Payment Terms

[jonny-chicken]

Good Morning Jonny-chicken.
Most brokers just ignore the terms and do whatever they want - we have seen them come through at 75 days which obviously we refuse.
We have clients who pay in 60 even though our acceptable terms are 45 - the difference is they pay in 60 like clockwork.
Not sure where a new broker expects to "have credit" with no history - doesn't happen in any other business.
Carriers should demand COD or payment up front until the broker has established credit with them.
Where did this kind of thinking and acceptance become the norm in transportation - it's a crazy business plan for the carrier's for sure. Time to put a stop to it.

Good Morning Sir Fedup,

I agree, most brokers do ignore the payment terms of carriers who haul for them. That's been my experience anyway... I have gotten used to it and have no problem receiving payments up to the 45 day mark... After that, my attitude changes...

There are some brokers out there who pay very quickly... One that comes to mind is Quarterback... where it's a touchdown everytime! haahahaa... Sorry, I love that slogan... Most payments I receive from them come in about 7 to 10 days, and that is extremely rare in this business...

As far as carriers go... I'm one of the good ones... at least I think so! haahahaa...

All of our drivers have smartphones and they are required to send us scanned copies of all paperwork upon delivery. This way we can get the paperwork out fast to bill our customer or broker, to get the money flowing sooner...

 

[Freight Broker]

Good Morning Jonny-chicken.
Most brokers just ignore the terms and do whatever they want - we have seen them come through at 75 days which obviously we refuse.
We have clients who pay in 60 even though our acceptable terms are 45 - the difference is they pay in 60 like clockwork.
Not sure where a new broker expects to "have credit" with no history - doesn't happen in any other business.
Carriers should demand COD or payment up front until the broker has established credit with them.
Where did this kind of thinking and acceptance become the norm in transportation - it's a crazy business plan for the carrier's for sure. Time to put a stop to it.

Interesting.. after some 20 years in business the carriers who rejected me when I was new on account of no credit are all GONE ... the folks who took a chance on me are alive and doing well.

 

[loaders]

One of the first things I realized when I started my business over 30 years ago, was regardless of how much freight you may have and regardless of how rich your rates may be, if you don’t pay your carriers promptly, you’re not going to make it in this industry. Paying your suppliers on time, every time, goes a long way, even further than just being a nice guy. I know carriers remember which broker has the best rates, but they also remember which broker pays their bills on time.

 

[bubba-one]

ICC or Interstate Commerce Commission use to require that freight bills be paid in 15 days, deregulation has caused for the changes that the industry has come to accept.

 

[fedup]

Likely happene

Interesting.. after some 20 years in business the carriers who rejected me when I was new on account of no credit are all GONE ... the folks who took a chance on me are alive and doing well.

Likely due to taking too many chances on new brokers and never got paid could have played a part!!
Congrats to you though - industry needs more like you.
Betting you have seen some negative changes to the carriers you use over the years and that's unfortunate as well.

 

[markhamboy]

Okay here is one that makes us broker look bad when payment shows 60 days. We pay 30 day from the date we receive the invoice. Shipment was picked up March 26. 1st drop in Dieppe NB delivered March 30, 2nd drop in Corner Brook, NL delivered on April 9.
Now invoice date March 26. So now if a carrier want's a reference, I can't use this company, even though they said your net 30 starts from the day you receive the invoice, BUT their system will show paid in 60 days.

 

[Beep Beep]

Okay here is one that makes us broker look bad when payment shows 60 days. We pay 30 day from the date we receive the invoice. Shipment was picked up March 26. 1st drop in Dieppe NB delivered March 30, 2nd drop in Corner Brook, NL delivered on April 9.
Now invoice date March 26. So now if a carrier want's a reference, I can't use this company, even though they said your net 30 starts from the day you receive the invoice, BUT their system will show paid in 60 days.
View attachment 795

Every Factoring company uses the backdate model and some carriers are also doing this making quick paying brokers look bad.
How can I pay an invoice that isn't received???

