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Five of the most costly mistakes

These errors generate the most losses for any cargo transport and logistics companies.

1. Failure to resolve any dispute early on

It is very common to experience delays in receivables when the clients are not satisfied with the cargo transport services provided whether due to a delivery delay, merchandise damage or a dispute on an additional charge. It is of the outmost importance this claim is serviced and a written resolution is provided in due time. If your client feels ignored or devalued, most likely you will not receive any return phone calls or reply to your communications. They will not pay your bills just because they might think it is your fault for not resolving the dispute. This will be just another argument for not paying and all without regard to the legality of their actions.

2.- Faulty follow ups

When a client is past due, it is critical you designate a person in-charge until you have recovered the past due amounts. It is equally critical you have on hand all the information related to the services (PO dates, rate confirmations, invoices, important e-mails, etc.) Your communication should be consistent and continuos without fail.

3.  Outdated contact information

Many invoices go unpaid because they were forwarded to the wrong address or to the attention of someone who no longer works at that company. Your invoice gets lost that way. These types of errors can be avoided by simply maintaining your contact information updated. You can establish a process to periodically update your client database. There is a high volume of unpaid invoices due to lack of updated contact information.

3.- Lack of a credit and collections policy

This is without a doubt the highest cost generating mistake of all. Your company must put in place a credit and collections policy. Your client must know when payments are due and should be received, when their accounts would be considered past due, the process and the consequences of not paying on time. You must include in your credit application (this document should be signed) a clause notifying your client that interest and delinquency fees will be generated for non-payment if their account is assigned to a collections agency or third-party for recovery. Your credit and collections policy must be detailed. However, most importantly, your company must abide by it without exceptions.

5. Lack of consistency with your client

One common error is to fail to do what you told your client you would do. The lack of consistency in what you say and you do generates millions of losses in the industry. When someone in your company promises to send a document or information that same day, but in reality it was sent a day later or a week later, creates the best formula for your company to lose prestige and credibility altogether. Even if it seems to have been only an oversight without a mejor consequence, it will have a great impact on your receivables if this has implications in the collections or commercial arena for your company.

As an example, if you tell your delinquent client that their credit will be suspended and their account will be assigned to a third-party or collections agency if they do not pay within five days. Make sure you do it! There is no better way to show you mean what you say (and enforce your credit and collections policy) than to take action when you say you will.

I am sure if you avoid these mistakes, or at least some of them, you will reduce your risks when granting credit to new clients and will increase your recovery rates.

See you next time!

Salvador Bañuelos

Sal is known internationally for the debt collection results he has provided to the freight transportation and import/export industries worldwide for the last 15 years. Author of "Credit and Collections in the Freight Industry Handbook" & "Credit & Collections Policy – Practical Guide”. He contributes to the industry with articles in the following leading magazines: T21 and Enfasis Logistica Contact him:  E-mail ,  Twitter ,  facebook,

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Copyright © 2020 AFS International, LLC. All rights reserved.