Cash flow can make or break a trucking company’s operations. Having a good cash flow means steadily bringing money in to be able to purchase fuel for the next load, pay your drivers on time and continue to pick up new business. Part of managing your cash flow is proper invoicing and collections. Your customers should be paying your invoices in full and on time, every time. If they’re not, it may be beneficial to take a look at your invoicing and collections process.
Get all the information right the first time
The first step to successful invoicing is to ensure that all relevant information appears on the invoice clearly and correctly. Incorrect information can delay payment and cause additional work for you or your back-office staff. In general, you’ll want to include at least the following information on your invoices:
- Your full, legal business name and official address
- The full, legal business name of the entity you’re billing, and their official address
- Contact information for each of the above (make sure it’s the correct contact specific to billing)
- Reference number(s) for the particular job(s) being billed
- Necessary additional paperwork (receipts, BOLs)
- Summary/description of work
- Date (mailed or emailed) and a due date for payment
- Cost breakdown(s), including applicable taxes and fees
- Total amount due
- Accepted methods of payment and instructions for paying the invoice
- Any additional information specific to your business
Create a Process for Sending Invoices
Another key to successful invoicing is the process. You’ll want to develop and implement a documented system for creating, delivering and following up on your invoices. This can be a simple list, but it will help serve as a resource if collecting payment on the invoice becomes an issue. Determine who is responsible for what internally, including clear instructions on how and when to deliver invoices, and how and when to follow up with your customers.
Communicate Clearly with Customers
Sometimes invoices aren’t paid on time. There are a variety of reasons, from errors on the invoices themselves to issues or delays with your customers that are unrelated to your company (e.g., turnover, lost paperwork, etc.). The first (and nicest) thing to do when an invoice hasn’t been paid by the due date is to politely follow up.
If following up doesn’t work (and depending on the process and timeline you’ve created for following up on invoices), reach out again, explain that payment is past due and firmly request a quick resolution. Open communication is usually helpful so if needed, offer to have a conversation to go over the situation. If you are still unable to collect payment, you may need to consider a third-party collections agency to manage the debt.
Consider Factoring Services
Trucking companies who are looking to streamline and simplify invoicing and collections should consider partnering with a factoring company. In addition to increasing your cash flow by paying you for open invoices within 24 hours, the factoring company manages the invoicing and collections process for you. You can get paid the same day you submit an invoice and you don’t have to worry about collecting payment from your customer. The quick payment and additional back-office support usually offsets the minimal factoring fee you pay for services.
However you decide to facilitate the invoicing process for your company, having a plan in place and knowing the options available will make it easier to stay in control even if you run into collections issues.