Freight brokers have to deal with multiple priorities daily, and with so much work to do, it is common for mistakes to be made and some things to slip between the cracks. Unfortunately, bookkeeping tends to be one of those items that gets neglected by Freight brokers and this can lead to a loss of revenue and mishaps.
According to Wikipedia, “bookkeeping is the recording of financial transactions, and is part of the process of accounting in business. Transactions include purchases, sales, receipts, and payments by an individual person or an organization/corporation”.
Below are a few bookkeeping mistakes that freight brokers often make and which you should try to avoid.
Improper expense categories
Maintaining proper expense categories is incredibly important and most fright brokers tend to get this wrong. They either don’t categorize their expenses or create plenty of categories. This practice can lead to an inability to maintain proper records.
To ensure proper expense categorizing, you may want to use an accounting software such as MYOB and QuickBooks etc. And you should only add new expense categories after thorough consideration. It might also help to get professional help to set up your initial classification of expenses.
Delaying credit card repayments
Credit cards can be a great tool for businesses, it allows companies to make payments when funds are not readily available, but surprisingly many freight brokers and other businesses alike forget to pay off their credit card balance at the end of each billing cycle mainly due to improper bookkeeping resulting in huge interest charged their credit card balance each year.
Although an interest free credit card can help improve cash flow and delay repayments, without proper bookkeeping and prompt repayment of your balance interest and fees charged by credit card providers can leave a huge dent in your overall profits. The best way to keep on top of credit card debt is to set a reminder to review your credit card statements each billing period without exception.
Incomplete invoice details
Make sure your invoices are complete and include as much details as possible about each fee. This will help your customers easily identify the charges and categorize the expense. In turn, this would allow for speed payment of invoices and improve your cashflow.
For example, clearly state if the item is charged by weight, mile, dimensions etc. If extra charges apply, make sure this is indicated with a reason why such as fuel surcharge, express delivery etc. These extra charges should be included in a separate section from the rest of the invoice to make it easier to understand.
Providing proper details on your invoice can go a long way to speeding up your invoice payments.
Insufficient tracking of receivables and invoices
Insufficient tracking of receivables means you either don’t get paid on time or don’t get paid at all. Most freight brokers would admit that delays between when the broker pays their carriers and when they receive payment the customers can have a negative impact cashflow.
Consider using invoice factoring services offered by companies such as Payability and Bluevine to help improve your cash flow especially if you find tracking and collecting invoices too hard. Invoice factoring companies purchase your invoice and pay you immediately for it at a discounted rate. This can help improve your cash flow and also save you on bookkeeping/accounting costs.
Not hiring a bookkeeper
Many business owners prefer to save time and money by performing bookkeeping tasks themselves or delegating it to a junior employee, but although this practice can save money in the short term it can also result in expensive errors and a bad credit rating.
It might pay off in the long run to hire a professional to handle your bookkeeping even if it means outsourcing to a third party.
No Knowledge of accounting software functions
Freight brokers often purchase accounting software to avoid the hassle. However, not all of them learn how to use the software. If you are using the software, you should take the time and learn the available functions of the software as this can save you a lot of time.
Using accounting software is a great way to get real-time information regarding the progress of your business in less time. However, it is important for freight brokers to find the right accounting software for this purpose and get the necessary training to use them properly.
