Legal Tips for Recovering Freight Payments

Unpaid freight bills can have a significant impact on your company's cash flow and overall financial health. Consistent non-payment can put carriers in a difficult position, despite the fact that payment delays are common. You may need to look into legal options if you have exhausted all of the informal means of collecting your money. What should you know in order to protect your business and recover the money owed, and what legal options are available to you when a freight broker or shipper refuses to pay, in this guide.

1. Review your freight contract

Reviewing the freight contract you have with the broker or shipper is the first step before taking any legal action. The contract will list the terms, conditions, and remedies you may have if your payment is delayed or withheld. Some contracts contain clauses for dispute resolution that specify how disputes involving payments must be resolved, such as through arbitration or mediation.

Important Remarks to Make:

• Payment terms and due dates

• Interest or penalties for late payments

• Arbitration, mediation, or litigation clauses for disputes resolution.

By understanding your contract, you can determine whether the other party's terms have been broken, giving you a solid foundation for any legal action.



2..... File a claim for freight.

In some circumstances, the best course of action may be to file a formal freight claim. To do this, you must notify the broker or shipper in writing that you are requesting payment for the services or goods you have delivered. A freight claim can also be used if the dispute involves damaged goods, lost cargo, or other transportation-related disputes. It is a formal request for compensation for non-payment.

How Do I File a Freight Claim:

• Provide the broker/shipper with written notification, including the unpaid amount, the invoice, the delivery confirmation, and any additional documentation.

• Make sure to submit your claim within the deadlines set forth in the contract or industry guidelines.

• Keep in touch with us to make sure your claim is being processed.

3.... The Broker's Surety Bond should be used.

According to the Federal Motor Carrier Safety Administration( FMCSA), freight brokers are required to carry a surety bond or trust fund of at least$ 75, 000. In the event that the broker fails to fulfill its financial obligations, this bond exists to protect carriers and shippers. One of the most efficient ways to recover unpaid freight bills is when a freight broker refuses to pay you for their surety bond.

How to File a Surety Bond Claim

• Gather pertinent paperwork, including your broker's contract with you and the unpaid invoice.

• Get in touch with the bonding company that holds the broker's surety bond; this information should be provided by the broker or made available via FMCSA.

• Submit the necessary paperwork to the bonding company so you can file your claim.

The bond company will pay you for the unpaid amount, up to the bond's maximum, if your claim is valid.

4.... Bring the case to the court for small claims

You might want to file a case in small claims court if you want to collect smaller unpaid amounts. When the amount owed is within the court's cap, which typically ranges from$ 5, 000 to$ 10, 000, depending on the state, this is a relatively low-cost option for recovering freight bills.

How to File a Case in a Small Claims Court

• Make sure your claim qualifies by researching the small claims court system in your state.

• Create documentation, including the contract, the unpaid invoices, and communications with the broker or shipper.

• Attend the hearing where you present your case and file the claim with your neighborhood small claims court.

If the court rules in your favor, you will be required to pay the amount owed to the broker or shipper. Although the collection of the money is simple, the court wo n't handle the actual collection of the money, so it may not guarantee immediate payment.

5. Take into account hiring a collection agency

Employing a collections agency may be a wise choice if the broker or shipper is unwilling to pay the owed amount because of how much it is owed. Collections agencies have a history of success in recovering unpaid debts, and they can handle the process of contacting the debtor and negotiating payment for you. Although you'll Freight Logic LLC have to pay the agency a portion of the recovered amount, this can be a successful way to resolve the problem without going to court.

How to Work with a Collections Agency

• Select a company with expertise in the freight or logistics sector.

• Provide them with all the necessary paperwork, including your agreement with the debtor and unpaid invoices.

• Agree on the collection procedure and bargain the fee (typically a portion of the recovered funds).

6. File a lawsuit against a breach of contract.

You may need to file a lawsuit for contract breach if you want to pay more money or if all other attempts have failed. Although it takes longer and is more formal, it might be necessary if the broker or shipper refuses to pay significant sums of money. This lawsuit may be handled in federal court or civil court depending on the court's jurisdiction and the amount owed.

How to File a Contract Lawsuit for Breach:

• Get in touch with a lawyer who specializes in contract or transportation law to go over your case and assess your chances of success.

• Create all forms of documentation, including contracts, unpaid invoices, delivery documentation, and communication records.

• File the lawsuit in the appropriate court, go through the legal process, go through discovery, or go to trial, if necessary;

Legal action may be expensive, but it might be the only option for recovering significant unpaid bills.

7.... Report the shipper or broker to the regulatory bodies

You can report the non-payment to regulatory bodies, such as the FMCSA, in addition to going to court for legal action. This may not result in immediate payment, but it could lead to the broker's license being suspended or revoked, which could prevent them from engaging in similar practices with other companies.

How to File a Complaint with FMCSA:

Visit the FMCSA's National Consumer Complaints Database.

• Provide a complaint describing the broker's failure to pay and any relevant supporting documentation.

• Follow up to see how your complaint is progressing.

By disclosing the broker, you help keep them accountable and stop non-payment issues for other carriers in the future.

8. Prevent upcoming non-payment issues.

Once the current issue has been resolved, it's crucial to take action to avoid additional non-payment issues. Implementing best practices for arranging payment terms and vetting brokers can lessen your chance of dealing with unreliable clients.

Best Ways to Avoid Non-Payment:

Before accepting new loads, conduct credit checks on brokers or shippers.

• To ensure faster payments, use freight payment services or factoring companies.

• Establish clear payment terms, penalties for late payments, and dispute resolution procedures.

You can reduce the chance of dealing with unpaid freight bills by managing your relationships with brokers and shippers.

Final Thoughts

Legal action may be required to pay back the money owed to you when faced with unpaid freight bills. Knowing your options is essential to protecting your business, whether you choose to file a claim against a surety bond, go to small claims court, hire a collection agency, or file a lawsuit. Always go over your agreements carefully, keep track of all transactions, and follow the appropriate procedures to quickly recover payment. You can protect your business from upcoming non-payment issues by taking the right legal action and putting preventive measures in place.

Leave a Reply

Your email address will not be published. Required fields are marked *