Titanium Logistics - Woodbridge, ON
- Thread starter WALTERK
- Start date
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They pay but, they have been a little longer than usual lately. we have an outstanding invoice from 27 oct 2015. They use to be under 60 days but are around 70 to 80 days .
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I've often wondered why a big "professional" place can't pay within 30 days while some of us smaller brokers have no trouble paying in 15 days or less. We draw from the same well of customers... i.e. its not as if luck hands us all shippers who pay promptly. 60 days is bad... 70 to 80 is downright disrespectful.
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Perhaps they're using the cash flow generated by the logistics division to help carry the trucking division. There seems to be ample evidence on this site that carriers who also broker freight, stretch their payables (to other carriers) beyond that of most brokerage only companies.
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I believe there is some truth to this, but probably not in this case. Titanium is very well financed and when they are acquiring trucking companies they are doing so as a 'stalking horse' buyer.
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Some 15 years ago I was unemployed and took a business course sponsored by the Ontario government to get unemployed people back to work by starting their own businesses. Needless to say its worked out really well for me.. but I distinctly recall one of the presenters telling our class that one should always hang on to one's money for as long as possible.. that using other peoples' money was a good way to manage one's cash flow. Even at the time I made a mental note to myself never to do that.. I've had a few tight cash situations over the years.. but never anything that would require me to push payments out 60 days. Far be it for me to criticize Titanium.. but I don't see any real advantage to dragging payments out that long..
I've worked at a large carrier (+500 trucks) that also brokered freight based in Quebec and I can attest to this. Payment was over 90 days, because paying carriers was not critical when it came to payment. Paying for truck leases, employees, fuel all was put as more important.
They realized after how many carriers decided to stop using them that it was time to turn it around.
Smaller companies generally look at their payables as a refection of their character and like to send a message to their suppliers that they are to be trusted and to ensure that their suppliers stick with them.
Larger companies who have payables of millions of dollars per month generally look at their payables as a potential profit center. By extending payment by 10 or 15 days they are saving thousands of dollars per month in interest on their lines of credit and simply look at it as smart business. If holding off payment a few weeks represents big enough savings and reduces the need to dip into the credit line many CFO's will take the route of holding payment as long as they can. Not saying it's right or always the case but the administrative and accounting departments of large carriers now call the shots whereas historically they played less of a management role.
Larger companies who have payables of millions of dollars per month generally look at their payables as a potential profit center. By extending payment by 10 or 15 days they are saving thousands of dollars per month in interest on their lines of credit and simply look at it as smart business. If holding off payment a few weeks represents big enough savings and reduces the need to dip into the credit line many CFO's will take the route of holding payment as long as they can. Not saying it's right or always the case but the administrative and accounting departments of large carriers now call the shots whereas historically they played less of a management role.
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Whatiship brings up a good point so what I would like to know...
Out of curiosity, how many carriers charge interest after 30 days?
Out of curiosity, how many carriers charge interest after 30 days?
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Whatiship is right on the money. Others have told me the same, but I guess it boils down to how do you quantify your ability to get trucks? Sure, hanging on to the money for an extra 15 or 30 days will help cash flow and save money on interest accrued to using the operating line.. BUT.. the cost of doing that is a weakened credit report and ability to capture trucks. Maybe the big guys get trucks anyway, regardless of their days to pay. I know that my days to pay puts me at the front of the line in a tight market. I've even had shippers ask me why they should use my services. I tell them my credit history and days to pay is better than even theirs is and better than most of my competitors. Without that where would I be? I'd hate be out there trying to get trucks with a 60 days to pay record... would be like riding a mule at the Kentucky Derby.
To your question Hauling Ass.. most put some kind of notation on their invoices, but I've never tested it as I don't pay late. My guess would be most aren't going to bother with it..
To your question Hauling Ass.. most put some kind of notation on their invoices, but I've never tested it as I don't pay late. My guess would be most aren't going to bother with it..
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Quite a few carriers, and brokers as well, will have a notation on their invoice that interest will be charged after 30 days. Usually the rate is astronomical, something like 2% per month! I don't think that they do this expecting to get paid any sort of interest, but more so in case they have to take a debtor to court. With the interest noted on the invoice, the court might be more inclined to award it, as it was one of the terms of the debt. This is just speculation on my part however. Freight Broker is correct, we too have had many instances where a carrier will accept freight from our firm over another broker, even when the other broker's rate is higher. The carriers have made it clear, that our payment record (30 days from receipt) helps to keep their cash flow healthy, as opposed to waiting 60+ days for an extra few bucks.
Good point Loaders! Regardless of if you charge it or not, if it is not shown on your invoice you have little chance of collecting it if it goes to court. The interest charge might just pay a chunk of the collection agency's fees if you use one.
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I do not know how many carriers charge interest, however I can say from experience that our invoices stated our interest policy and our statements showed interest owing.
99% of our customers simply short paid the interest and we never attempted to collect unless we were in small claims court.
99% of our customers simply short paid the interest and we never attempted to collect unless we were in small claims court.
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I don't mention interest at all. Late payments aren't an option, so how much I charge you if you're late is a moot point.
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The interest after terms is not specific to transportation, I remember using it even before I got into transportation. What it is meant for is to give the supplier the right to charge interest where there is a bad end to the relationship for whatever reason.
As far as trucking and brokerage is concerned, the business has been morphing. In my opinion, a lot of what the brokerages or brokerage departments offer out there is a cash flow solution for their smaller partners. Good brokers even under their normal payment terms are paying their suppliers quicker than they are getting paid. Just check any publicly traded company of this sort and compare their payables to their receivables and it will prove it. And brokers use quick-pay very typically as a profit center. Once you have good credit and good cash flow, money is cheap to borrow if you need to and the public companies are typically flush with cash. CHR and Hub Group are probably the best examples of this.
Titanium again is very well financed but the management of the company are not transportation people, they are finance people. Titanium as a company is growing a lot mostly on the heels of its acquisitions. It's brokerage unit is growing and by no means is considered small, but does not compare whatsoever to the big guys out there.
As far as trucking and brokerage is concerned, the business has been morphing. In my opinion, a lot of what the brokerages or brokerage departments offer out there is a cash flow solution for their smaller partners. Good brokers even under their normal payment terms are paying their suppliers quicker than they are getting paid. Just check any publicly traded company of this sort and compare their payables to their receivables and it will prove it. And brokers use quick-pay very typically as a profit center. Once you have good credit and good cash flow, money is cheap to borrow if you need to and the public companies are typically flush with cash. CHR and Hub Group are probably the best examples of this.
Titanium again is very well financed but the management of the company are not transportation people, they are finance people. Titanium as a company is growing a lot mostly on the heels of its acquisitions. It's brokerage unit is growing and by no means is considered small, but does not compare whatsoever to the big guys out there.
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As Loaders mentioned below, we have the 2% interest terms on our credit application but we only enforce and collect this if we need to go to court.
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