknow questions from agents about
, like you know, agent based, sowe get you know questions from
(09:15):
agents about, like you know, doI need to have any insurance?
Blah, blah, blah.
So here here's the breakdown.
The brokerage that you'recontracted with as an agent will
have insurance policies thatany brokerage would have, right,
like general liability, um,contingent cargo, contingent
auto, things like that, um, youare cut, your the business that
you're doing is covered underthose policies.
(09:36):
What doesn't happen like so thethe general liability policy,
for example, like a slip trip orfall in the office, those do
not trickle down and cover acontracted agent.
Speaker 2 (09:47):
So if your agent pierce, isn't in charge or on
the lease.
If you had an office as anagent, you're right, you know my
agents that have an office andhave employees.
Speaker 1 (09:57):
Well, usually their office lease is going to require
that they show proof of theirown general liability policy.
But yes, that is an instancewhen you would want to have a
policy to cover things of thatnature.
So if someone's in your officeand you know falls and breaks
their back, you're not going tolose your house over it.
Speaker 2 (10:19):
So here's, but as far as you don't need like a
contingent cargo policy oranything like that for your
shippers.
Let me throw.
Let me throw a what if?
Scenario at you.
Sure, I'm an agent for you saypierce does not have receivables
insurance, okay, yep, butpierce and my contract is a 1099
agent.
You guys pay me on loadsdelivered.
I'm not saying that is yoursetup, but like that's not
uncommon for some agents we payon invoice, sorry.
(10:41):
Yeah.
Speaker 1 (10:42):
The scenario you're going to give me has probably
happened at our company orsomething, so I'm getting paid
on loads delivered every week.
Speaker 2 (10:49):
Right, I'm paying my employees as an agent underneath
Pierce, employees as an agentunderneath Pierce, but then my
customer, of which Pierceapproved credit for, because
Pierce is funding the invoicesand taking the risk between
paying me and when they get paidfrom my customer, if my
customer goes under, goesbankrupt and everybody did what
(11:09):
they were supposed to and it'sjust a risk, like Del Monte
which came up recently, right?
Or like they just can't paytheir bills and likely lots of
these free bills don't get paid.
Is there a scenario in which meas an agent wants to pay for my
own receivables insurance,because if my customer doesn't
pay you, pierce is going towithhold future money from me.
(11:30):
It's not like you're just goingto eat that risk and be okay
with my getting paid on all myloads and you being stuck for
the invoices.
Speaker 1 (11:39):
Yeah, so like the common agent world practice is
like we we use a receivablesinsurance company, right, yeah,
I know.
Speaker 2 (11:48):
I'm just saying a lot other agents.
Speaker 1 (11:50):
So right, so prior to that, when we didn't.
And this is common in the agentworld is like your contract
will outline like your splitslike we're 70 30, which means
like if there's profit, it's 7030.
If there's loss, it's 70 30.
Right, and you know so.
If there's a lot of you know,customer goes out of business
and leaves a ten thousand dollarbalance and an agent's the 70%
(12:15):
stakeholder in that like, well,they, they now have a $7,000
debt.
In that scenario, right, whatplays out normally in that is
that that agent's like yeah, I'mnot gonna pay that back to you,
so I'm just gonna quit and goto another company and then
we'll try to invoice them, andthen you know whatever.
Um.
So to your point aboutreceivables insurance for the
(12:35):
agent.
If the company doesn't offer it, it's you know itself.
Um, yeah, I mean you, you mightbe able to, I don't even.
I don't know if you can, though, because I don't think you can.
Because if you're the, if you'rethe I'm a contractor.
Speaker 2 (12:49):
I can't insure your receivables, you're not my
company.
If you're an agent, it's notyour receivable, but I'm liable
for them.
Speaker 1 (12:56):
Yeah.
So if I'm an agent for acompany that doesn't have an
insurance policy like that, ifyou've got a large customer and
you want to protect that in thatcredit line, have the
conversation with that brokerageand just say, hey, I'd really
like to do x, y and z and here'san option.
So, like we use allianz, whichis formerly euler, and I use
(13:19):
them at a previous company aswell, there's a, there's a price
tag pro false is a good one.
Speaker 2 (13:23):
Like we've looked at how to repulse it.
Like there's a quite a few outthere that you can get this with
.
Because, to your point, right,like I used to think about this
a lot when I worked at, like TQO.
