When you’re deciding upon your payment terms as a carrier, there are a lot of things you need to take into account. For example, how quickly are you going to demand payment? Are you going to offer financing options? If so, what will your interest rates be? Getting paid is obviously one of the most important things in business – in fact, it’s the whole point of running a business, so you’d best decide upon a payment term system which works for your company.

After you’ve decided your method of payment, and whether you’ll accept checks, cash, or wire transfers, for instance, then you need to get into the nitty-gritty and decide what kinds of invoices you want to be chasing up from your clients. Here we go over a few common payment terms, although you should always choose a payment term which makes sense for your business and the space you operate within.

Quick Pay

Many reefer transportation services use a “Quick Pay” payment term which is known as an industry-leading payment term. With this service, you get 1.5% of Net funds due, and you are also able to get paid within a mere 72 hours of delivery. This makes your payment speedy and easy, eliminating the need to harass clients for invoices weeks/months after a service has been completed.

7-Day Payment Terms

Another common payment term is the 7-day payment term, which is used as a standard by many carriers in the cold chain logistics game. There are no fees to pay with this payment term, making it ideal for companies where immediate cash flow isn’t a pressing issue. As indicated by the name, you are paid 7 days after a successful delivery has been confirmed, meaning that you don’t fall too far behind on your payments.

Advance Payment Terms

With advance payment terms, carriers receive an advance of the gross load amount once the pickup of the load has been confirmed. The standard ratio for advance payment is around 40%, and parties can expect a service charge of around 2% if using an advanced payment term service.

So, which one of these payment terms is the best? Well, that all depends on you and your specific needs. If you’re desperate for cash flow and need to get paid ASAP, then Quick Payment and Advance Payments may be ideal for you. On the other hand, if you’re able to get paid later on and save a bunch of money on fees, then longer-term payments (like the 7-day payment term mentioned) may be the ideal solution for you.