Sometimes the best lessons are those learned through mistakes that were made in past experiences. Although those mistakes are definitely tough to swallow and many times costly, they are ones that business-savvy truckers don’t want to make twice.
The subject of this column deals with problems in which owner-operators have been handed the short end of the stick. The good news is they have learned from their experiences and want to share some tips with those who would like to avoid these pitfalls.
OOIDA member Ron H. got tired of waiting for brokers to pay on time, which seems to be a common problem for owner-operators. He decided to give them an incentive to pay in a timely manner by including interest charges on his invoices. It sounded like a good idea at the time, but Ron forgot one thing … he didn’t include this stipulation on the rate confirmation when the load was initially contracted. He soon found out that he’d wasted his time figuring in the interest charges because if it’s not in the contract, it is difficult to force collection. Ron now negotiates interest charges for late payment and sees that they are included in the contract. Of course he knows this doesn’t necessarily mean that he’ll always be able to get prompt payment from the broker, but it does help him to know if he’s ever forced to file against the broker’s bond, he can also claim the interest charges.
Eric W. ran into a slightly different problem. The first time he was sent out to pick up a load only to find that someone had beaten him to it, he shrugged it off. The second time this happened, he took it personally. Eric thought that it was not only unfair of the shipper to send him out to pick up a load and then give it away to someone else, but also costly for him. Realizing that with fuel prices so high this practice could definitely narrow his profit margin, he decided to take action. Now, when he negotiates his contract, he sees to it that a minimum charge for a truck ordered but not used is included on the load confirmation. He says it’s just good business to do this, and after all, it’s only fair that he be paid for his time and fuel. Eric also recommends that owner-operators ask for an advance on the load. It’s not likely that a shipper will give away a load they’ve already paid someone to haul. He stresses that owner-operators should always negotiate a contract, get everything in writing, and don’t wait too long to take action if the contract has not been fulfilled. In fact, after 31 days, he calls OOIDA’s Business Services department for assistance.
After OOIDA member Mark G. got burned once, he now sees the light and wants to warn other owner-operators not to make the same mistake. When he was unable to collect for a load he’d hauled, he tried to file on the broker’s bond. Unfortunately, the company name on the load confirmation was different from the name under the MC number. He found that the company whose name was on the confirmation was a nearly bankrupt subsidiary and not protected by the broker’s bond. He was never able to collect for the load, but he did learn a lesson from his experience. Now he always checks the motor carrier number and makes sure the load confirmation reflects exactly the same name as the MC number.
OOIDA’s Business Services department gave him a web site (http://fhwa-li.volpe.dot.gov/LIVIEW/pkg_html.prc_lisearch), which makes it easy for him to get information about the companies he hauls for and he’s found it very useful. In addition, they also advised him to check with a credit reporting service, such as Transcredit, for additional information about a company’s financial stability. Mark’s advice: Always check out the company before you pick up or deliver the load.
It’s important to know that owner-operators should never feel it is unreasonable to negotiate a contract in order to include terms that protect their own interests. After all, if you don’t ask for it, the company is not likely to offer it, particularly if it’s something that comes out of their bank account. Don’t be shy about digging for information about the company you’re about to contract with either. As a business owner, it’s your responsibility to know with whom you’re dealing in order to even up the odds a little.