There is nothing fun about not getting paid for the loads you have hauled. Unfortunately, every small trucking company and owner-operator will eventually encounter clients who take 45, 60 days, or even longer to pay.
This can create a strain on your time and cash flow because you have already prepaid for items like fuel and insurance and now you must follow up with your clients for payment. It is always hard to seek funds you are rightfully owed. But there is also the possibility that you could hurt your relationship with your clients by having to ask for the payment more than once. This all adds up to something you would love to avoid.
Fortunately, there are a few solutions to help you eliminate or lessen the need to chase late payments. These solutions include things you can quickly and easily do yourself and others that require you to find a trusted partner to help.
1. Have clear payment terms
It helps to set expectations with your clients from the start. Clearly define if payment is due on receipt, within 30 days, or whatever terms work best for your business.
2. Make sure you know your clients and brokers before you haul the load
What if you had a crystal ball and could predict when your clients were going to pay? Conducting credit checks on prospective clients and brokers before you haul the first load is the next best thing. You can obtain a sense for how long they have taken to pay other suppliers in the past. This won’t guarantee how they will handle your payment, but it can provide some insight and allow you to pass on the load if their history does not match with your business needs.
You might be thinking, “But there will be a cost to doing a credit check?” However, there are partners who offer low to no-cost credit checks to their clients. If this is important to you, it may be a good question to ask prospective financial partners in the future.
3. Automate your system.
Some accounting systems such as Wave (waveapps.com) allow you to set up follow-up payment reminders. This can save you from having to remember to do it and save time spent sending them out. Clients may even prefer an automated reminder from an accounting system because it can seem less personal.
4. Partner with a factoring company that will provide immediate funds for your freight bills and will manage collections for you
The fastest and easiest way to eliminate late payments and chasing your clients for payment is to partner with a freight bill factoring company. Factoring provides immediate funds for your freight bills. Some factoring companies will also manage your invoicing, processing, mailing, and collections, so that all you have to worry about is delivering the load.
5. Accept credit cards
It has been proven that accepting credit cards or giving your clients different options for payment can lead to speedier collection times. The downside to accepting credit cards is the extra fees, but faster payments can eliminate some of the time spent on collections, saving you time and money.
While there may be no single way to get all your clients to pay when you want them to, these solutions should help ease the financial challenge of late payments.
This article was authored under the guidance and editorial standards of HDT's editors to provide useful information to our readers. Jeremy Robison is the president of Tetra Capital, which offers freight bill factoring services to trucking companies of all sizes.