Okay, because my previous job,like I worked at a bank and I
evaluated credit risk to lendpeople money, whether it was a
business or real estate, right,real estate right.
And I'm like, okay, like my jobis to read through the
(13:46):
financials, look at their creditreports, determine if this is a
good bet.
Like, if I give this businessor person money, can they pay me
back?
Like I'm involved in thatdecision.
But then at TQL, what I noticedis like, oh, as a broker, I am
not involved in the creditallocation.
You just send over thecompany's information and TQL
(14:07):
goes okay, well, you get ahundred grand in credit and then
, if that company goes out ofbusiness, I don't get paid any
commission, because I got tomake sure I don't get paid
commission until they pay theirbills.
And I always, I always felt likethat is a misalignment in
responsibility.
So I'm like, okay, well, likeif I'm on the hook, then let me
read their credit, let medetermine how much credit we're
going to give them, because I'mnot even involved in this
(14:28):
decision.
You guys decide to give themthis amount of money and then
they don't pay me and then Ilose the money when I wasn't
even involved in that and to meI was like that felt like a
disconnect in how the but again,in a practical stance, you
can't train practice so likecorrect, you can't train a bunch
of freight brokers on how torun credit risk to the extent
your credit department can.
(14:49):
So it makes more sense.
But like I just have thatunique perspective because I had
both jobs and I'm like, wait aminute.
But also like to your point,like from a practical standpoint
, like a broker is going to askfor more credit, almost always
to push that limit becausethey're going to get more margin
and that's usually what it isis there.
Speaker 1 (15:06):
there's a push and pull game being played between
the credit rep and the broker.
I've had people like in thepast that were like you charge
back a commission because acustomer didn't pay the invoice,
and they're like, well, whatdid I do wrong?
And it's like really nothing.
But at the end of the day we,just as a business, you can't
pay a commission on money thatyou never receive.
(15:28):
Like it's just, you just can'tJust sucks Cost of doing
business situation.
Good questions.
That's a.
That's a unique one.
I don't think we've ever hadany kind of questions like that.
That is a really good one, butyep, all right.
Final thoughts.
Speaker 2 (15:43):
Whether you believe you can or believe you.
All right, welcome back for the final mile.
This is our segment where weanswer your questions that you
guys send to us each and everyday, it feels like at this point
, through YouTube, the website.
We appreciate it, so we can'tget to every single question.
We try to answer a lot of themon YouTube or on the show or via
email, but we got some goodones that we'll get to today.
(00:22):
Make sure to check out all ofour other content at
Freight360.net and on YouTube,and you can check out the
Freight Broker Basics course onour website as well for an
educational option.
And please check out thesponsors in the description box.
That will help support ourchannel.
All right, ben.
Our first question Does abroker and a dispatcher play the
(00:42):
same role?
And, if not, can one person bethe dispatcher and the broker?
So I'm assuming the way thatthey're using the word
dispatcher can be taken multipleways.
What I want to say is if you'rea dispatcher for a trucking
company, like an independentdispatcher that represents
trucking companies, you are nota broker.
(01:04):
Those are two different things.
Brokers are things.
Brokers are licensed.
Dispatchers are not licensed.
There is some um, tia, industrystandard like guidance on
dispatch services, but there'sno like legal groundwork for at
this point.
Can you be both?
You could be both, so what'syour?
(01:27):
How would you take this Cause?
I want to make sure we're nottalking about like the
dispatcher inside of thebrokerage who's actually like
contracting the truck andtracking the truck.
Speaker 2 (01:34):
When it says the same role I'm going to.
I'm going to zoom into the wordrole and try to define it from
there, right.
So role could mean a fewdifferent things.
Like if you're meaning the roleis like what you're doing all
day.
Meaning like you are connectinga carrier with a shipper that
has a load right.
Like that is different for adispatcher than a broker right.
(01:57):
So for a dispatcher, the way Ialways understand the guidance
is you do not have the abilityto choose between motor carriers
for any given load as adispatcher.
As a dispatcher, you arecontracted with a trucking
company and you are able tosource loads for that trucking
company and book their trucks onthat load.
(02:20):
You are not able to book ofmany multiple MCs for one given
load.
You work for the truckingcompany, you book loads for them
as a dispatcher.
