If You Could See the Future…
You see a load of freight posted with an AMAZING rate, so you feel you have to ACT FAST to get it before someone else — But they GOTCHA!
If you looked into the credit checking crystal ball, you might see the risks of your quick decision.
We’ve been factoring freight invoices for 34 years. We’ve seen it happen to many truckers. Enticed by an amazing rate, they skip running a credit/payment history report and they haul the load. They call us, asking to factor the invoice and we look at the payment history and find that company owes and owes. All signs point to their lines of credit are about dry up. Their credit history shows they have lots of debt. They’ve gone from paying on time, to paying late, to not paying several haulers at all. We have to decline factoring that invoice because it’s a grim picture in that crystal ball.
There are four possible outcomes. First one, you wait for several weeks, maybe even months and then the payment arrives, finally! Seems great, you get the check in the bank, get caught up on bills, and start breathing a little easier….. Then a bankruptcy notice arrives. The bankruptcy court tells you to give the payment from that “dream” customer to the court. The court will be deciding who gets paid and for how much money. They are making sure that business didn’t just pay friends rather than the real bills that were owed. This makes for tough times. Your money is already spent, and there is no way to scrape together that much money and give it back to the court. (At typical profit margins, it will take hauling 10 more loads to set aside enough to equal that one lost load.) If you do send the money back to the court, you’re crossing your fingers for months hoping you have the lucky invoice that will get paid.
Scenario two, you couldn’t get factored on that risky customer but you hauled anyway. Now you are stuck waiting to get paid. You wait for weeks. You spend hours on the phone calling them about the money. Eventually you get paid. But… the amount of time you spent to get the money, and the amount of late fees and penalties that happened are more than double the “extra money” you thought you would make. You never haul for them again, and you spread the word to your friends. You all watch the load board and laugh at the AMAZING rate they just posted for a load and wonder who will get suckered into it.
Scenario three, you did it. You held your breath for a few extra days waiting for the check, but it came. You’ve been busy hauling for other people ever since. Then you hear of a good friend who is going out of business. You call to find out how that happened, because you thought they were doing really well. They had grabbed a load a couple months after you for a GREAT RATE from that same sinking company. They never got paid, and spent hours of time trying to collect the money. In the train wreck of business bankruptcy, they smashed your friend’s business! GULP… it could have been you.
Scenario four, you gambled well. You got paid a week or two late, but it didn’t kill you. You laugh at your factoring company’s credit advice. Life goes on.
Something that seems too good to be true,
Usually is too good to be true (but not always).
If you’re tempted to grab a freight load for an AMAZING rate, make sure to do a credit check. Too often great rates are because they have a bad reputation, and most people won’t haul for them.
One of our recent reviews brought up this very point.
★★★★★5 out of 5 stars.
4 months ago
Great company to work with treats us as family!
We were hauling a lot of loads with a very large corporation for a couple years with little issues. Steelhead informed us that the company we were hauling for financials were starting to decline and they looked as if they were heading towards BK and advised us to slow down on hauling for them as much incase they did. We listened reluctantly and about 3 months to the day that corporation filed BK and stiffed a friend of ours causing him to sell 2 of his trucks to make up for the loss.
Transport Topics- Buyers Guide
We have a vested interest in helping you find customers with reliable payment histories. Our outlook is to provide you with easy and fast credit checking services so that you can develop a terrific customer base.
Eventually you won’t need factoring anymore. That’s just fine with us. We want your company to be one of the successful graduates and go onto great business success.
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