Some of our clients profit from past due accounts that have been assigned with our Agency. What does this mean? The amounts recovered are higher than those originally invoiced even when collection fees have been charged on a contingency basis. Our clients receive more than what they originally had charged for their transport service, sometimes generating a larger profit.
How does this work? Cargo transport agents provide quotes and invoice their cargo transport services by classifying each service at certain rates which provide their customers with discounted pricing. Discounted pricing fluctuates between 15% and 50%. Upon non-payment within the first 30 days granted, clients send a re-classification notice for that service which includes the actual service class and the corresponding full service price. A new invoice is then generated for the full price of the services provided.
Is this legal?
In Mexico, you must include these terms in your credit application. Be aware the discounted price cannot exceed 100% of the original amount quoted. It is suggested you include these terms in your quote or rate sheet, rate confirmation sheet, and invoices. This is a way to enforce your invoicing policy and your clients will not be surprised when they receive your invoices with charges higher than originally quoted when applicable.
In the US, you do not have to include these terms and conditions in your credit application. To enforce them, you only need to include them in your Rules of Tariff. See CFR – Section 49 377.203 g(1)(ii). To view them, clic here.
This can be a very useful tool when you send out payment reminders to your clients before due dates are past. In this way, your clients will be aware of the fact that not paying on time will take away their discounted pricing and, therefore, might encourage them to give your payment priority. No doubt, this can be very effective in increasing timely payments from your clients.
I strongly suggest you seek the advice of your attorney or legal team to assist you in the analyses and implementation of these terms and conditions into your credit forms. I am of the opinion that a cargo transport agent should not pay the price for any delinquent account. After all, if you no longer want to do business with that delinquent account, why not make a profit before they go to your competition?
See you next time!