A freight or trucking bill is a simple document that has multiple processes and is not as straightforward in payment as other businesses. An owner-operator, for example, accepts a bid for a tender to haul a full truckload of produce. Depending on the market, the cost the owner-operator will charge the company, also known as a shipper, changes depending on fuel costs, the available capacity in the market, and overall demand of truckload service. The owner-operator does not get paid typically until the delivery is finalized and even then, may have to wait net 30 or net 60 days to get paid depending on the terms with the shipper.
The American Trucking Association and analysts HIS Global Insight and Martin Labbe Associates predictl “freight tonnage in the U.S. will grow 24 percent by 2022, with revenue in the industry rising 66 percent.” Due to this exponential growth, freight billing has become increasingly complex, creating a much higher demand for automated systems and access to capital. Why? As stated above, if a small business has several days or weeks of Accounts Receivables (AR) and does not have the cash they need to pay for immediate needs to operate their business, like payroll, fuel, maintenance, and more, it is a harsh environment and could lead to bankruptcy.
With that said, owner-operators must understand the best practices to bill efficiently and utilize services, such as freight bill factoring, to keep cash flow high. In this article, owner-operators will learn 7 best practices to streamline freight billing and keep cash flow at a level that keeps the business operating.
1. Make Sure You Have the Right Billing Software
The correct billing software can help owner-operators bill their invoices. including specifics relating to different charges and costs, The right freight bill software will promote a more efficient and personalized experience. Transportation or freight finance can also work with the right automated platform,
2. Understand Your Freight Classification Codes
Your freight class helps determine your shipping cost. Therefore understanding freight classification codes and what classification code is for the freight you are haulding ensures all billed loads are priced accurately. Comprehension of classification codes will create a smooth billing and invoicing process, which inherently means knowing what to expect when you get paid.
3. Bill Promptly and Accurately
Owner-operators are focused not only on servicing their customers, but making sure they get paid for a job well done. That’s why it’s important that owner operators invoice their loads promptly and accurately. mMistakes will create distrust and uncertainty, and their customers need quick, accurate, and easy to read invoices so they can bill correctly. If invoices are missing details, their customers may not submit payment until the corrections are complete. Errors lengthen the billing process, which may delay payment to the owner operator.
4. Know when to Renegotiate Rates with Customers and Brokers
In any business model where you provide a service, such as the transportation of a shipper’s freight, requires discussing changing prices of those services. In the freight industry, rates can change when there is a new lane, a new contract, a new broker carrier agreement, or when market forces change that require renegotiation. It is important to ensure that all rates are accurate to move forward smoothly. It is the responsibility of the owner operator to bill correctly and to communicate with shippers and brokers to make sure there is no confusion about the charges on their invoices. . When a rate needs to be renegotiated, a freight invoice can help explain what the new charges are.
5. Stay Informed of Changing Fuel Costs, and Keep Track of Expenses
Fuel costs are always a factor in the cost of a freight move as fuel surcharges make up the total cost and are included in any freight bill or invoice. Depending on fuel rates the costs of moving a load for a carrier may fluctuate. Fluctuations in fuel costs can make the ability to forecast future profits challenging.
6. Improve Recordkeeping & Documentation of Deliveries and Payment
Documenting freight billing requires a more efficient and seamless process to maintain business continuity. When proper forms are not maintained, it creates more margin of error. Improving processes for financial recordkeeping will keep a business proactive with any issues related to billing. Keeping complete records can help alleviate freight broker credit risk. That, in turn, lessens the risk of denial for factoring services and gets more money into the pocket of your business, improving overall cash flow and empowering the owner-operator to have higher profit margins, allowing for more investment in the business to grow and thrive.
7. Have a Plan to Handle Customer Complaints or CSR Requests
Ensure that the freight billing services or platforms that you use for your company have a straightforward process to handle complaints and requests as improved responsiveness leads to higher customer service scores, like Net Promoter Scores (NPS). The owner-operator or staff in their back office, should communicate with the customer through all stages and be transparent through the billing process.
Boost Freight Billing With ComFreight’s HaulPay for Freight Factoring Now
It is critical for owner-operators to stay in business to improve overall financial processes, like billing shippers for freight hauled, so that the owner-operator is able to survive and thrive in any market. Additionally, owner-opeartors may partner with quickpay shippers, or partner with a freight factoring company, such as HaulPay by ComFreight. See how trucking companies find and get paid for more loads with ComFreight’s HaulPay for your trucking bill today.