For many freight hauling companies and independent operators, nonpayment of invoices is one of the most frequently encountered obstacles to consistent cashflow—but it doesn’t need to be. There are a few simple steps that freight companies can take to greatly reduce payment issues, and there’s little-to-no effort required. All you really need to do to curtail nonpayment problems is establish a few specific business practices and make them habitual.

Information is Key

When you invoice a partner for work you’ve done, making sure that you have the correct contact information for that client is vital. This includes obvious details like having a valid, legal name and address on file—your invoice won’t be paid if it’s sent to the wrong entity—and less obvious details like the names of specific individuals or departments that handle billing and accounts receivable. When you work with partners who have larger corporate structures, sending an invoice to the wrong department (or to the care of no specific department) can lead to significant delays in payment. In especially large environments, improperly addressed paperwork is sometimes discarded altogether. There’s no reason to allow clerical errors or information gaps to stand between your company and the money that it’s earned.

Similarly, invoices should include as much information for the client as is practically reasonable—reference numbers for the specific job and/or contract at hand, supplementary paperwork like receipts and bills of lading, itemized cost breakdowns, times/dates that labor was performed, and so on. Every piece of relevant data that you can provide eliminates one more question—and, therefore, one more barrier to timely payment—that your partners might have once the work has been done.

Invoices should also highlight due dates and explain what methods of payment you accept. Don’t allow for ambiguity on those details. Put due dates in a dedicated, visible area of your invoice away from other number sequences (especially account/reference numbers) that clients could conflate them with. If there are limits on the types of payments you accept or the way you can process them, make sure those are stated clearly on the invoice. In short, providing the answers to questions your clients are likely to ask helps to ensure timely receipt of funds.

Implement Regular Billing Practices

Your business practices should include strictly observed billing habits. This includes sending invoices to your clients on regular dates or at regular intervals, as well as establishing a series of escalating protocols to deal with late or missed payments. Regular billing intervals are important because they establish a consistent cashflow for you and accounting stability for your business partners. Setting up billing cycles is ideal; we all like to receive our bills at the same time each month so that we can reliably account for our expenses versus income. However, if the work you do for a client is too infrequent or irregular to bill cyclically, you should at least get in the habit of billing them at regular intervals after the work has been completed.

It’s also important to have a formal plan of escalation to deal with clients who miss due dates. Your first contact with a client who has missed a due date should be a relatively gentle reminder that you’re still waiting for their payment. Just as you almost certainly lose or misplace important paperwork from time to time, so to do your clients. The postal service is also experiencing well-known and documented delivery issues right now, so if you send invoices and follow up messages through the mail you should be prepared for (possibly lengthy) delays. If that first reminder goes unanswered, you should send a more pointed message indicating that you have not yet received, but are still very much expecting, payment. This might also include language that reminds your partners of any policies you have regarding doing or not doing work for entities whose accounts are past due.

Have Safety Nets in Place

If you implement these practices in your day-to-day business, you should see a marked decrease in payment and cashflow issues. However, you’ll occasionally have clients who simply can’t or won’t pay what they owe you. In these instances, it’s important to have your own safety nets in place.Partnering with Transcredit ensures that you’ll have the information you need to make informed financial decisions about who you work with and, in the event of nonpayment, have avenues for recovery.