Getting stiffed by a shipper is one of the worst experiences in freight brokerage — you delivered the service, you paid the carrier, and now the shipper won't pay. The options depend on the amount, your documentation, and how much time and money you're willing to spend pursuing it.
Why Shippers Don't Pay
Understanding the reason matters for your approach:
Cash flow disputes: The shipper has the invoice but claims they don't have the cash right now. They're stalling, not denying the debt. This is the most common scenario and usually resolves with patient escalation.
Disputed invoice: The shipper claims the charges are incorrect — a cargo claim offset, disputed accessorials, rate discrepancy. These need documentation review before you can resolve them.
Freight claim leverage: The shipper is withholding payment to pressure the broker on a cargo claim for damaged freight. This is a common but problematic negotiating tactic. The claim and the invoice are legally separate obligations; withholding payment on a valid invoice to resolve a disputed claim is generally not legally defensible, but it happens constantly.
Bankruptcy: The shipper has financial problems that prevent payment. This requires a different approach — creditor claims in bankruptcy proceedings rather than standard collections.
Intentional non-payment: Rare, but some businesses use brokers with no intention to pay. This is fraud.
The Collections Escalation Process
Stage 1: Internal follow-up (Days 1–30 past due)
Assign clear ownership to collections within your team. Most invoices that are "past due" are simply lost in a queue at the shipper's AP department. A polite, professional phone call to the AP contact often resolves it within a week.
Stage 2: Escalation within the shipper's organization (Days 30–60 past due)
If AP isn't responding, escalate to the logistics manager, operations manager, or whoever your primary contact was at the shipper. This puts peer pressure on the AP process. Most shippers don't want to damage a working business relationship over payment processing delays.
Draft a formal written notice (email is acceptable with return receipt) that includes:
- Invoice numbers and amounts
- The due date
- The amount currently past due
- A specific deadline for payment (typically 10–14 days)
- Statement that failure to pay may result in collections and legal action
Stage 3: Demand letter (Days 60–90 past due)
A formal demand letter — ideally on letterhead and referencing the specific contractual obligations and state law remedies — signals that you're prepared to take legal action. Some brokers send this themselves; for larger amounts, having an attorney send it adds credibility.
Stage 4: Collections agency or legal action (90+ days past due)
Collections agencies specializing in freight receivables charge a percentage of what they recover (typically 25–50% depending on age and amount of the debt). This reduces your recovery but requires no upfront cost and removes the burden from your team.
Small claims court works well for amounts under your state's small claims limit (typically $7,500–$15,000 depending on state). It's fast (usually 30–60 days to hearing), inexpensive ($50–$200 filing fee), and you don't need an attorney. You'll need documentation of the debt (invoice, BOL, POD, your signed broker-shipper agreement).
Civil litigation through a transportation attorney is appropriate for larger amounts ($10,000+) where the economics justify legal fees. Transportation attorneys who specialize in freight disputes can often send demand letters and file suit on a contingency basis for proven debts.
Your Documentation Is Everything
Your ability to collect on a disputed invoice depends directly on your documentation:
The signed broker-shipper agreement establishes the payment terms and governing law. If you don't have one, your legal standing is weaker.
Signed rate confirmation establishes the agreed rate for the specific load.
POD (Proof of Delivery) establishes that the load was actually delivered. Without a POD, the shipper can claim non-delivery.
Load tracking records support your timeline of events, particularly useful when shippers dispute dates or claim late delivery justified rate reductions.
Preventing Non-Payment Before It Happens
Credit checks at shipper onboarding. Services like Ansonia Network, Experian Business, and Dun & Bradstreet provide credit scores for businesses. Freight-specific credit bureaus like ATBS also maintain payment history records for transportation relationships.
Payment term agreements in your broker-shipper contract. Explicit payment terms (Net 30 days from invoice, 1.5% monthly late fee on past due amounts) are enforceable and create legal standing for collections.
Credit limits. Establish a maximum credit limit for each customer based on their credit profile. Cutting off additional loads when a customer exceeds their credit limit stops the problem from getting worse.
Early warning signs. Customers who habitually push payment to the last day of terms, dispute invoices frequently without resolution, or fail to provide a consistent AP contact are higher risk. Adjust your credit policies accordingly.
Personal guarantees for small businesses. When brokering for smaller companies, a personal guarantee from the owner can be a condition of extending credit. If the business fails to pay, the owner is personally liable.
Freight Broker's Lien Rights
Some states give freight brokers limited lien rights against freight in their possession (or freight being moved on their behalf) until payment is received. This is rarely practical in practice — you've already delivered the goods before payment is due — but it's worth understanding the legal framework in your state.
When to Write Off Bad Debt
At some point, the cost of pursuing collections exceeds the expected recovery. Common thresholds:
- Under $500: Usually not worth the time unless it's a quick phone call resolution
- $500–$2,500: Consider small claims if you have good documentation; otherwise write off and adjust credit policies for the customer
- $2,500–$10,000: Small claims court; consult a collections agency
- $10,000+: Attorney review; assess likelihood of recovery before committing to litigation costs
Bad debt should be tracked and reported appropriately on your financials. It's also a signal — if you're accumulating bad debt, your credit screening process needs tightening.
Frequently Asked Questions
Can I put a shipper on a "do not work with" list and share it with other brokers?
Informally, yes — discussing your payment experience with other brokers through professional networks is common. Formally publishing a blacklist can create defamation exposure if the information is inaccurate or if the intent is to harm rather than inform. Stick to factual statements about your own documented experience.
What if the shipper disputes the charge and I believe they're wrong?
Request a specific written explanation of the disputed amount. If the dispute involves a rate discrepancy, provide your rate confirmation showing the agreed terms. If it involves a cargo claim offset, treat it as a separate dispute to be resolved through the proper claims process while pursuing payment of the undisputed portion.
Can a shipper use a cargo claim to offset my invoice without going through the claims process?
Not legally. The Carmack Amendment creates a specific process for cargo claims that is separate from the payment obligation for completed transportation services. A shipper who unilaterally withholds payment to resolve a cargo dispute is taking an action their attorney would not advise. However, it happens frequently, and the practical resolution is usually negotiation.
Does interest accrue on unpaid freight invoices?
It depends on your agreement. If your broker-shipper contract specifies late payment interest (e.g., 1.5% per month on past due amounts), that interest accrues and is collectible. If your contract doesn't specify, your ability to charge interest depends on state law.
What is the statute of limitations for collecting freight broker invoices?
Varies by state. Most states have a 4–6 year statute of limitations for breach of contract claims (which is what an unpaid invoice represents). The clock typically starts when the invoice became due. Don't let a collectible debt age past the statute without taking action.