Debt is one of the top things that can run any business or operation to the ground. Debt in both the sense of owing money or being owed money. The negative cash flow and cost it creates makes payment collection one of the most important tasks in any business. It is not different when it comes to freight hauling, especially because the debtors might be spread across long distances. This makes collecting freight debts very challenging, especially if the organization has not properly cultivated a trustworthy collection pipeline or task management system. You can create the best freight forwarding business that provides the best services and customer support, but if you continue to have negative cash flow, it can all go up in smoke, and freight debts are an easy way to do just that. Payment collection is one of the best infrastructures needed for creating a healthy and thriving business that doesn’t hemorrhage cash. To help you with your dream of building a productive business, here are some tips on how to avoid freight debts and maintain your business reputation.

Steps To Avoid Freight Debts

1. Set up A Comprehensive Credit Application Process

Before engaging in any freight forwarding operation, it is imperative to remember that there will always be delays and disappointments, especially when it comes to payment. A lot of businesses will come to you with excuses and promises on why they haven’t paid and when they will be capable of paying. It is good to build trust with clients, but allowing them to accrue debt is not the way. If anyone wants to take up credit from you, make sure that you set a comprehensive credit application process and register it with a reliable third party. Before approving the credit application, make sure that the following information is collected and verified. Name of freight forwarding business, registration documents, agency agreement, credit limit, and credit period.

2. Consult A Reputable Source on Their Credit Status and Past Credit Details

It is always important that you verify the credit status of anyone applying for a credit and ensure that they are either capable of paying for it or have done so in the past. You can check the IFD Delinquent list or FDRS to verify their history of bad debts. If the company is listed on any of them, you are advised not to sanction the credit. Verify their details from various sources and past creditors to see their experience with payment collection with that company.

3. Set Up Clear Credit Payment Terms

When signing a contract with another freight forwarder, ensure that you make sure that the terms are clear in writing and agreed upon by both parties. Seek legal advice to ensure that all bases are covered, and review the terms as you go. You can set a credit limit as well as late-payment interest; just make sure that these details are specified in the contract. Depending on your modus operandi, you can assign more flexibility to an old and familiar agent compared to a new and relatively unknown one.

4. Create Invoice, Track Invoice, and Collect Payment on Time

 Proper management and data collection is what saves a lot of logistics endeavors. Apart from setting the terms and conditions, ensure that a system is in place that allows invoices to be quickly issued to prevent agents from delaying your payment because it wasn’t issued on time. Track the payment status of that invoice by inputting it into a database and set a prompt reminder to the debtor to make sure they pay on time.

5. Make A Blacklist of every Reneging Debtor

Business is nothing to joke about. To cultivate a successful business, one must know how and when to advance or retreat. Make sure that you create a list of delinquent freight forwarders so that you can blacklist them. You might also consider lowering their credit limit or not sanctioning any future credit application.


All this emphasizes a need for terrific management skills, experience, and legal know-how. That is why you need to seek the help of professionals such as our team at Freight Checkers, which is a trustworthy transportation debt collection agency with lots of experience in helping businesses avoid freight debt. Give us a call today or fill out our online contact form!