How Much Working Capital Does a Freight Brokerage Need?

Why brokerages run out of cash while growing

Growth takes cash before it returns any. Every new load sends carrier pay out on the brokerage’s schedule, and its margin arrives only when the shipper pays. C.H. Robinson and RXO use the same sentence in their 10-Ks for 2025: as volumes or the freight rates charged to customers increase, “the resulting increase in revenues may increase our working capital needs due to our business model, which generally has a higher length of days sales outstanding than days payables outstanding.” In the hypothetical above, freight that grows 50% at the same mix and terms needs about $307,500 more cash, during the weeks the new business has not paid yet.

Three things raise the number without a single new load. Rates: RXO’s 10-K for 2025 says “Higher carrier prices may result in decreased income from operations and increases in working capital usage.” Slower shippers: C.H. Robinson lists among its risks that “some customers may not pay us as quickly as they have in the past, which may cause our working capital needs to increase.” Faster carrier pay: every load moved to quick pay adds its days to the gap.

A new shipper is the sharpest case. Illustrative example: a new account at $3,000 a day of carrier spend on net 60, with carriers paid at day 12 and the first remittance at day 65, has about $159,000 out before its first dollar comes in. The income statement shows a good month; the bank balance shows the opposite. The float can outgrow the credit line in one good quarter, and when it does, the carrier invoices are the bills that wait. Why late carrier pay puts a broker’s authority at risk is covered in the guide to quick pay against shipper terms, and what an unpaid carrier can file in the guide to claims against a broker’s bond.

Net 60 or net 90 from a large shipper: what the terms cost

For some large shippers, long terms are written policy. Procter & Gamble’s 10-K for its fiscal year ended June 30, 2026 says it “has an ongoing program to negotiate extended payment terms with its suppliers consistent with market practices,” and that supplier terms under its supply chain finance program “generally range from 60 to 180 days.” Participating suppliers may sell those invoices to a bank that prices the advance on the buyer’s credit. The filing does not say which suppliers move freight; it shows what a large buyer’s terms can look like, and that an early-payment route sometimes comes with them.

Illustrative example: a load with $2,000 of carrier pay billed at $2,300 earns $300 of margin. Carriers are paid at day 12, the invoice goes out on the day of delivery, and the shipper pays five days past its terms. At a 10% annual cost of money, financing the load costs about $13 on net 30, $29 on net 60 and $45 on net 90, about 15% of the margin. At 20% a year, net 90 costs about $91, close to 30% of it. At five loads a day, the same freight ties up about $230,000 on net 30 and $830,000 on net 90. Net 90 can still be freight worth taking when three answers are yes:

• The margin works after financing at the brokerage’s actual cost of money, not the best rate it has been offered.
• The extra float fits inside available cash after the busy month and the late-shipper test.
• The shipper’s credit can carry 90-plus days of exposure: a credit check, a dollar credit limit, and a named person who watches it.

If any answer is no, there are offers to make before turning the freight down: a rate that carries the financing cost, shorter terms on part of the volume, a credit limit with terms that tighten past it, or the shipper’s supply chain finance program, priced against the brokerage’s credit line. The arithmetic tells the owner what the freight is worth on the terms on offer.

What a shipper agreement can say about payment terms and late fees

The shipper agreement is where the float is set, so the payment clause deserves the same attention as the rate. What follows explains common clause topics in plain words; it is not legal advice, and the brokerage’s transportation attorney drafts or reviews the language. If a large shipper insists on its own paper, the same list is what to read for and record, shipper by shipper.

• Terms, and the event that starts them: invoice date, receipt of a complete invoice, or delivery. Name what makes an invoice complete, such as the POD and the shipper’s reference numbers, and where it goes.
• Disputes: undisputed amounts paid on terms, disputed amounts identified in writing with a reason, inside a stated window.
• Deductions: whether loss or damage claims may be taken out of freight charges or are settled on their own. A claim taken as an offset is one of the causes of short pays.
• Late payment: a stated late charge or interest rate, the day it starts and how it is figured. State usury and interest rules differ, so the attorney sets the number.
• Credit: a dollar credit limit, and what happens past it or past a set number of days late, such as payment before further loads.
• Which document controls when the agreement, the routing guide, purchase order terms or portal terms disagree.

A late charge does not shrink the float by itself. It gives the brokerage something in writing to point to when a payment slips, and whether to charge it to a good shipper on a bad week is the owner’s call. For a contract that names no rate, the guide on interest for late invoices quotes what four state statutes say.

What to check every week

One person owns the number, read in the same meeting every week from the same exports:

• Float by shipper against last week, and every shipper whose actual days to pay moved past its terms.
• Cash plus undrawn credit, against the float plus the busy-month and late-shipper additions.
• Carrier payments due in the next 14 days, against shipper payments expected in the same days, by name.
• Each new shipper: first load, first invoice, first payment.
• Every open claim notice from the surety or trustee, with its response date and who is writing it.

When the float grows faster than the cash and the line, the list shows which shipper is driving it while there is still time to talk about rates, terms or volume.

When the number is not the problem, and where the Review fits

A brokerage that already knows its float by shipper, holds the stress cases with room to spare, and prices long terms on purpose has done this work. If cash is short this week, the first calls are to the bank or the factor and the accountant. If a surety claim notice has arrived, the next call is to a transportation attorney.

For an owner-led brokerage, the Revenue Review counts this under the Invoice → Payment hand-off. From read-only exports of the TMS, the accounting file and the bank, it rebuilds days to pay carriers and days to be paid for every shipper, sizes the float, and lists the slow payers, late invoices and short pays that widen it, in monthly dollars where the records support them. It does not arrange financing, recommend a lender or factor, or give legal advice. It takes two weeks, and the report is the brokerage’s to keep.

If the count above shows a gap, the next step is a free 20-minute call, where we say whether that count, done in-house, is enough.