Ask truckers how long it usually takes them to get paid for the loads they haul, and you’ll hear 30 days. Sometimes, they get paid as quickly as two weeks, but the norm is monthly. That’s an ideal situation. You might run into a company that is short on cash and delays payments.
Are you tired of waiting days, weeks, or even months to get the money you’re owed? You delivered a truckload weeks ago, and your invoice still sits unpaid. What steps can you take to get paid immediately?
Make Repayment Terms Clear From the Start
When you create an invoice, make sure your payment terms are clear. If you’re contracting with a shipper or broker, establish a broker/shipper packet that states exactly when a payment is due.
Most shippers and brokers are going to stick to a month, but that doesn’t mean you can’t get payment from them a bit faster. Start by understanding federal regulations. Freight bills must be presented within 15 days from the time you delivered the load, excluding weekends and federal holidays. The repayment period must be seven days, including weekends and holidays.
Make sure your terms explain what happens if payment isn’t paid within 30 days. Generally, a $20 minimum penalty is added to the unpaid amount. Every 30 days that pass after that leads to another penalty.
Offer a small discount if the invoice is paid within a week. You could offer a 3% off and get paid quickly. If you’ve set your rates to buffer this discount, you’ll find it’s easy to still turn a profit, even after offering the discount.
That’s a perfect world. Not everything goes your way. If it’s been a month and you still haven’t been paid, there’s the chance you won’t get paid. You’ve done all of that work and get nothing in return. You’re paying employees to keep pressing for payment, which adds to your expenses. You could consider suing the broker or shipper.
In 2013, a motor carrier sued a company for failing to pay the discounted rate for 300 shipments totaling $115,851. Late payment penalties, financial losses, and legal fees brought the amount due to $460,049.
Research Clients Before Agreeing to Haul a Load
Before you take on a new broker or shipper, run a credit check. Freight factoring companies like Saint John Capital provide free broker credit checks. Make sure the company you’re considering hauling for has a solid history of paying on time.
If you see a job that you want to take, use the free credit check. You can see if the broker or shipper has issues with debt, late payments, or other reasons that might make you think twice.
When there is a strong history of repayments, you’re less likely to run into issues with unpaid invoices. You’ll get paid on time, if not in advance of the “pay by” deadline.
The Benefits to Factoring Your Invoices With Saint John Capital
What if you don’t want to wait even a week? Cash on delivery is best for you. You have employees to pay, trucks to maintain and fuel up, and bills that are overdue. You need money now and factoring invoices can resolve this. Freight factoring is perfect for all of these reasons.
#1 – Get Paid When You Pick-Up or Deliver the Load
Freight factoring involves submitting a bill of lading to an invoice factoring expert. The company pays you the money you’re owed, minus a small service fee. The money is transferred to your bank immediately rather than weeks later.
#2 – Save Money on Accountants
When you pick-up or deliver the load, scan the bill of lading into the free mobile app. That’s all it takes. You don’t need to create an invoice, fax anything, or pay a bookkeeper. When you upload the bill of lading, the software generates an invoice automatically that you can upload to your accounting software.
You won’t need to pay for an accountant each month. Use bookkeeping software for the invoices you upload and pay your employees. When tax time rolls around, you can pay a quarterly or yearly fee for an accountant instead, which reduces your operating expenses.
#3 – Even With the Factoring Rate, You Save Money
You are going to be paying an invoice factoring fee, and that factoring rate (service fee) needs to be competitive. If you’re being offered factoring rates of 5% or 6%, it’s worth shopping around for a better rate. You’ll find Saint John Capital has the lowest rates in the industry.
In the long-run, even if you consider a factoring rate of a couple percentage points, you end up saving money. If you pay your company credit card late because you were paid late, those late payment fees will cost you much more than a couple of percentage points over time.
Late payments impact your credit score, which can lead to higher interest rates, insurance rates, etc. One of today’s best business credit cards has an APR range of 13.24% for excellent credit or 19.24% for good credit. That’s a 6% difference. Another one ranges from 13.49% to 21.49%, a difference of 8%. If late payments reduce you to having poor credit, it can be worse. You may not qualify for loans to grow your trucking company or pay for necessary truck repairs that keep you in business.
#4 – Get All of the Money You’re Owed Instantly
Some factoring companies advance 90% or 95% of the money you’re owed. The balance is held until the invoice is actually paid. Look for a company that offers 100% advances. Get all of the money that’s owed, but be cautious of recourse terms.
Ask what happens if the broker or shipper never pays your invoice. You need to know if the invoice factoring company uses non-recourse, recourse, or modified recourse.
- Non-Recourse – If the broker or shipper never pays, no matter the reason, you’re not responsible for paying back the factoring company.
- Recourse – If the broker or shipper never pays, you have to repay the factoring company.
- Modified Recourse – The factoring company takes out an insurance policy to protect against non-payment in certain situations, such as bankruptcy. But, non-payment for other reasons, such as a dispute that you delivered on time, requires you to repay the invoice factoring agency.
#5 – Choose How You Get Paid
When you get paid, where do you want that payment to go? It may take a little longer to reach your bank account through an EBT than it would through a fuel card or debit card. If you could get paid the same day to your debit card, and then take that money to pay for fuel and repairs, would that help simplify your life?
#6 – You Gain Decades of Expertise
Here’s one more thing to consider. You want to partner with a freight factoring specialist that has a stellar reputation. Saint John Capital has been in business for more than 20 years. That says a lot.
How do you get paid as soon as you deliver a load? Head to Saint John Capital and open an account. All you need is your name, contact information, and MC number. Complete the quick online form and you’re on your way to getting paid immediately.