Getting paid faster on freight receivables

Why freight receivables run long

A carrier pays for fuel, wages and the truck before the load moves, and is paid weeks later. That gap is normal in trucking, but its length is partly in your control. When carriers look closely at their slow invoices, the causes are usually the same: the invoice went out days after delivery, the proof of delivery was missing or unreadable, the reference number did not match, the invoice sat in the wrong inbox, or no one followed up until it was already long overdue.

Every one of those is a process problem, and each has a fix that costs nothing but attention. The steps below follow an invoice from before the first load to the day you decide a debt will never be paid.

Set payment terms before the first load

Payment terms are part of the deal, not something to sort out after delivery. Put them in writing on your credit application, your rate agreement or the customer’s carrier packet, and make sure the rate confirmation for each load does not contradict them.

• Net terms. State the number of days and when they start, for example "net 30 from receipt of invoice with signed proof of delivery".
• How to pay. Give your remittance details and the payment methods you accept, including online payment if you offer it.
• Where invoices go. Ask for the accounts payable contact and billing address now, not when the first invoice is due.
• Late payment interest. If you charge interest on overdue invoices, state it in the agreement. In Canada, the federal Interest Act says that when a written contract sets interest by the day, week or month, no more than five per cent a year can be recovered unless the contract also states the equivalent yearly rate. If your terms quote a monthly rate, quote the yearly rate it equals alongside it, and have your accountant or lawyer check the wording.

Short terms are worth asking for. Many brokers offer standard terms and a faster option for a fee, and a direct shipper may accept shorter terms in exchange for reliable capacity. Whatever you agree, write it on the invoice too.

Check credit before you haul for a new customer

The fastest way to lose money in trucking is to haul for a customer that cannot pay. A credit check takes less time than one collections call.

1. Confirm who they are. The legal name, address and, for a broker, its registration. In the US, a property broker must keep a surety bond or trust fund in effect to stay registered with FMCSA, so check that the broker’s registration is active before you book.
2. Ask for references. Two or three other carriers or suppliers who have been paid by this customer recently, and call them.
3. Check payment history. If you subscribe to a credit or payment-history service, look at how many days the customer takes to pay on average and whether that number is getting longer.
4. Set a limit. Decide how much you will let a new customer owe you at once, and raise the limit as the customer pays on time.

Watch concentration as well. If one customer owes you a large share of your receivables, a single late payment can stop your fuel cards. Spread the risk, or ask for shorter terms with your largest customers.

Invoice the same day, with clean paperwork

Most customers count their terms from the day they receive a complete invoice, so every day between delivery and invoicing is a day added to your wait. Make invoicing part of closing out the load: as soon as the driver sends the signed bill of lading, the invoice goes out.

A complete invoice carries the customer’s own reference numbers, the agreed rate, each accessorial on its own line with the evidence behind it, and the signed proof of delivery and rate confirmation attached. Detail on what to include is in how to invoice a trucking load.

Paperwork quality matters as much as speed. Train drivers to photograph documents flat and in full, and check every scan before it goes to the customer. An unreadable proof of delivery is not a dispute, but it stops the invoice exactly like one.

Make it easy to pay

A customer that wants to pay you should be able to do it in a few minutes. Put the payment options on every invoice and every statement: bank details for a transfer, the mailing address for cheques, and a link for online payment if you have one.

Online payment by card or bank debit removes the wait for a cheque in the mail and the trip to deposit it. Card payments cost you a processing fee, so decide which customers and invoice sizes you will offer it for. Bank debits, such as Canadian pre-authorized debit and US ACH debit, usually cost less but take a few days to clear.

A customer portal, where customers can see their open invoices, download copies and pay, also cuts the calls asking you to resend an invoice. Make sure the remittance details you give match where you want money to go, and update them everywhere at once if they change.

A weekly collections routine

Collections work best as a routine, on the same day every week, from the receivables aging report. The aging groups unpaid invoices by how old they are, typically current, 1 to 30 days past due, 31 to 60, 61 to 90 and over 90.