The thing that makes it a littleconfusing is under the guidance
, my interpretation is that,like you are able to dispatch
for multiple trucking companiesbut they need to have a
distinguishing quality.
(02:41):
Meaning like, yes, like I havea reefer company I'm a
dispatcher for and a van, solike if I have a van load it
only goes here, a reefer loadonly goes there the guidance
clearly states that, like you,can't be a dispatcher for six
different dry van companiesbecause now you're operating as
a freight broker without alicense.
So to me that is thedistinction and rules.
Distinction and rules.
(03:07):
A broker allows you to work,with your license, any shipper
and vet and work with anycarrier to move that load right.
A dispatcher is constrained oronly able to work with typically
one trucking company unlessthat trucking company can't
provide other services likemaybe drayage, maybe intermodal
or maybe like, or maybe like ordifferent areas of the country.
Speaker 1 (03:25):
Yeah, correct, what this trucking company only is a
dispatch service, basicallyhaving a load from a broker and
being like, hmm, I got these sixtruck companies available this
one pays me this much and youknow it's like, uh, if you're,
if you're, they're then havingsome control over, um, you know,
carrier selection, that is afreight broker's role and that's
(03:48):
our license.
Speaker 2 (03:50):
The ability to vet and determine the carrier
selection.
You can determine the carrierselection, but it has to have
differences Like to your point.
Like I can use this truckingcompany and they're all vans
because they only operate in thenortheast.
Oh, I need to move this load inthe southwest.
I can use that trucking companyI'm contracted with for that
load because one can't do theother one's load.
Speaker 1 (04:11):
If you could pick between the two.
Yeah, the dispatcher cannottake paint.
Money cannot run through thedispatcher.
Speaker 2 (04:16):
Right, right.
They have to pay the truckingcompany.
The trucking company pays thedispatcher.
Speaker 1 (04:19):
Yep Brokers, the money runs through us, so all
right.
Next question I think this isfrom a shipper, actually.
So we recently found out thatour broker booked a few loads
with a fraudulent freight haulerso a fraud carrier.
That broker still wants to bepaid for the loads.
They paid the fraud motorcarrier but doesn't know who the
(04:42):
trucking company who actuallydelivered the load is and likely
won't pay them if they comeforward Any advice.
So, all right.
This is a very common scenarioin double brokering where, like,
shipper gives load to, we'lljust pretend that me and you are
part of this equation, right?
(05:03):
So Shipper gives a load to youas a freight broker and I'm
trucking company, right, yougive it to me and you think I'm
going to haul it.
What do I do?
Is I give it to I without alicense or the authority to do
so.
I give it to some owneroperator who then hauls it.
I take payment from you and Ijust fall off the face of the
(05:24):
earth, right?
And you know whoever thatcarrier is to hold it at some
point is going to come aroundand want payment and per, like
the laws, like the, that youwouldn't have to pay them, right
?
The actual shipper isresponsible for freight payment,
which, I tell you, lose acustomer if you don't own up to
your errors.
(05:44):
Yes, so this?
This shipper is asking foradvice because the broker that
they used let's see the brokerwants to be paid but doesn't
know who it was.
So, yeah, I mean I wouldn't, Iwouldn't pay the broker, I'd
freeze their pay, but I wouldtry to work with them on a
relational piece of like hey, ifwe want to do business together
, like, we've got to haveprocesses in place to make sure
(06:05):
that who you're sending into usis legitimate.
Or I mean, depending on how badthis is like, just don't ever
use this broker again.
Like, because you are as theshipper, you are going to be
held liable to pay whoeverhauled that load of yours when
they come around and if thebroker says I'm not paying them,
they're going to come to you.
So yeah, I wouldn't pay.
Yeah.
Speaker 2 (06:34):
And again like I wouldn't pay.
Yeah.
And again like I would becurious how the shipper found
out the broker paid a fraudulentcompany and still wants paid.
I'm guessing because how thatarose, like how the shipper
found out the broker paid afraudulent company Right, but
hadn't yet paid the broker.
Speaker 1 (06:44):
To me is probably like a whole lot of things were
like the brokers like, yeah, Ihired this Trucking company and
a shipper, something happens,goes wrong.
They can't get a hold ofsomebody.
Next thing you know they'relike who'd you load?
Oh, we loaded ABC Trucking.
And it's like no, we contractedXYZ.
Like it was probably somethingalong the line, like something
must have happened.
