Most transportation companies process credit applications. In my years of practice, I have noticed that many of these companies use formats specific for other industries. It is of the utmost importance to use formats that are specific to the needs and characteristics of the freight transportation industry.
I suggest that you require commercial references from freight transportation companies and that you protect your company with a signed application authorizing your company to charge a certain percentage of the amount past due to cover collection costs and past-due interest in the event that the account becomes overdue and has to be placed with a collection agency or an attorney.
“Credit terms are 30 days from date of invoice. Outstanding balances are subject to 1.5% interest per month. The undersigned authorizes and releases all banks, persons and companies listed on this application to furnish information and authorizes the checking of credit. The undersigned agrees to pay all collection costs, and legal fees incurred to collect delinquent balances.”
Small businesses are sometimes intimidated by credit applications with many pages. Lengthy credit applications may be daunting to potential customers and compel them to use other carriers.
Credit departments extend credit when they have sufficient information to do so. Be sure that the amount of information requested is appropriate for the amount of credit requested.
Ensure that a letter including instructions for completion, an estimated timeline of the approval process, and your commitment that the applicant’s information will be kept confidential accompanies the credit application you provide to the applicant.
In order to accelerate the credit approval process, I recommend that you authorize your sales team to provide the credit application and letter of instruction directly to the applicant.
Note that the end of the credit application includes an area entitled, “For Credit Department Use Only.” In this section, the numbers one to six are intended to provide a space for the following: to record the responses from the commercial and transportation references, to note if the applicant has previously been reported as delinquent by other companies, to record the credit limit approved by your company, and for the name and signature of the authorized credit department employee approving the credit account.
Excerpt From: Salvador Banuelos. “Credit & Collections in the Freight Industry Handbook.” iBooks, Amazon, Barnes & Noble