Here’s a scenario that happens all too often: you invoice a customer for your delivered load, only to not get paid on time or at all. This is a burden that many fleets have to deal with instead of spending their time on other important matters, such as developing roles with brokers and shippers or maximizing time delivering loads.
Don’t waste your time chasing down unpaid accounts and missing out on cash flow. Learn the importance of running a freight broker credit check and set your business up for success.
Do You Need To Run a Credit Check on Your Freight Broker or Shipper?
Yes – trucking companies should run freight broker credit checks and shipper credit checks.
Sometimes in this industry, performing credit checks can be put on the back burner, but you’re putting your business at risk by doing so. To be successful, it’s vital to perform credit checks for new customers and periodic reviews for existing ones. This will significantly mitigate your risk and help you to get paid on time. Let’s get into this a little bit more.
Why You Need To Run a Credit Check on Your Freight Broker
Running a credit check on your freight broker is crucial for several reasons. Firstly, it can help you assess the financial stability of your broker and minimize your financial risks. By verifying the creditworthiness of your broker, you can avoid partnering with a company that may default on payments or go bankrupt, leaving you with unpaid invoices and loss of revenue.
Checking the creditworthiness of your broker can also provide insights into their business practices and reputation. A broker with a history of financial problems may indicate a lack of professionalism and reliability in their operations, which could cause problems for your business in the long run.
Why You Need To Run a Credit Check on Your Freight Shipper
Regular credit checks on your freight shipper can help you stay up-to-date with any changes in their financial situation. Credit scores can fluctuate over time, and a previously reliable shipper may experience financial difficulties that affect their ability to pay on time. By monitoring your shipper's credit score regularly, you can identify potential issues early and take necessary precautions to protect your business.
Conducting a credit check on shippers is also crucial when it comes to negotiating better rates and terms. If your shipper has a good credit score, they are more likely to pay on time, giving you more leverage to negotiate favorable service terms.
How To Run a Credit Check on Your Freight Broker or Shipper
Before you run a credit check on your prospective broker or shipper, do your due diligence to learn about their history and how they run their business. This will help you get an idea upfront if you want to consider working with them.
Ask your freight shipper or broker these questions:
- How long have you been in business?
- How are you going to pay me?
- Do you have references you’d be willing to share?
- Do you value customer service and communication?
- How do you solve issues?
After doing your initial research and are pleased with the results, you can move on to the next step – running a free credit check through a third party. You can view credit ratings, days-to-pay information, debt summary, and more.
What Is Good or Bad Credit for Brokers and Shippers?
To determine if a broker or shipping company would be good to work with, you can follow the following general guidelines:
- High risk: 0 - 69 credit rating
- Medium risk: 70 - 86 credit rating
- Low risk: 87 - 100 credit rating
Don’t forget that credit is just one factor to consider when evaluating the financial stability of a broker or shipper company. You must also analyze payment history, business practices, reputation, and industry experience. When you weigh all these elements, you can confidently decide if you want to enter a business partnership.
Reduce Credit Risk With ComFreight’s HaulPay
No one wants to worry bout unreliable customers, credit risk, or unpaid invoices. Using the right freight finance tools can provide benefits that help improve cash flow while reducing payment times – that’s where ComFreight’s HaulPay comes in.
HaulPay allows you to check customer credit, so you can address payment problems before they even begin. You can also enjoy same-day payment, automated invoicing, and so much more! To learn more about the outstanding benefits of HaulPay, contact the team at ComFreight today. We want to help you succeed.