Comparing the concerns that truckers have today with those of ten years ago can be interesting. As we cited in our last post, many of the problems are the same today as they were ten years ago. One area that was not elaborated upon, however, was the topic of extending and managing credit.
It’s one thing for a trucker to have secured good customers, have the correct rates calculated, and have drivers in the trucks (but it can be difficult, obviously, to secure these things all at the same time). And once you have these things in place, a trucker hauls the freight but then must wait 30, or more, days to get paid for the services rendered. How do you know you will be paid? How do you know how much credit to extend?
The question of credit management is one that gets far too little attention. Truckers must educate themselves regarding credit and employ the best practices to avoid credit problems. The faltering economy may be affecting your shipping customers and the brokers that hire you to move freight, and these companies may not be as credit-worthy as they were in the past. They could pose a serious credit risk to your company. Equip yourself so that you can minimize some of the risks of extending credit.
The first tool you should have is a good, reliable outside credit checking source. There are load boards that will rate a customer debtor’s past payment record. This is a good start, but load board information can be limited. Like a patient in the doctor’s office, you might need to get a second opinion. There are several valuable and reliable credit companies serving the trucking industry that provide you with a more in-depth look at a customer’s past payment habits. Ansonia Credit and Compunet Credit serve the trucking industry and for a reasonable subscription fee. These credit management tools, and others like them, can give you added peace of mind.
Another credit-checking tool: If you factor your invoices with a factoring company (like TFG), the factoring company often has a database of credit information that you may access in order to help you with your credit decision. At TFG we make this information available to you at no cost 24 hours a day.
Looking at today’s problems in the industry can help you focus on how you might improve your credit management operations. Better and more attention to credit management are only going to help your company.
There’s a new survey being conducted by the American Transportation Research Institute, which is attempting to identify the Critical Issues in the Trucking Industry for 2014. There’s still time for you to participate in the survey, which you can find here. You’ll be provided you with a copy of the results once the survey is completed. This is a good way for you to access information that can help you manage your company better.
If you have questions about credit management call us at TFG at 800-705-3863.