 

[loaders]

I am all for businesses doing whatever they can to speed up getting paid. Let’s face it, cash flow is the “grease” that keeps the wheels turning. However, asking a customer to pay an invoice before they have actually received it, or asking for payment without at least offering a POD, is pushing the envelope. In our office, the payment clock doesn’t start until we have received either an actual or scanned invoice with a current date on it, not something dated 2+ weeks ago.

 

[BPOVFB]

I'm a real big fan of factoring companies that purchase receivables without correct paperwork and expect to be paid promptly.

 

[AccountsReceivable@DRC]

Hey Fedup,

From my perspective (as a carrier), it seems most brokers treat our payment terms as more of a suggestion than a rule... haahahaa...

jonny-chicken,

It's been a long time since I've commented on your posts. I've missed you (lol). Your response here was 'bang on'.

Here's a common frustrating scenario occurring more frequently between brokers & carriers:

Carrier agrees to a broker confirmation and the rate. Broker then calls and says your "current contract on file" with that broker has expired. You need to complete their ONLINE broker contract (RMIS) to get updated on their end. You can't make any amendments to that contract (due to it being online), you need certain docs on hand to be uploaded and the thing takes 20+ minutes to complete. Carrier does the load(s) and issues the invoice - to find out you need to upload one invoice at a time with the POD to their 'portal'. Portal? What portal? Carrier then needs to get setup with an account to access the broker's "portal" in order to submit the paperwork to get paid. To which you are at someone's mercy to give you a login and temporary password to get that portal going.

It never ends. And all this for a $400 invoice. Good lord. The carrier should be charging another $200 admin fee. All the hoopla just to get a truck going. Makes you miss the 'trucking of ole' when your dispatch had one desk, 2 guys, one land line and a fax machine. Simple...and got the job done.

 

[jonny-chicken]

jonny-chicken,

It's been a long time since I've commented on your posts. I've missed you (lol). Your response here was 'bang on'.

Here's a common frustrating scenario occurring more frequently between brokers & carriers:

Carrier agrees to a broker confirmation and the rate. Broker then calls and says your "current contract on file" with that broker has expired. You need to complete their ONLINE broker contract (RMIS) to get updated on their end. You can't make any amendments to that contract (due to it being online), you need certain docs on hand to be uploaded and the thing takes 20+ minutes to complete. Carrier does the load(s) and issues the invoice - to find out you need to upload one invoice at a time with the POD to their 'portal'. Portal? What portal? Carrier then needs to get setup with an account to access the broker's "portal" in order to submit the paperwork to get paid. To which you are at someone's mercy to give you a login and temporary password to get that portal going.

It never ends. And all this for a $400 invoice. Good lord. The carrier should be charging another $200 admin fee. All the hoopla just to get a truck going. Makes you miss the 'trucking of ole' when your dispatch had one desk, 2 guys, one land line and a fax machine. Simple...and got the job done.

Yeah, I hate those places, and their damn 'Portals'! haahaaha...

It's like a portal to hell!

Thanks for the kudos!

 

[Freight Broker]

"net" terms are conventionally taken from the date the work started.. so if a carrier picked up a load on March 26 and the terms are "net 30" then the 30 days are measured from March 26. It irks me as well when the factoring company drags its feet in getting the invoice out. But its in their best interest to show you as a slow paying broker.. and if that's not possible they try to make you look slowER than you really are. Let's not forget that factoring companies thrive because their service is getting money to the carrier faster than you can get it from the broker directly.. and the bigger that spread is, the more valuable their services are deemed to be. Now, if that doesn't make you mad, remember that the factoring companies are also in cahuts with the credit reporting people.. so they get to report whatever they want.. 40 days.. 60 days.. whatever, and you as the broker or shipper have zero recourse because they won't even let you know who reported you. And some of them take it a step further.. they measure the date from the day the load was accepted.. i.e. load was accepted March 13.. picked up on ready date April 12.. and delivered on April 14. Even if the money is transferred on the date of delivery that's reported as 32 days! Now that pretty much everyone and his dog factors there's less reason to pay your bills in a timely manner.. so long as you pay eventually and remain "factorable" the carriers themselves (at least most of them) don't care how long you take to pay the factoring company.

