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Bootstrapping to $33 Million: Freightwise CIO Richard Hoehn (Part 5)

Posted on Saturday, Nov 2nd 2019

Sramana Mitra: What happens next?

Richard Hoehn: Now we got some money and start ramping into sales. You also got the whole complexity of managing this money. What we do is, we aggregate and pay the carriers. If we have a client and we save them money on a specific carrier like FedEx, FedEx sends us a bill.

We attach our gain share to it, get that bill funded by our client and then disperse the invoice to FedEx. With that, comes a lot of complexity in terms of accounting and management.

Sramana Mitra: That impacts your cash flow as well, doesn’t it?

Richard Hoehn: Yes. If our clients don’t pay, then that’s not great. 

Sramana Mitra: The customers understand that they have to pay you so that you can pay the carriers. Otherwise, you wouldn’t be able to manage this process.

Richard Hoehn: That’s one of the things that Freightwise does well. Clients like us for that because our clients will have 100 to 300 shipments a week. That means, at least, 200 invoices a week. That’s a lot of invoices to manage.

Freightwise takes care of that with our platform. We send one bill to our clients, get the cash, and then disburse the payments. There’s a nice mechanism built in where we ensure that Freightwise gets their share. We were printing and sending 800 checks a week. That is a lot of paper.

When we talk about client integrations, the key is also the vendor integration side. We have client integration and vendor integration. At this point in time, there are no checks in our office anymore. We send special files we’ve integrated into our banks. The banks send these checks for us.

We are American Express’s number three client in Tenessee. With that much money flowing around, you have to be rock-solid that no fraud happens. Once you reach a certain point, you need to offload to a third-party. 

Sramana Mitra: What is the next major milestone and next set of strategic moves that you followed to get to that milestone?

Richard Hoehn: One big milestone for Freightwise is growth. We believe we can double our size in the next 12 months. To hit that milestone, a lot of things have to happen.

One is, our product offering has to expand into more modes. Right now, we focus on parcels and LTL. We need to expand in other product offerings that are ancillary. This could include insurance for shipments. That’s a big area that we see growth in.

To get there, one of the big tricky things for any company is to get the right people on board and hire the right people. Quite a bit of effort is being placed in building out a new office. We’re expanding our office. That way, we can bring in the right people for the job.

Sramana Mitra: What is your team like? Are they all in Tenessee? 

Richard Hoehn: About two-thirds are. The other third is distributed throughout the US. It’s primarily sales, but there’re some strategic strong people in their area. We don’t mind having external people for that too.

Sramana Mitra: What is the size of the team?

Richard Hoehn: We’re 50 people.

This segment is part 5 in the series : Bootstrapping to $33 Million: Freightwise CIO Richard Hoehn
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