Operations

How To Get The Best Farm Deal

Jim Luff
Posted on December 12, 2014

Operators often book farm orders amongst each other in haste, with no specific terms as we rush to gain new business and dispatch orders in another city. What can go wrong? Plenty!

The Basic Arrangement
It all begins with the basic details, which should include the date of service, the type of vehicle, the pickup location, time and destination. These details are vital to providing good passenger service, but payment methods rarely show up on the initial farm orders. Whether a big company farms to a small company or two small companies farm to each other locally, almost all email or fax assignments bear only the client transport arrangements. That’s fine until someone misses a payment, a company screws up the service, or the client disputes overtime charges.

Money Matters
Payment for service trumps all other aspects of running a business. No matter how well you know the operation sending you business, a written agreement between two companies will clarify and ease the payment process. But it isn’t just about getting a credit card number or a credit application. You must define how charges will accrue, such as by the mile or the hour, a flat rate or a combination. Determine your rates for extended service and when payment occurs. While that might seem simple enough, if a client provides a credit card when booking, do you have explicit permission to charge the card for overtime or damages? If you bill the company sending you the order, you should get a credit card as backup and follow a written agreement with clear terms for past due invoices and when the card gets charged. This avoids waiting for money.

When Things Go Wrong
Without an agreement, operators will lack a clear understanding of “wrong” and the repercussions. Let’s say the client vomits in the vehicle. Does the company farming the order to you know that you charge a clean-up fee of $300? Did they specifically agree to it? If you are late to the pickup, does the affiliate have the right to deduct $50 from your payment? The terms for such situations should be spelled out in writing. But we don’t always make these deals until something goes wrong, and then it is too late. Lacking an agreement can cause problems between the two companies and kill any future business dealings. Both parties suffer from the long-term effects. An agreement forestalls surprises and disputes over additional credit card charges tied to service failures.

Enforcing Agreements
Some situations can get sticky. If a credit card company is involved, it will mediate the dispute and decide if any charges are valid. That’s why a contract must list a backup credit card and the circumstances under which it can be run. For example, a small city operator owed payment from a big city affiliate far away will struggle to collect the amount due without such an agreement.

Related Topics: affiliate networks, farm-in farm-out, negotiations, networking, New Operator, service pricing

Jim Luff Contributing Editor
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