Unfortunately at some point every trucking company needs solutions to eliminate late payments because there is nothing fun about not getting paid for the loads you have hauled. But unfortunately, every small trucking company and owner-operator are going to encounter clients who sometimes take 45 or 60 days or more to pay. When this happens, it can create a strain on your cash flow, especially since you have prepaid for items like fuel and insurance. Then you add in the time consuming and unpleasant task of following up with your clients trying to get them to pay. Not to mention it is always hard when you must beg for funds you are rightfully owed. Lastly, there is the possibility and fear you will 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. They range from things you can quickly and easily do yourself or things you will need to find a trusted partner to help you with.
Have clear payment terms.
It helps to set expectations with your clients from the start. Make sure you clearly define if payment is due on receipt, within 30 days or whatever terms work best for your business.
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? When you conduct credit checks on prospective clients and brokers before you haul the first load, you get the next best thing. You can obtain a sense for how long they have taken to pay other suppliers in the past. This is no guarantee for 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.
With this you might be thinking, “but there will be a cost to doing a credit check.” The good news is when you partner with a freight bill factoring company such as Tetra Capital; you will have access to unlimited credit checks for FREE.
Automate your system.
Some accounting systems such as Wave (waveapps.com) allow you to set up follow-up payment reminders. This helps save you from having to remember to do it and saves the time you would spend sending them out. Your clients may also not be as bothered by an automated reminder from an accounting system because it can be seen as less personal.
Partner with a factoring company who will provide immediate funds for your freight bills and will manage collections for you.
The fastest and easiest way to eliminate late payments and having to chase your clients for payment is to partner with a freight bill factoring company such as Tetra Capital. Factoring provides immediate funds for your freight bills. Additionally, Tetra Capital will manage your invoicing, processing, mailing and collections, so all you have to worry about is delivering the load.
Accept credit cards.
It has been proven that when you accept credit cards or give your clients different options for payment you could see an increase in the collection times. The downside to accepting credit cards is the fee taken for doing so. The upside is you could get paid more quickly eliminating some of your time spent on collections, saving you time and money.
While there may be no one way to get all your clients to pay when you want them to, these options should help you ease the financial challenge tied to late payments.