(07:04):
And when they started goingback through the details they
probably realized like whoactually got loaded and hauled?
It was not the same as who thebroker booked.
Speaker 2 (07:14):
And the broker's like probably like, like, yeah, I
clearly one slip past me typedeal and I think if I'm the
shipper, I, to your point, wouldwork with a broker and try to
gather as much information asyou can, because what your real
objective here isn't to screwanybody as a shipper, it's to
just make sure the payment getsto the company that moved the
load Right.
So, whether that's me as ashipper, it's to just make sure
the payment gets to the companythat moved the load right.
(07:37):
So, whether that's me as ashipper, trying to figure out
from my loading doc do we haveany images, photos or
documentation of the truckingcompany that we loaded?
Does my receiver have any ofthat documentation or images?
Try to find the MC of thecarrier that actually hauled it.
Get them in the loop to contactthem to make sure they're
involved and the money gets tothem.
(07:58):
Because the only scenario atwhich I'm paying that broker for
that load is that the broker inwriting is going to release the
payment I give the broker tothe actual carrier, which
doesn't solve the broker'sproblem.
The broker, at the end of theday, if they want to keep the
customer, is already out themoney they paid the fraudulent
person and even if they get paidfrom the shipper, they still
(08:20):
have to pay the second carrierthat actually moved the freight
anyway.
So, regardless of how thisworks for the broker like,
they're out that money if theywant to keep the relationship
with the shipper as the shipper.
If you don't get those funds tothat trucking company that
hauled your freight, they willcome back eventually in the next
few weeks or months and they'regoing to reach out to you
because they know they picked aload up from you and they're
(08:40):
going to shoot an email or callyour facility and say, hey, who
did you guys arrange this loadwith?
Because we didn't get paid.
You'll look up the load numberand then you'll be able to close
the loop on what actuallyhappened.
That's usually how these kindof play out.
Speaker 1 (08:53):
Yep, all right.
Last one Do you think an agentworking as 1099 should buy some
kind of insurance?
What insurance?
Do you think Bad debt is not aconcern?
Okay, I actually get thisquestion.
I've got this question frompeople within our because Pierce
is agent based, so we get youknow questions from agents about
, like you know, agent based, sowe get you know questions from
(09:15):
agents about, like you know, doI need to have any insurance?
Blah, blah, blah.
So here here's the breakdown.
The brokerage that you'recontracted with as an agent will
have insurance policies thatany brokerage would have, right,
like general liability, um,contingent cargo, contingent
auto, things like that, um, youare cut, your the business that
you're doing is covered underthose policies.
(09:36):
What doesn't happen like so thethe general liability policy,
for example, like a slip trip orfall in the office, those do
not trickle down and cover acontracted agent.
Speaker 2 (09:47):
So if your agent pierce, isn't in charge or on
the lease.
If you had an office as anagent, you're right, you know my
agents that have an office andhave employees.
Speaker 1 (09:57):
Well, usually their office lease is going to require
that they show proof of theirown general liability policy.
But yes, that is an instancewhen you would want to have a
policy to cover things of thatnature.
So if someone's in your officeand you know falls and breaks
their back, you're not going tolose your house over it.
Speaker 2 (10:19):
So here's, but as far as you don't need like a
contingent cargo policy oranything like that for your
shippers.
Let me throw.
Let me throw a what if?
Scenario at you.
Sure, I'm an agent for you saypierce does not have receivables
insurance, okay, yep, butpierce and my contract is a 1099
agent.
You guys pay me on loadsdelivered.
I'm not saying that is yoursetup, but like that's not
uncommon for some agents we payon invoice, sorry.
(10:41):
Yeah.
Speaker 1 (10:42):
The scenario you're going to give me has probably
happened at our company orsomething, so I'm getting paid
on loads delivered every week.
Speaker 2 (10:49):
Right, I'm paying my employees as an agent underneath
Pierce, employees as an agentunderneath Pierce, but then my
customer, of which Pierceapproved credit for, because
Pierce is funding the invoicesand taking the risk between
paying me and when they get paidfrom my customer, if my
customer goes under, goesbankrupt and everybody did what
(11:09):
they were supposed to and it'sjust a risk, like Del Monte
which came up recently, right?
Or like they just can't paytheir bills and likely lots of
these free bills don't get paid.
