Cash in hand is king so here are a few cash flow considerations for transportation companies.
Get a CPA or Bookkeeper
It is always good to have a professional help you make sure your finances are in order. They can also give you advice on your cash flow projections and help you identify any potential cash flow problems that could lie ahead. A good CPA will also have an intimate knowledge of tax laws in their area that will save you money almost every time. Additionally, an accountant will almost always find you more deductions come tax time.
Freight Bill Factoring
Factoring your freight bills with a factoring company, such as Tetra Capital, allows you to eliminate the 30-60 days you have to wait for your customers to pay giving you the cash flow you need to pay for things such as fuel, maintenance and payroll. Freight bill factoring allows you to use your existing untapped collateral (your invoices) without assuming any debt. Once you deliver the load the factoring company can make cash available to you from 65% to 95% of the face value of your unpaid freight bill within hours. The factoring company pays the balance, less a service fee, to you when your customer pays the invoice. While the factoring company waits to be paid, you have a large portion of your money to use as needed.
Look into Leasing Your Equipment
Leasing your equipment can offer many benefits, one of which is helping your cash flow by leaving your cash and other lines of credit to be used for other expenses. When leasing your equipment the monthly payment can also be lower, than if you had purchased the equipment, leaving you more money each month for other things. Additionally, lease payments are considered a business expense, providing your business with the tax benefits even though you did not purchase the equipment.
Be Prepared for Seasonal Changes
Every business has seasonal changes in cash flow and trucking companies are no different. Make sure you are setting aside funds for those slow periods or utilize funding options, such as freight bill factoring, during those times to give you the funds you need when business is slow.
Shorten the Collection Times on Your Receivables
Waiting 30, 60 or more days to collect on your freight bills can be a real cash flow killer. You have several options to try to collect on your freight bills quicker including, sending out invoices immediately after delivering the load, shortening your payment terms or offering a discount to customers who pay more quickly and penalties to those who pay late. Another option is to utilize freight bill factoring which allows you to collect the funds immediately so you don’t have to wait on your customer to pay.
Look for Loyalty Programs and Benefit Cards
Trucking companies have several options available to them to save with loyalty programs and benefit cards. You can find savings on fuel, tires, insurance, hotels and more through the various trucking associations and even through freight bill factoring companies. Every little bit of savings can add up to help your cash flow.