1. Look ahead. For invoices due in the next seven days, confirm the customer has them and that nothing is missing. This is the call that prevents late payments.
2. Chase the newly late. For invoices 1 to 30 days past due, email or call the payables contact, quote the invoice number and the customer’s load number, and ask for a payment date.
3. Escalate the older ones. Past 30 days, go above the payables clerk to the person who books your loads, and hold new loads until the account is current if your terms allow it.
4. Send statements. Once a month, send each customer a statement of every open invoice. It often turns up invoices the customer never received.
5. Record what you heard. Note every promise to pay and its date, and follow up the day after the date if the money has not arrived.

Keep a record of every collection step. It is useful in any later dispute, and in Canada it supports a bad debt deduction if it comes to that. The CRA generally expects business records to be kept for six years from the end of the last tax year they relate to.

Short pays and disputes

A short pay is a payment for less than the invoice, often with a deduction for an accessorial the customer did not accept, a claim for damaged freight, or a rate that does not match their records. Treat it the day it arrives, while the load is still fresh in everyone’s memory.

• Find the reason. Check the remittance advice or ask the customer which line was cut and why.
• Compare it with your documents. The rate confirmation, the bill of lading with in and out times, and any receipts.
• Rebill or close it. If you are right, send the missing amount as its own invoice with the evidence attached. If they are right, issue a credit note so your receivables stay accurate rather than leaving a small balance open forever.

For brokered loads in the US, federal rules require a broker to keep a record of each transaction for three years, including the compensation it received and the freight charges it collected, and each party to the transaction has the right to review that record. When a broker short-pays you and the reason is unclear, asking to review that record can help settle it.

Quick pay and factoring: speed for a fee

When the free fixes are done and you still need cash sooner, there are two common options. Quick pay, offered by many brokers, pays your invoice within a few days for a fee taken off the payment. Factoring sells your invoices to a factoring company, which advances most of the value straight away and collects from your customer.

Both cost real money. Work out what each costs on a real invoice and compare it with what the faster cash is worth to you. Use quick pay for the occasional cash crunch, and consider factoring when you have creditworthy customers on long terms and no other financing. The full picture, including recourse, the notice of assignment and how to record it, is in freight factoring explained.

When a debt goes bad

Some invoices will never be paid. Recognise them in the books rather than carrying them for years. In Canada there are two separate income tax deductions, and your accountant will choose which applies:

• A reserve for doubtful debts. The Income Tax Act allows a reasonable reserve for debts that are doubtful but not yet proven bad, provided they were included in income.
• A bad debt deduction. Debts that you establish have become bad in the year, and that were included in income, can be deducted.

GST/HST has its own rule. If you charged and remitted GST/HST on an invoice to a customer you dealt with at arm’s length, and you write the debt off in your books, the Excise Tax Act lets you deduct the tax portion when calculating your net tax. The claim must be made in a return filed within four years after the due date of the return for the period in which you wrote it off, and if you later recover any of the debt, you add the tax back in the period you recover it.

Before writing off, make sure you have done what a reasonable creditor would: statements, calls, written demands and, for larger amounts, a collection agency or small claims court. Keep that record with the invoice.

How TruckerPro Finance handles it

In TruckerPro Finance, the invoice is built from the delivered load, with the customer, references and charges you already entered, and emailed to the customer as a PDF. Customer statements list each customer’s open invoices, and credit notes handle the corrections when a short pay turns out to be right.

The receivables aging is refreshed daily, so your weekly collections routine starts from current numbers. Payments are recorded against each invoice, one at a time or in bulk.

Through the customer portal, each customer sees and downloads only their own invoices and can pay online by card, and by US ACH debit or Canadian pre-authorized debit where your own Stripe account offers them. Online payments are recorded against the invoice. All of this is included from the Starter plan. Factoring submissions, the notice of assignment and fee tracking are on Essentials. Compare the plans.