Is there a scenario in which meas an agent wants to pay for my
own receivables insurance,because if my customer doesn't
pay you, pierce is going towithhold future money from me.
(11:30):
It's not like you're just goingto eat that risk and be okay
with my getting paid on all myloads and you being stuck for
the invoices.
Speaker 1 (11:39):
Yeah, so like the common agent world practice is
like we we use a receivablesinsurance company, right, yeah,
I know.
Speaker 2 (11:48):
I'm just saying a lot other agents.
Speaker 1 (11:50):
So right, so prior to that, when we didn't.
And this is common in the agentworld is like your contract
will outline like your splitslike we're 70 30, which means
like if there's profit, it's 7030.
If there's loss, it's 70 30.
Right, and you know so.
If there's a lot of you know,customer goes out of business
and leaves a ten thousand dollarbalance and an agent's the 70%
(12:15):
stakeholder in that like, well,they, they now have a $7,000
debt.
In that scenario, right, whatplays out normally in that is
that that agent's like yeah, I'mnot gonna pay that back to you,
so I'm just gonna quit and goto another company and then
we'll try to invoice them, andthen you know whatever.
Um.
So to your point aboutreceivables insurance for the
(12:35):
agent.
If the company doesn't offer it, it's you know itself.
Um, yeah, I mean you, you mightbe able to, I don't even.
I don't know if you can, though, because I don't think you can.
Because if you're the, if you'rethe I'm a contractor.
Speaker 2 (12:49):
I can't insure your receivables, you're not my
company.
If you're an agent, it's notyour receivable, but I'm liable
for them.
Speaker 1 (12:56):
Yeah.
So if I'm an agent for acompany that doesn't have an
insurance policy like that, ifyou've got a large customer and
you want to protect that in thatcredit line, have the
conversation with that brokerageand just say, hey, I'd really
like to do x, y and z and here'san option.
So, like we use allianz, whichis formerly euler, and I use
(13:19):
them at a previous company aswell, there's a, there's a price
tag pro false is a good one.
Speaker 2 (13:23):
Like we've looked at how to repulse it.
Like there's a quite a few outthere that you can get this with
.
Because, to your point, right,like I used to think about this
a lot when I worked at, like TQO.
Okay, because my previous job,like I worked at a bank and I
evaluated credit risk to lendpeople money, whether it was a
business or real estate, right,real estate right.
And I'm like, okay, like my jobis to read through the
(13:46):
financials, look at their creditreports, determine if this is a
good bet.
Like, if I give this businessor person money, can they pay me
back?
Like I'm involved in thatdecision.
But then at TQL, what I noticedis like, oh, as a broker, I am
not involved in the creditallocation.
You just send over thecompany's information and TQL
(14:07):
goes okay, well, you get ahundred grand in credit and then
, if that company goes out ofbusiness, I don't get paid any
commission, because I got tomake sure I don't get paid
commission until they pay theirbills.
And I always, I always felt likethat is a misalignment in
responsibility.
So I'm like, okay, well, likeif I'm on the hook, then let me
read their credit, let medetermine how much credit we're
going to give them, because I'mnot even involved in this
(14:28):
decision.
You guys decide to give themthis amount of money and then
they don't pay me and then Ilose the money when I wasn't
even involved in that and to meI was like that felt like a
disconnect in how the but again,in a practical stance, you
can't train practice so likecorrect, you can't train a bunch
of freight brokers on how torun credit risk to the extent
your credit department can.
(14:49):
So it makes more sense.
But like I just have thatunique perspective because I had
both jobs and I'm like, wait aminute.
But also like to your point,like from a practical standpoint
, like a broker is going to askfor more credit, almost always
to push that limit becausethey're going to get more margin
and that's usually what it isis there.
Speaker 1 (15:06):
there's a push and pull game being played between
the credit rep and the broker.
I've had people like in thepast that were like you charge
back a commission because acustomer didn't pay the invoice,
and they're like, well, whatdid I do wrong?
And it's like really nothing.
But at the end of the day we,just as a business, you can't
pay a commission on money thatyou never receive.
(15:28):
Like it's just, you just can'tJust sucks Cost of doing
business situation.
Good questions.
That's a.
That's a unique one.
I don't think we've ever hadany kind of questions like that.
That is a really good one, butyep, all right.
Final thoughts.
Speaker 2 (15:43):
Whether you believe you can or believe you.
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