Transportation businesses need to keep an eye on their cash flow statements. Checking these critical numbers gives you an indication about how much is going out and how much is coming in to your business.
Earning more than business expenses? It's all good. Negative balance regularly appearing on statements? Not so good.
When you run into problems with your cash flow, you can't put blame on customers. That's because cash flow depends on how you handle business finances, so it's a problem on your end.
Fortunately, any small business owner can stabilize the fluctuations of income vs. expense tide by following these measures:
Factor your freight bills
If your transportation company stuck in neutral? Are unpaid broker invoices leaving you strapped for cash? Do you face cash flow issues because shippers and commercial clients take up to 60 days to pay up?
In many instances, freight bills get in the way of growing your company. And trucking is already challenging with fuel prices and insurance rates constantly on the rise. Slow payments and low cash in your bank account are the last things you need.
But there's a way to get rid of slow moving payments and improve cash flow. By factoring for freight bills, trucking companies can receive payments on the same day they deliver the load. Reliable factoring services will let you factor freight bills with minimum effort. All you need to do is send freight invoices with delivery proof and get paid - there's no easier way to get cash flow back on track.
Take more profitable loads
Before taking loads, calculate your per-mile rate and then get contracts that at least take your business to the break-even point on the haul. Having this information up-front can save you time in negotiation and load selection.
One tested way of searching for profitable clients is to join industry associations who work with local chapters in your region. Organizations provide a list of companies to members, but you can find several publicly available lists with emails, contact numbers, and names.
After you identify businesses to work with, get on the phone and start calling them. Try setting up in-person meetings and always try reaching the person in charge. Ultimately, you can be the carrier of choice they work with and build a network of shippers who become loyal customers.
As a side note, you must bid lower than your competition to get some business as a new company. Yet, the bid should be high enough to bring in profits. The only way to bid such amount is to know your expenses up front: the cost of your work, fuel, truck repairs, cost of deadhead miles, maintenance, and trailer payments.
Improve credit rating
Having access to extra cash improves your ability to get discount payments, pay bills on time, and improve your credit score. This should be an important consideration for transportation companies. It also translates into avoiding penalties like higher interest rate payments.
You can seek options with benefit cards and loyalty programs to improve credit rating. Often, transportation companies can find savings on tires, hotels, fuels, and more through local associations. Even a bit of savings can ensure you have extra cash at the end of the month.