As you haul freight for various shippers and brokers you occasionally must decide whether or not to risk extending credit to a new customer (shipper/broker). Naturally, you want to get paid for hauling the freight, but dealing with unknown companies might leave you holding the bag. Everyone has heard stories of brokers (or experienced them firsthand) who promise “too good to be true” rates—and then rip truckers off after the fact.
So how can you minimize your risks?
The obvious first solution is to check new customer credit with a reliable credit reporting source. There are several solid credit companies that you can subscribe to in order to access credit information. Ansonia Credit and Compunet are both reliable trustworthy credit companies. Based on your useage, subscription fees can run $25 to $35 per report. Higher volumes generally command lower rates.
Another good source of information is credit data available from your factoring company. At Transportation Funding Group you may go online via our website and access credit information on more than 30,000 debtor files for free! You can look at how long we have been doing business with the customer, what their high credit has been, how quickly they pay their bills, and other key credit information that can help you make a smart credit decision.
Our carriers regularly call us to ask for help with credit decisions. If we need to order a credit report to supplement our credit information, we do that at no charge to our carrier.
TFG performs all credit follow-up with your customers: we make the phone calls and keep the money turning. This regular and ongoing contact helps keep your accounts under control. If a problem develops we alert you to that immediately so you can take steps to protect your interests. This up-to-the-minute credit information gives you added peace of mind that you have an outside third party looking out for your company. We can assist you with other credit follow-up steps which might include filing against a broker’s bond, among other things.
Since October 2013, the minimum limit for a broker bond was increased from $10,000 up to $75,000. This is a good change, especially if you do need to file on a particular broker’s bond. With a higher minimum, there’s a better chance that you can get paid on an invoice from a deadbeat broker.
The better credit information you have available to you, the less likely you will be to have credit write-offs.