DISPATCHER'S BLOG

Should You Accept “Cash on Delivery” loads from Brokers with Bad Credit?

Cash on Delivery

As a truck dispatcher, you’re periodically faced with decisions that can make or break your client’s business. One scenario that requires careful consideration is whether to accept cash on delivery from freight brokers with a poor credit history when booking a load for a client. It’s a dilemma that demands a balanced approach, weighing the potential rewards against the inherent risks.

Imagine this: You’re on the hunt for a load that would be a perfect fit for your client. You call a freight broker, and the details seem promising—it’s a great load that your client would love to pick up. However, when you run a credit check or verify with your client’s factoring company, you discover that this broker has a bad credit history. Your factoring company flatly refuses to factor the load, which means your client won’t get paid once he or she delivers and submits paperwork.

At this point, the broker might make an enticing offer: “How about I pay you cash on delivery? Your client delivers the load, and we’ll pay you right then and there.” Tempting, right? The prospect of getting paid immediately upon delivery can be alluring, especially if your client needs cash fast. But before you jump at the opportunity, it’s crucial to consider the potential pitfalls.

In most cases, the prudent answer is probably not to book the load. Dealing with freight brokers who have a bad credit history or a reputation for non-payment can lead to a whole host of problems down the road. What if your driver arrives at the delivery point, and the broker tries to renegotiate the rate or claims there was a mix-up? Your client already transported the cargo, and now you’re in a sticky situation.

Moreover, these brokers may employ tactics to delay or avoid payment altogether, leaving you and your client high and dry. They might claim that the paperwork is incomplete, nitpick over minor details, or simply disappear without a trace. Suddenly, what seemed like a straightforward transaction turns into a nightmare of unpaid invoices.

The safer bet is to politely decline the offer and move on to the next broker. While it may be tempting to take on a load for the sake of keeping your client’s truck running, the potential risks often outweigh the rewards. Remember, there are typically plenty of loads available, so you can afford to be selective about who your client transports for.

Cash on Delivery loads

However, there are exceptions to this rule that warrant consideration. If the broker is simply new and doesn’t have an extensive credit history yet, the risk factor might be lower. In such cases, you could consider accepting the load if the broker is willing to compromise and pay a portion of the fee upfront at pick up, with the remaining balance due upon delivery. This way, your client isn’t bearing the full financial risk, and you can gauge the broker’s reliability before committing fully.

Another scenario where accepting cash on delivery might be more acceptable is in certain niche industries or specialized hauling services. For instance, in the car hauling industry, it’s quite common to get paid on delivery after transporting vehicles safely to their destination. In these cases, the practice is more widely accepted and follows standard industry protocols.

Ultimately, the decision to accept cash on delivery from brokers with bad credit rests with your client, as they’re the ones taking on the financial risk. As their trusted advisor, it’s your responsibility to thoroughly explain the potential risks and rewards, and get their full approval before proceeding. Lay out the different scenarios, share your professional insights, and let them make an informed decision that aligns with their risk tolerance and business goals.

If your client is uncomfortable with the idea or if your gut instinct raises red flags, don’t hesitate to walk away. A reputable broker with a solid credit history and a track record of timely payments is always the safer choice. Your time and effort are better spent pursuing reliable business opportunities that don’t jeopardize your client’s financial well-being or put your own livelihood at stake.

In the world of trucking, cash flow is king, but accepting loads from brokers with bad credit can be a risky gamble. By exercising caution, doing your due diligence, and prioritizing trustworthy partnerships, you can navigate these situations with confidence, protect your client’s interests, and ensure the long-term success of your business.

Copyright by Roman Shmundyak April 2024

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