Trying to get paid twice?

[loaders]

We have recently experienced an increased number of carriers calling on invoices that have already been paid. I do not know if this is attributable to poor accounting practices on their part (most likely the case with a much smaller operation), or a conscious attempt to see if my accounting department is "asleep at the switch". Fortunately, we have various systems in place to prevent any invoice from being paid twice. On another note, has anyone else noticed that the number of carriers using factoring companies appears to have increased? With rates heading directly towards the basement, giving up any extra percentage of revenue must add to the existing challenges of turning a profit in todays market.

 

[TRUCKIT]

With freight volumes on a downward spiral and more on more Clients taking longer to pay Carriers are no doubt feeling a squeeze on their cash flows. Bankruptcy rates are on the increase and with fuel, wages and equipment payments all due within 7-30 days I can not say I blame them for being concerned when freight payments have not reached their office within 30 - 40 days. You did not indicate your payment terms or whether the cheques for the paid invoices had been cashed. A clear indicator on whether this is suspicious or not.

As for factoring companies, I would suggest this indicates a severe lack of operating capital, and with slim margins giving up 5-10 points is a recipe for insolvency. I would be very concerned giving freight to a Carrier that factors invoices. Brokers rely on a diverse and profitable trucking industry in order to survive and profit. Paying Carriers within terms will ensure your Carrier of choice remains viable.

 

[loaders]

I failed to mention in my original post that the calls made looking for payment were indeed for invoices where the cheque had been cashed. My firm's payment terms have, and continue to be, 30 days from receipt of invoice, either by mail, fax or e-mail. I agree with your comment about the use of factoring companies however, with the large number of carriers of all sizes employing their services, it would severely reduce the number of carriers available if we adopted a "non-factoring carrier only" policy. Without knowing all the reasons behind a carriers decision to use a factoring company, it would be unfair to exclude all of them as a potential supplier.

 

[lowmiler88]

We are a trucking company but we have our own freight to our own buildings that we have to broker at times. If we know a company is using a factoring company we will give them a quick pay at a cost of 5% directly to them. Otherwise we pay all of our bills within 30 days because you cannot demand payment in 30 days if you do not pay your bills in 30 days. Sad to say but I think the next couple of months will tell you who is financially stable and who is not.

 

[dee5276]

we use a freight broker for a couple of reasons, #1 we simply do not have the time to babysit these accounts. Very little is getting paid on time these days, and numerous phone calls have to made. freight brokers are right on top of our clients, and they are very aware when something is starting to going a little "funny".
#2 I used to pay for credit with load link, it is very rarely current or accurate. My freight brokering company allows me to look up any company i want to use and see an up to date payment history. If it is a new company the will do the credit check, and assess the risk.
A freight broker keeps 10% only if it goes 100 days, other wise we receive a refund. If a company pays us in 30 days then it is only 3%. I feel this is more cost effective than hiring some one part time to do collections.