 

[jonny-chicken]

"net" terms are conventionally taken from the date the work started.. so if a carrier picked up a load on March 26 and the terms are "net 30" then the 30 days are measured from March 26. It irks me as well when the factoring company drags its feet in getting the invoice out. But its in their best interest to show you as a slow paying broker.. and if that's not possible they try to make you look slowER than you really are. Let's not forget that factoring companies thrive because their service is getting money to the carrier faster than you can get it from the broker directly.. and the bigger that spread is, the more valuable their services are deemed to be. Now, if that doesn't make you mad, remember that the factoring companies are also in cahuts with the credit reporting people.. so they get to report whatever they want.. 40 days.. 60 days.. whatever, and you as the broker or shipper have zero recourse because they won't even let you know who reported you. And some of them take it a step further.. they measure the date from the day the load was accepted.. i.e. load was accepted March 13.. picked up on ready date April 12.. and delivered on April 14. Even if the money is transferred on the date of delivery that's reported as 32 days! Now that pretty much everyone and his dog factors there's less reason to pay your bills in a timely manner.. so long as you pay eventually and remain "factorable" the carriers themselves (at least most of them) don't care how long you take to pay the factoring company.

Although it was difficult getting through your giant block of text... haahaahaa... I do agree, this has been my experience with factoring companies as well... Report the carrier late before the invoice is even delivered!

 

[WOODY]

that just adds to the list of reasons why we don't use factoring companies

 

[economy]

"net" terms are conventionally taken from the date the work started.. so if a carrier picked up a load on March 26 and the terms are "net 30" then the 30 days are measured from March 26. It irks me as well when the factoring company drags its feet in getting the invoice out. But its in their best interest to show you as a slow paying broker.. and if that's not possible they try to make you look slowER than you really are. Let's not forget that factoring companies thrive because their service is getting money to the carrier faster than you can get it from the broker directly.. and the bigger that spread is, the more valuable their services are deemed to be. Now, if that doesn't make you mad, remember that the factoring companies are also in cahuts with the credit reporting people.. so they get to report whatever they want.. 40 days.. 60 days.. whatever, and you as the broker or shipper have zero recourse because they won't even let you know who reported you. And some of them take it a step further.. they measure the date from the day the load was accepted.. i.e. load was accepted March 13.. picked up on ready date April 12.. and delivered on April 14. Even if the money is transferred on the date of delivery that's reported as 32 days! Now that pretty much everyone and his dog factors there's less reason to pay your bills in a timely manner.. so long as you pay eventually and remain "factorable" the carriers themselves (at least most of them) don't care how long you take to pay the factoring company.

Speaking of the factoring companies and I am with one of them. Can not speak on behalf of all other factors, but what mentioned above WE HAVE NEVER DONE such reporting, nor does it make any sense to me why would factoring companies to do that. I am not trying to open up a new subject of discussion in this thread, but perhaps there is something going on with other factors on the market I am not aware of. NO SENSE.

 

[jonny-chicken]

Speaking of the factoring companies and I am with one of them. Can not speak on behalf of all other factors, but what mentioned above WE HAVE NEVER DONE such reporting, nor does it make any sense to me why would factoring companies to do that. I am not trying to open up a new subject of discussion in this thread, but perhaps there is something going on with other factors on the market I am not aware of. NO SENSE.

The two that I remember having this problem with were JD Factors and Riveria Finance... but it was many years ago, as I tend to avoid doing business with companies that factor their invoices, so I don't encounter them much anymore.

From what I could gather, they really didn't care if the data was accurate, they just had some automated system in place to send late payment data directly to Equifax... I guess they treated their invoices as 'due upon receipt'... but the carrier would mail the invoice to the factoring company, who would then put their 'stamp' on it and then mail it to us... By the time we received their invoice, it was already overdue, according to them...

Some companies who factor their invoices, don't just factor all of them... They will pick and choose which ones to factor, sometimes basing their decision on the 'days to pay' provided by equifax... If the factoring company is always reporting the broker as being past due, then the carrier will choose to factor because they are concerned about waiting to get paid by a broker that, according to equifax, is a slow payer... More business for the factoring company... And the cycle continues...

