In the trucking industry, it is a fact that at some point or another, you will work with a freight broker. While we always recommend our clients check the validity of their brokers before getting into business with them, there is still a chance that a shipper or a carrier could find themselves working with a broker who refuses to pay. What are the options in this case? How can you ensure that you get paid by your brokers?
- Check credit on them. Companies like Ansonia and Cortera specialize in covering credit on Freight Brokers.
- Make sure they are Bonded. FMCSA and Safer Web System allow you to check on their Authority.
- Make sure their Bond is not in breach. A Bond is good for 30 days after the Surety/Trust Bond company has sent in for cancellation. This can also be done in the FMCSA website.
What do you do when a Broker fails to pay you?
So, you took all the precautions as noted above and you still haven’t been paid by the Broker you hauled for. What to do now? What can you do to get paid?
Contact their Bonding company to report their non-payment on your delinquent invoice(s). This is a process - they will either have you file a claim online or send you the necessary documents to file a claim by mail/email. You will need to submit your invoice(s), load confirmation sheet(s), and signed BOL(s).
Normally they contact their client to ask them to work out this past due debt before they actually cancel their bond. If they must cancel their bond, then you might be paid out on a first come, first serve basis, or they might wait till all claims are filed and then pay out on a prorated basis.
Each Bonding company works differently, so you will need to ask for specifics when filing on their Bond. Remember, the Bond is only for $75,000.00 and it doesn’t cover Intrastate loads. If you are factoring, this should be done by your factoring company, free of charge as UC Factors does.
Your second option is to try and collect on a load from the default Freight Broker would be to seek payment from the Shipper and/or Consignee on the load in question. This is where an accurate signed BOL comes in very handy.
The signed BOL is your contractual documentation of the haul. Most Carriers only use what the Shipper gives them. This can be a variety of documents; Manifest, Packing Slip, Work Order, Sales Summary, and if you are lucky a Straight Bill of Lading (BOL) or Delivery Receipt.
The FMSCA, Regulation 373-101 on Motor Carrier Bills of Lading as for:
- Names of consignor and consignee, w/addresses
- Origin and destination points
- Number of packages
- Description of freight
- Weight, volume, or measurement of freight
Title 49 USC 14706 for Motor Carriers and Freight Forwarders ask that - A carrier providing transportation or service subject to jurisdiction under subchapter I or III of chapter 135 shall issue a receipt or bill of lading for property it receives for transportation under this part.
Since this is a requirement for Motor Carriers, then why not insure your contractual documentation is accurate to the load you are hauling. As noted, a shipper will issue whatever documentation they feel is necessary for them, and not for the load you were hired to haul.
With accurate documentation, you may now seek payment from the shipper and/or consignee of the load with confidence. Send a demand letter to the Shipper and/or Consignee for the amount you are due for the freight.
If the shipper or consignee (depending if the load was prepaid or collect) has not paid the Broker, then you have a good chance of them paying your invoice. If you have a factoring company, they could assist you in sending out these letters, free of charge as we do.
Bill Of Lading Helpful Hints
- Always check in under your own company name
- Make sure your company name appears legibly on the BOL
- Make sure the BOL is signed by all parties, Driver, Shipper, and Consignee
- Make sure BOL matches P/U and Delivery information of Load
What Does a Factoring Company Do When There’s a Disputed Payment from a Broker?
Most factoring companies do not get involved in the case of a dispute. The invoice goes on record as a disputed charge and the invoice will be charged back to the client.
The best thing we can recommend when it comes to ensuring payment from brokers is to be aware of who you are working with and always provide your own documentation.
If you choose to work with a factoring company like UC Factors, they can help you by performing credit and bond checks as well as providing you with a template for your own bill of lading. However, even if you do not work with a factoring company, we recommend you perform these checks on your own for your safety and protection.
How do you know you are working with an invoice factoring company who will help you take steps to ensure you get paid by your broker? Learn how to choose a factoring company here!