Shakey
Site Supporter
30
CAT Global Inc
- Thread starter Gr8Loads
- Start date
30
If your working capital (and if you use a line of credit) allows you to pay on average all of your vendors at say, 45 days. Then, you offer quickpay to selected vendors at say, 15 days. Someone else has to wait to day 75 because you offered that quickpay.
By removing the quickpay option, you ensure that those who wait the longest don't wait as long as they would be otherwise.
I swear I had better words to describe this before I started typing, but you know what I mean.
This is a smart business decision, although you forgo the additional profit earned from the QP.
Keep well,
Mike
By removing the quickpay option, you ensure that those who wait the longest don't wait as long as they would be otherwise.
I swear I had better words to describe this before I started typing, but you know what I mean.
This is a smart business decision, although you forgo the additional profit earned from the QP.
Keep well,
Mike
30
I understand what you are trying to say Mike Jr, but in doing so, you are actually describing a company that is operating on a knifes edge. 45 days worth of working capital and not a nickel left over? Much too thin in my books. Any professionally run carrier, broker, candle stick maker, should have considerably more capital available to them than that. The quick pay option is as you said, a profit maker for the company providing it and having ample cash allows you to make it available. If Cat Global is having cash flow problems, the reason for it is one of the following, slow paying customers and/or poorly managed accounts receivable, management taking too much cash out in the form of dividends or salaries, or no one is controlling expenses. In other words, mismanagement.
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you do realize a carrier can and does have way more oops cost ie tires blow out, engines calve etc. You seem to think the worst case for everyone is their fax machine breaks down, we are not all brokers with costs that do not vary ( for the most part month to month). Yes we have our fixed costs but the variables in the trucking side can delete cash in a hurry. Just sayin..
I think its:
Lack of Money the route to all failures
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That’s why I included….”no one is controlling expenses”. A well run transport company has, or should have, a pretty good handle on what their operating expenses are, including the unexpected ones, meaning a contingency fund for those surprises such as complete engine failure the month after the warranty has expired. Years ago, I was a co-owner of a full maintenance truck leasing operation. In that business you are constantly gambling that your rate per km charged to the customer will cover such catastrophic things and still leave a bit left over for regular preventive maintenance. Listen, I am not trying to compare a freight brokerage operation to that of a transport company. They are two separate and completely different animals with their own unique set of challenges. However, surely you will agree, that bad, inattentive management, regardless of which branch of our industry we are referring to, is usually the cause of the problems we are seeing at this particular company…..no money!
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I always preferred working with GOOD brokers who weren't arms of carriers when I was on the asset side. A broker that is financially well managed should have ample retained earnings to pay its carriers faster than it gets paid. One of the benefits a smaller carrier in particular working with brokers is exactly this, because so many of the shippers do not pay in 30 days.
A carrier will feed its own assets first ... every damn time.
A carrier will feed its own assets first ... every damn time.
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So true. In any carrier's huge pile of accounts payable invoices, the ones from other carriers for loads they hauled will always take a back seat to fuel, repairs, wages, insurance, etc. A carrier will always ensure he is paying the invoices that allow him to continue to operate his fleet first. Right, wrong, doesn't really mater, it is just the way things work.
Or the typical take the money and run?
or the carriers out there doing things too cheaper and driving good people out of business. Even when they are not long term carriers/ brokers
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We used to take regular freight as they have been a customer since 2009.. but over the last year we saw it was taking longer and longer to get paid then they stopped communicating with us even though we were trying to work with them. Invoices were creeping towards 120 days. What a way to treat a longtime business relationship. We ended up having to hold a shipment to get some answers and Stefan Poplic at CAT got extremely rude and arrogant. They are now on our DNU list and I have blocked them
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We've dropped their credit limit severely.
Average days to pay is currently at 76
Things don't look good.
Average days to pay is currently at 76
Things don't look good.