How Truck Dispatchers Get Paid?
Today, we're going to discuss how independent truck dispatchers get paid. I am frequently asked, “How do you get paid as a truck dispatcher? Should I collect money from a freight broker? Do I need a factoring company to get paid? Or how do I collect the money if I am working from a remote location?”
I am going to answer all these questions and offer you an optimal solution for getting paid. Starting with whether or not you should collect money from a freight broker, the answer is absolutely not! As an independent truck dispatcher, you are just assisting your client,
which is a trucking company. You are not a legal party to the transportation transaction between a licensed freight broker and a licensed motor carrier. You are just helping one of the parties with the process of conducting this transaction. Therefore, you should not be collecting or paying out any money. Yes, I have seen some dispatch companies get set up in such a way where they're basically acting as a factoring company and funding the transactions for their clients, but this setup is very complicated, and you will be carrying financial risks, which realistically, is just really unnecessary.
Speaking of the factoring companies. Do you need one to get paid as an independent truck dispatcher? The answer to this question is “not really.” Some factoring companies offer partnership programs to independent truck dispatchers. The idea behind this partnership is that you, as a dispatcher, will refer your client, the trucking company, to the factoring company. And then, once your client starts factoring their invoices, you will begin receiving your percentage automatically from the factoring company, as they are the ones paying out money for the invoice to the trucking company. They will set aside your percentage and pay it out directly to you. With such an arrangement, you don't have to bill your clients and as your clients are getting paid, so will you.
However, there is a huge flaw with this strategy. What if your client is not using a factoring company and bills brokers directly? What if your client has already signed up with a different factoring company, which does not offer a partnership opportunity to the dispatchers? Switching from one factoring company to another is not really that easy. While getting paid through a factoring company may sound like an attractive opportunity, in reality, it will be very difficult to implement, especially when you are working with many different clients. So what is the optimal solution for getting paid? In my experience, you should just bill or charge your clients directly for the services you have provided. For example, when you're getting your taxes done, your accountant just charges you for tax preparation. You should do pretty much the same. You have done a service and now you’re billing or charging your client for the service you have provided. It's that simple.
However, you might also be asking, “Well, how do I collect this money for my client?” In our training, we discuss many different ways you can get paid. One of them is the good old, send out an invoice to your client. However, it has a pretty big flaw of you potentially not getting paid while still providing a dispatching service to this client. So you may want to utilize a more modern version of invoicing, which is sending out the digital invoice. Your client will receive an email, can click on the link and make a payment, and you will immediately know if you got paid or not. This way, you will not be providing the service. If you're not being paid, the disadvantage of this strategy is that your client may get annoyed by you sending them a link every week and then possibly having to input their payment information to get you paid. Here, you can offer them a better solution and have them sign a credit card authorization form where you keep their credit card information on file and charge them on a weekly basis with Virtual Terminal for the services you have provided. They don't have to do anything and you know you will get paid. You remain in control of your receivables.
By the way, if you are one of our students, you can reach out to our support team, describe your situation, and we will advise you on the best possible way to set up your receivables again, based on your individual situation. With all that being said, I want you to take away one simple but very important point: You, as an independent truck dispatcher, should not get involved in the financial flow between freight brokers and trucking companies. You should be just charging for the dispatching service you have provided, nothing more, nothing less.
© By Alfa X Logistics March 2022
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