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Protecting Our Clients Through Credit Checks With SJC

What happens when a broker or shipper fails to pay on time? You’ve delivered a load for a company and it’s been 60 days and still nothing? You have bills and late fees piling up, and workers to pay, but you don’t have the thousands you’re owed. It’s a nightmare, and it’s also a reason that some trucking companies end up shutting down. Protecting your company is essential, and several things help. 

Before agreeing to any job, you should run a business credit check. You also need to talk to search news and trucking forums to see if that company’s name pops up. In 2022, owner-operators reported revenue increases of 7%, which was great, except that operational costs increased by almost 23%. Revenue increases were quickly consumed by rising costs. You need to be paid on time, every time.

 The Federal Motor Carrier Safety Administration (FMCSA) offers a National Consumer Complaint Database where you can file complaints for non-payment. You can file as a consumer, driver, or industry professional, and it’s a quick 15-minute form. The problem is that the investigation takes time, and there’s no guarantee it will result in your being paid.

Saint John Capital has another option. We offer free business credit checks to protect our clients from non-payment. Take a closer look at how both of these programs help people in the trucking industry.

How the National Consumer Complaint Database Works

To file a complaint, you can be a consumer who hires a trucking company to haul items, such as when you’re moving to another state. You can be a driver who works with a broker or shipper, or an industry professional like a trucking company owner. When you file a complaint, click on the correct box to ensure your complaint is routed to the correct department.

Fill out the information and provide as many details as you can. You’ll need to provide: 

  • Your name, address, and contact information
  • The company’s name, address, and contact information
  • The origin and destination of the shipment
  • The issue you’re alleging happened (Non-payment is an agreement violation.)
  • DOT and MC identification numbers

The FMCSA looks over complaints and decides whether further investigation is needed. If so, the agency may reach out to you for more information. Complaints can become part of a company’s permanent record, which helps others. It doesn’t mean you’ll get the money you’re owed. 

Better Ways to Protect Yourself 

There are better ways to protect yourself from non-payment or late payments. Consider partnering with a freight factoring specialist. Instead of invoicing a client and waiting until they pay, you make a delivery, get the signed bill of lading, and submit that to the factoring company. They pay you all or part of the amount due that day or within a couple of days. Your days of waiting weeks or months to get paid come to an end. 

The freight factoring company invoices your clients and chases down payment instead. You have the money you’re owed, and that makes it easy to keep on top of your own expenses. Nothing is late, so you avoid costly late fees or penalties for being unable to pay your employees on time.

What happens with a freight factoring arrangement? Pick up and deliver freight as you usually do. Once you have the bill of lading, submit that through an app to the freight factoring company. They will process that BOL, approve payment, and send the money you’re owed to your bank or card.

Some arrangements have you getting a percentage of the money that’s due. It could be you get 90% now and the remaining 10%, minus the freight factoring fee, once your client pays. You could get a 100% advance, meaning you get everything you’re owed, again minus the fee.

One question that often comes up is what happens if your client never pays the invoice. Without freight factoring, you’d have to take the company to court or sell the unpaid debt to a debt collector. Debt collectors pay about 4% of 5% of the money owed, so you still take a huge loss. With a freight factoring arrangement, what happens depends on the arrangement you’ve made. 

  • Non-recourse agreements – You keep the money you were advanced and the factoring company takes the loss.
  • Recourse agreements – You have to repay the money you were advanced.
  • Partial agreements – You repay a percentage of the money you were advanced, and the factor takes the loss on the balance.

The factoring fees you’re charged are based on these types of arrangements. As the risk is greater for a factoring company if you sign up for non-recourse, the fees are higher. They’re much lower if you sign up for a recourse agreement. You have to decide if lower fees are worth the risk or not. 

In addition to freight factoring services, Saint John Capital provides free business credit checks. These greatly reduce your risk. Could you run a business credit check on your own? Sure, but the cost is often prohibitive. Dun & Bradstreet charges more than $100 for a one-time report. 

Other major credit reporting bureaus like Equifax and Experian range from $40 to $100. Those expenses add up quickly, especially if you have multiple companies to check. Save money and get free business credit reports from Saint John Capital. 

Ask Saint John Capital About Free Business Credit Checks

 Before accepting any work from a new client, no matter how long they’ve been in business, pull up a business credit check. You want to look at the company’s history of payments. How many were late? Do they still have outstanding and overdue invoices? You don’t want to take a risk on someone with a history of non-payment or delayed payments.

What’s in a business credit report? There are several things included, and it helps to familiarize yourself with the pertinent information within one.

  • Business name, number of employees, annual sales, stakeholder names, and any subsidiaries.
  • Accounts and when they were open
  • Payment history
  • Outstanding debts
  • Liens, judgments, and bankruptcies

The outstanding debts, liens/judgments/bankruptcies, and payment history are especially important. It also may show Dun & Bradstreet’s PAYDEX score, which is a number from 1 to 100. The higher the number, the more reliable the company. 

The PAYDEX score can look at hundreds of factors from the different creditors and suppliers, so it’s a very comprehensive number, but only payments that have been reported to Dun & Bradstreet are calculated, so you need to look at more than the score. Payment histories are incredibly important for that reason.

Saint John Capital provides free business credit checks, freight factoring, and many other helpful services. With a business debit card, same-day payments are possible, and an app is all you need to submit the necessary forms for instant payments. Talk to our team of factoring experts to learn more.

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