Steps for Collecting Outstanding Freight Payments from Brokers
Steps for Collecting Outstanding Freight Payments from Brokers
Blog Article
When a freight broker owes you money, it can seriously strain your company's cash flow and operations. Knowing how to handle the situation is crucial, whether it is due to delayed payments, disputes, or simply refusing to pay. We'll give you actionable advice to help you recover your funds quickly and defend your business in this guide, explaining the steps you should take when a freight broker owes you money.
1. Review the terms of your contract and payment.
Examine the terms of the contract you have with the freight broker before proceeding. Pay particular attention to the payment terms, which include the agreed-upon deadlines for payment and any restrictions that might have an impact on the procedure. This will help you understand your legal standing and prevent the broker from actually breaking the agreement.
Key Concepts:
• Look for any restrictions on late fees or fines for late payments.
• Verify that all necessary paperwork, such as delivery and invoice documentation, was submitted on time and correctly.
2..... Send a reminder about making a formal payment
The next step is to send a formal payment reminder once you've verified that your payment is due. To ensure the broker receives it, this can be done via email or a certified letter. Maintain a professional tone by clearly stating the contract's terms for payment, the original due date, and the amount owed.
A template for an email reminder about payments:
• Subject: Payment Reminder for Invoice#] Invoice Number
• Body: Dear [Broker Name], we would like to inform you that payment for the invoice number [dated]Date] is currently due. Payment was due on [Due Date] in accordance with the agreed payment terms. Please arrange for the [Amount Owed] to be paid for right away. Thank you for your prompt investigation into this issue.
3.... Make a Phone Call to Follow Up with a Follow-Up.
Follow up with a phone call to the freight broker if your payment reminder is ignored. A phone call can sometimes help you get the job done more quickly because it enables you to speak directly with the broker or their accounts payable department.
Tips for the Call
Ask for a specific payment date and be firm but polite.
• Take notes of what is being discussed, along with any payment promises made.
4.... Request options for fast-paying or factoring
If the freight broker is having temporary cash flow issues, they might be able to provide quick-pay services or factoring as an alternative. While factoring involves selling the invoice to a third-party factoring company, which will pay you upfront and collect the payment from the broker, quick-pay allows carriers to receive a quicker payment, frequently for a small fee.
How to proceed
• Find out if the broker offers quick payment or if they can arrange factoring for the balance.
• Assess the costs and advantages of accepting these choices, if available.
5. Claim against the freight broker's surety bond
In the event that a freight broker in the United States fails to pay, they are required to have a surety bond, which acts as a financial guarantee for the carriers and shippers. You can file a claim against the broker's bond if you are unable to get payment from them.
How to File a Claim for Surety Bond:
• Find the broker's surety bond information, which should be included on the contract or accessible through the Federal Motor Carrier Safety Administration( FMCSA).
• Send a claim to the bonding company, providing all necessary paperwork, such as the unpaid invoice, contract, and proof of delivery.
• The bonding company will pay you up to the bond's maximum if the claim is approved.
6..... Report the broker to the FMCSA.
Reporting a broker to the FMCSA can help them hold them accountable if they refuse to pay or have a history of non-payment. The FMCSA regulates freight brokers, and it looks into complaints about non-payment, which could lead to fines or the broker's license to be voided.
How to File a Complaint
Visit the FMCSA's National Consumer Complaints Database.
• Give details about the broker, the amount due, and any efforts you've made to collect the payment.
7.... Take into account hiring a collection agency
Employing a collections agency may be a viable option if you still are unable to recover your payment despite the previous instructions. Collections agencies have a focus on recovering unpaid debts and will handle the phone calls and payments with the broker. Keep in mind that collection agencies typically charge a fee for a percentage of the recovered funds.
How to Select a Collections Agency:
• Look for organizations that concentrate on the transportation and logistics sector.
• Ensure the organization has a valid license and a proven track record of success in recovering unpaid freight bills.
8. As a last resort, seek legal action.
In order to recover your money, you might need to file legal action against the broker in a last ditch effort. You may be able to file a lawsuit or file a small claims court claim, depending on the amount owed and the circumstances. It's important to weigh the potential advantages against the costs because legal action can be expensive and time-consuming.
Steps of a legal proceeding:
• Get in touch with a lawyer with a background in contract or transportation law.
• Take into account the broker's financial stability before acting, because winning a judgment does n't guarantee payment if the broker is insolvent.
9. Protect Yourself for upcoming business transactions
Once the current issue has been resolved, it's crucial to take action to protect your company from upcoming non-payment claims. Implementing some best practices can read more help to lessen the chance of dealing with brokers who might not be able to make their payments.
Best Practices of the Year:
• Conduct a credit check on brokers before accepting new loads.
• Evaluate the broker's payment history using freight broker rating services.
• Consider using a factoring service to reduce risk and faster payments.
ConclusionA freight broker owing you money can be a stressful and frustrating experience. You can increase your chances of getting your money back by taking the necessary actions, such as reviewing your contract, sending payment reminders, filing claims, and requesting outside assistance as needed. By examining brokers and considering alternative payment options like factoring, it's also important to keep an eye on yourself for potential non-payment issues in the future.
You can navigate the difficulties of unpaid freight bills and keep your company running smoothly with the right strategy.