It’s Whether and When You Get Paid That Counts

QUESTION: Our receivables are piling up. What can we do to avoid slow-payers and no-payers in the future?

My company conducts credit checks for truckers, among other clients, so you can guess where I’m ultimately going to steer you. Most of all, though, I’d like you to keep four simple principles in mind as a way to reduce those slow-paying or no-paying customers crowding up your books:

* Learn as much as you can about the people you’re doing business with-or are considering doing business with. For instance, if you’re dealing with a load broker, go the extra step and make sure he’s authorized to broker freight. Ask if he is bonded and insured.

It’s not easy to be thorough and quick when you’re trying to decide whether to accept a load. You may not have the time or manpower to verify creditworthiness. Moreover, asking a potential customer for credit references will only produce names of those customers that are paid on time, and not the ones who have had trouble getting their money.

That’s what a credit report is for, and not all are created equal. The bigger credit reporting companies provide generic information on literally millions of businesses in the United States and Canada, their data gathered primarily by questioning the company they are developing the report on. These reports will contain information on banking, trade data, secured loans, courthouse-provided information, third-party collections, and payment trend analyses.

Other companies offer more industry-specific information, including records of how promptly shippers and brokers pay their freight bills. Using reports from carriers that have hauled for that customer before, they can show how much credit was extended, if the customer paid on time, paid late, or if he paid at all.

If their credit looks great, rest easy. If it’s questionable, you can make your agreement on a COD or cash basis.

* Know how to get in touch with your customer. It seems obvious, but a lot of people don’t get paid because they don’t know how to get back in touch with the company for which they hauled the freight. Make a record of the physical address of the office you dealt with. Know where the home office is located, get a mailing address and billing address, plus a phone number and fax number.

* Communicate the details of your agreement clearly and in writing. It’s a cliché, but a verbal contract isn’t worth the paper it’s written on. Make sure you have a written contract, and read it carefully. Then approve it or alter any agreed-upon changes, and be sure you and the customer initial any changes on the contract.

Most of the time, contracts are prepared by the load broker or shipper to outline what they expect from the carrier. In some cases, you may want to use your own contract which states what you expect in exchange for your services, instead of using one given to you.

* Make sure all of your paperwork is in order and processed promptly. Most slow payment situations occur because of paperwork problems. Slow payment can turn into non-payment if the necessary documents are lost or misplaced.

Be sure you know which documents the customer requires before payment will be made. Good luck! —–

Cindy Giuliani-Aldridge is president of CompuNet Credit Services, which she founded in 1984. She can be reached at 1-800-872-3748 or by e-mail at ccssale@ctaz.com.