Procedures for Qualifying a Transportation Broker

This information primarily is for use by a motor carrier, but certainly has much to offer a shipper.

Certain minimum information should be kept for up to 5 years in a file prior to engaging a Transportation Broker:

1. Operating Authority
2. The name of the registered agent for the company.
3. The federal tax identification number of the company.
4. Additional supplementary insurance, if they have.
5. A Financial Profile
6. A history of the business, including the key people of the business and their background.
7. A copy of the broker/shipper contract with special attention given to essential negotiated terms.
8. A copy of a broker/shipper contract.
9. Pull copy of D & B, or similar document.
10. Get a credit check form signed, and call references.
11. Make a management decision on the amount of credit to be extended and then manage that! Also allow the contract to address the term of payment policy.

WHEN BROKER DOES NOT PAY OR IS LATE, BEYOND THE TERMS:

30 days from invoice date should be the maximum credit extended to any company, third party or otherwise at any time. Good reason should support terms beyond. If late, call the Broker and use the following tactics.

1. Ask politely when payment will be made, make good notes of dates, who you talked to and responses.
2. If response is not satisfactory, report that you will send a demand payment record to the Shipper, the Consignee and the Insurance Company within (X) days. Then do it!
3. Tell the bonding company you are making demand for payment per attached invoice. Include particulars. This must be done quickly to be first in line to make claim.
4. Create an invoice for the transportation charges to the shipper. Put on the invoice, as per CFR 49 you are making demand for payment. I suggest also a call to the shipper, asking him for future business direct. You may not get paid, but could gain a shipper.
5. Within 30 days, and if no response is coming from any of the players file in small claims court in the city in which the broker resided.
6. “A MUST” be sure to put this account into the data base as extending no future credit…Also an alternative is to issue a letter to the account that any freight picked up will be held until all invoices are paid!