 

[KeyFactor]

Every Factoring company uses the backdate model and some carriers are also doing this making quick paying brokers look bad.
How can I pay an invoice that isn't received???

I can't speak for anyone else, but we never backdate or client's invoices. The carriers that work with us bill their customers directly by email, with me in cc and with the invoice bearing my stamp. The invoice is NEVER issued nor dated before the load is complete.

 

[tasuinam]

Yeah we would never pre date an invoice - makes no sense

 

[Jim L]

I will chime in here:
1. Credit is something that a carrier can extend to their customer(Freight Broker). It is not mandatory, obligatory and it definitely should not be expected. Credit can also be rescinded at any time. Its the carrier's choice if they want to extend that credit.
2. Carriers often pay the bulk of their expenses within a week. The drivers, fuel, permits, tolls, lumpers are the bulk of the total expenses paid in less than 7 days plus the other costs must be paid within a month - equipment financing, overhead charges etc. This is why 30 days should be the maximum.
3. The carrier is selling a service, not goods. Once the service is complete, there is no reversing it. You cannot get it back and resell it or put a lien on it. Most brokers have no assets so carriers have no recourse. In the good ol days, the freight was pre-paid until some offered a slight credit of 15 days. Now it has morphed to payment when we get money if I don't spend it first.
4. The Freight Broker issues a 'PO' ie. carrier confirmation. They know the expected pickup date and the expected delivery date. Saying that they will provide payment X days after receipt is silly. The invoice date should be the date of delivery as that is when the contract of carriage was complete - not the pickup date. Freight brokers should expect to pay that out within terms. If they use the excuse that they have to wait for the POD to arrive then they have issues.
5. Many freight brokers have carrier contracts that they force carriers to sign. In it, as a necessary part of any contract, are the terms. If they are violating the terms then the carrier contract is moot. I often say, 'Well, if you don't honor this part, should I stop honoring the part of not contacting your customer'.

Freight Brokers are the only ones who have the details of the payor and can put pressure on them. If they want to extend their credit 40-90+ days because they are dealing with some big monster of a company then they should take that risk - not the carrier. That risk does not waterfall down to the carrier.

Carriers should align themselves with Freight Brokers who work well with them and pay in a timely manner. It needs to be a symbiotic relationship where both carrier and broker work together to keep a freight payor happy. If you are seeing extended payments then call the broker up and ask them what is happening-challenge their decision to extend to 45 or 60 days. If they don't want to budge then it really isn't a symbiotic relationship any more is it? I find that after a chat you will see the payment times come down.

I have put so many freight brokers on hold in the past year. We eventually get paid but when it comes time for that next shipment we have a discussion and I usually tell them that their credit does not exist and that it needs to be paid before delivery. It turns nasty sometimes but then I fully understand where we stand with that broker.

 

[Freight Broker]

Agreed, and some of us do pay well within 30 days, regardless of how that's measured.. i.e. from bill date to delivery date. I measure mine from the day the load was picked up to the day the payment amount is withdrawn from my account.. that way I'm sure to meet and probably exceed the carriers' terms. Thus far I'm at 20 days based on that metric.

All of us in business are at liberty to extend or to not extend credit to whomever we like. Competitive pressures are often the deciding factor...i.e. do we want the load or the account enough to extend credit and to what extent?

Carriers and factoring companies would do well to report their days to pay accurately. Let the broker know exactly how you measure it and that you will report it. I know that my own days to pay are often completely off.. and I have to wonder sometimes why I even bother paying promptly.. if they're reporting me at 45 days then I'm beginning to think that I should perhaps pay in 45 days. There's a cost to paying promptly.. I pay interest on money that comes off my operating line to pay my bills before I get paid. that's a cost I can eliminate by dragging out my payment to reflect what's being reported.

The above is especially true if you're a small carrier. Some brokers/shippers figure because you're small you don't report your days to pay. So brokers tend to prioritize paying their bigger carriers and factoring companies, assuming that they do report. The fix to that is to let the broker know that you report payment history. I have several carriers who stamp each invoice with "we report to CompuServe".. that does get my attention, and I make doubly sure to pay it on time.