Extending Payment days

Jim L

Jim L

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Mar 2, 2009
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I am getting real frustrated with the number of freight brokers who have jumped on the band wagon and think that payment days of 60-75 days is the new normal. The load sheet and often their carrier contract state 30 days but now they are following the path of some other large brokers who have made this their standard. The reality is that carriers usually pay the bulk of their costs up front or within a week - fuel and insurance are pre-paid, drivers are usually paid with a week or two. This practice is the exact opposite of what should be happening.

To make matters worse, some use the excuse that our invoice have been flagged for payment but the officer doesn't come in for two weeks. Some of these antics have made it 90 days before we receive payment.

I invite all carriers to have a discussion with freight brokers they are doing business with and ensure you're all on the same page in regards to payments. We have flagged each one that does this so the next time we book with them there will be a discussion.
 
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Not saying you Jim, but who would have guessed that a brokerage operation run out of a private residence - may not be fluid in payments.....on the flip side, maybe as a carrier you could have the customer direct and then be paid in the 90-120 day payment terms direct? I think as you've stated - addressing the concern prior to booking is key and a good step - though really there are no guarantees either way. It's a tough game these days and I don't think payment terms are going to get any better moving forward.
 
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Well, some of us home based guys have no trouble whatsoever paying our bills within 30 days.. or maybe I'm the only one? I don't know why some others seem to need to drag things out to 75 days... I can only surmise they're not well run or have extremely bad luck with slow paying accounts of their own. I too would lean on them hard..Some seem to think it is a good business practice to drag out payments as long as possible.. even some of the biggest shippers do that..
 
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Jim L said:
I am getting real frustrated with the number of freight brokers who have jumped on the band wagon and think that payment days of 60-75 days is the new normal. The load sheet and often their carrier contract state 30 days but now they are following the path of some other large brokers who have made this their standard. The reality is that carriers usually pay the bulk of their costs up front or within a week - fuel and insurance are pre-paid, drivers are usually paid with a week or two. This practice is the exact opposite of what should be happening.

To make matters worse, some use the excuse that our invoice have been flagged for payment but the officer doesn't come in for two weeks. Some of these antics have made it 90 days before we receive payment.

I invite all carriers to have a discussion with freight brokers they are doing business with and ensure you're all on the same page in regards to payments. We have flagged each one that does this so the next time we book with them there will be a discussion.
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Hey JimL,

I'm seeing the same trend, and pushing back everytime someone tries to pull it.

Had this with a small broker last week, Titan Transline. My invoice was at 87 days and their response was that their controller who issues cheques is on vacation and will be back next week. I was not pleased and it showed...

You are doing the right thing having the conversation up front too, I unfortunately don't always get that opportunity myself, I just hear about stuff when we are not getting paid.

My response to this is a simple one... Name and shame...

If we carriers know which brokers (and maybe their customers) are playing this game, then we can avoid their freight and get something that pays in a reasonable time...
 
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Jim, you listed the exact reasons why carriers who also broker their freight appear on this site as slow payers as often, or even more often that stand alone brokers. All of the in coming cash gets gobbled up by those weekly expenditures you mentioned, leaving little to no funds available to pay that guy you hired to haul that “extra” load last month. Obviously not all carriers behave this way, just as not all brokers are adopting more lengthy payment terms, but your point is well taken. Using the confusion and disruptions caused by the Covid 19 pandemic as a reason to slow down payments is a lame excuse. Any well financed company, carrier, broker or shipper, should be able to weather this storm and if they are experiencing difficulty with payables, set aside some time to have a serious conversation with your suppliers and come to some agreeable solution.
 
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This is coming from a direct shipper not broker but they used to be a 30 day payer, on the mark and never had problems.

This year, they have extended their terms to 90 days, non-negotiable. Rationale was that their customer's pay them on 120 day terms and they could no longer justify paying transportation costs in 30.
 
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And as part of the conversation, ask them how they'd feel if their shipment arrived a day or three late. Longer payment terms are fine provided they were agreed to in advance..
 
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Kysanahc said:
This is coming from a direct shipper not broker but they used to be a 30 day payer, on the mark and never had problems.

This year, they have extended their terms to 90 days, non-negotiable. Rationale was that their customer's pay them on 120 day terms and they could no longer justify paying transportation costs in 30.
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A direct shipper who has extended their terms to 90 days for transportation service should be tossed to the next guy who wants to put up with it. It is not worth it to finance that money for 90 days plus you risk a large number of outstanding invoices that could go into default. Its not the carriers fault that the shipper decided to allow their customers to pay in 120 days.

I'd say watch out - that is the biggest indication of troubles brewing..
 
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I guess everyone needs to get it writing prior to moving the freight on payment terms and make it clear.
As long as you have it in writing not just on the load contract but in emails or signed contract, you should be good.
 
Having payments terms in writing is better than not having them in writing I suppose, but don't be surprised if the customer/broker/carrier/shipper decides to "change their mind" when faced with some sort of financial hardship.
 
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Millcroft Logistics Ltd. out of Burlington ON their accounts payable was off for 3 months due to Covid and they are not paying anyone till he comes back next week. My Invoice is just at 90 days.

This is new normal I guess
 
That is not right. When someone in a critical role such as accounts payable leaves their employer for illness, maternity leave, whatever, the employer should replace that person either internally or with an outside contract person for the duration of the absence. Using short staff as an excuse for more than just a few days sounds like a well thought out plan to stretch payment terms.
 
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Trans said:
Millcroft Logistics Ltd. out of Burlington ON their accounts payable was off for 3 months due to Covid and they are not paying anyone till he comes back next week. My Invoice is just at 90 days.

This is new normal I guess
Click to expand...

so next week will it be..............it will take weeks to catch up he is just back we will get to your invoice as soon as possible.

I would be calling others on BOL if not getting payment if you go over 90 days. More of this will be happening scary times for A/R for sure
 
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At least its an illness. a few years back I had one tell me that their payables person was away on a cruise, and that no checks would be signed until she got back.
 
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Many of my clients have delayed payments in excess of 60 days. I hope they can stay afloat.
 
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