Unpaid freight bills 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've 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.

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 payment is delayed or withheld. Some contracts contain dispute resolution clauses 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 payment

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

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



2..... File a cargo claim

In some circumstances, the logical step 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 provided. A freight claim is a formal request for compensation for non-payment, and it can also be used if the dispute involves lost or damaged goods or other transport-related disputes.

How to File a Freight Claim

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

• 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. Loan the Surety Bond of the Broker

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 meet its financial obligations, this bond exists to protect carriers and shippers. One of the best 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 documents, including your broker's contract with you, proof of delivery, 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 falls within the court's limit, 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 Small Claims Court Case:

• Check the state's small claims court system to make sure your claim qualifies.

• Create documentation, such as the contract, the unpaid invoices, and communication records with the broker or shipper.

• Attend the hearing to present your case and file the claim with your local 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 this process may not guarantee immediate payment.

5. Take into account hiring a Freight Logic LLC collection agency

Employing a collections agency may be a wise choice if the broker or shipper continues to be unresponsive and the amount owed is substantial. Collections agencies have a history of recovering unpaid debts, and they can handle the process of contacting the debtor and negotiating payment for you. Although you'll have to pay the agency a portion of the recovered amount, this can be a successful method of resolving 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 contract with the debtor and unpaid invoices.

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

6. File a lawsuit against a breach of contract.

You might need to file a lawsuit for contract breach if you want to pay more money or if all other attempts failed. Although this legal process is more formal and time-consuming, it may be required 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 country and the amount owed.

How to File a Breach of Contract Lawsuit

• 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, as well as 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. Preventing upcoming non-payment issues

Once the current situation 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 Techniques for Preventing Non-Payment:

• Before accepting new loads, check the credit of brokers or shippers.

• To ensure quicker payments, use freight payment services or factoring firms.

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

You can lessen the chance of having to deal with unpaid freight bills by managing your relationships with brokers and shippers.

What is the conclusion?

Legal action may be required to recover the money owed to you when faced with unpaid freight bills. Knowing your options is essential to protecting your business, whether you decide to file a claim against a surety bond, go to small claims court, hire a collection agency, or file a lawsuit. Always review your contracts closely, 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.