Carriers should understand the importance of shipper and freight broker credit checks to have a clearer insight into which companies would be the best partners. Discussing the importance of valuable rates, DAT Freight & Analytics explained how “posting an attractive rate will help, but beyond that, carriers want to work with brokers they can trust. And an important gauge of that trust is the broker’s credit score and days to pay, which carriers see right next to the posting. That’s why it’s critical that brokers maintain good scores.” Shippers and freight brokers that have a good credit rating provide a win-win solution for themselves and carriers to grow business and gain partners.
Trucking Companies SHOULD Credit Check Shippers and Brokers
Running a shipper credit check can help determine which shippers would be the best partners. Companies that check the credit score of shippers and brokers they may partner with will preserve the long-term health of the carriers’ business. Starting trucking companies should understand that a shipper or freight broker with bad credit will result in financial risk for the carrier. Shippers or brokers with good credit will understand the importance of their credit, as it reflects the quality and quantity of carriers they use.
Ensuring a shipper and freight broker credit check will determine which businesses may hinder the carriers’ consistent cash flow. However, carriers must understand the importance of continuing to run credit checks even after working with the partner. A credit score can frequently change, which is why carriers must run regular credit checks even with long-time partners. A single delayed payment on a load can have negative effects on their own business and the carrier. Trucking companies that stay up-to-date on partnering businesses credit have a higher chance of avoiding the financial burden that occurs with delayed payment.
What Is Considered a Low Credit Risk
Gaining and maintaining a good credit rating shows that the shipper and broker has a promising credit history. Trucking companies must learn the proper knowledge before running the shipper and broker credit check. If a broker has a credit score of 87 or higher, the company should be seen as a low credit risk. To maintain a good credit score and not have the appearance of a credit risk, brokers and shippers know the importance of paying on time, having multiple options for payment, and focusing on the relationship with a trucking business.
Understanding how credit works can be beneficial for all trucking companies, even those that do not have the time or resources available to check credit scores of potential partners. Freight brokers and shippers can maintain a beneficial credit score by paying carriers on time. Small trucking companies must understand the negative outcome from a delayed payment on even one load. A company may have a promising credit score before partnering with them, however there is always the risk of the credit score changing. Carriers keeping tabs on shippers and freight brokers credit score can help ensure the safety of the business.
An Integrated Freight Factoring Solution Can Combine Credit Checks With Payment Services
Factoring companies can provide a combination of streamlined payment processing along with credit checks. For some trucking companies, especially small or owner-operator businesses, the software to run credit is not always on hand. Additionally, an embedded, integrated invoice generation from within the finance solution can help shorten the payment clock. This will take all the stress off back-office tasks and allow freight factoring companies to handle such situations.
Freight factoring companies help not only with payment services but also in assisting carriers that are trying to determine which companies would make good partners. A freight factoring company not only helps benefit cash flow, factoring can also provide services to run a shipper and freight broker credit check. Factoring companies can run credit checks and ensure carriers partner with trustworthy brokers and shippers with the ability to pay. Companies without the proper tools or knowledge for credit checks have a higher risk of reaping the downfalls of partnering with companies with bad credit.
Credit Check Your Shippers and Boost Transport Revenue With BasicBlock
Trucking companies must understand the importance of credit checks for the business in the present and future. No carrier should have to risk working with a partner that could affect their business poorly. To work with a freight factoring company that can credit check shippers and brokers while providing more benefits, partner with BasicBlock today.