It takes money to make money in the trucking industry, and freight carriers that do not have a a steady cash flow are finding it difficult to land new customers and drive business growth. By obtaining the benefits of freight service providers, carriers can worry less about whether they’’ get paid for the load and instead focus more on operational tasks. Looking at shipping costs and the struggles in the supply chain, Supply Chain Dive explains, “Prices have escalated, too, as consumers feel the pinch from escalated shipping costs. According to the Department of Energy, fuel costs were up 37% year-over-year in mid-July, and load-to-truck costs were up more than 70% in the largest category.” Especially with peak season rapidly approaching, now is the time for freight carriers to get ahead of the competition and gain consistent cash flow. Let’s take a closer look at why cash flow is difficult to manage and how companies can improve it through freight factoring.
Why Cash Flow Is Hard to Manage
Maintaining a consistent cash flow can become exceedingly difficult for freight carriers, due to a significant volume of daily operational expenses and slow-paying customers. The trucking industry continues to face issues with economic stress, managing different freight volumes and rates, maintaining an efficient driver pool, and payment delays from shippers. Cash flow reflects the movement of money into and out of a business; more money going out than coming in results in a negative cash flow. The trucking industry continues to have slow-paying customers, slim margins, and high operating expenses, which makes it difficult to maintain a positive cash flow. To resolve a freight carrier’s capital structure and maximize revenue, the best option is seeking out a logistics expert who can help.
Due Diligence with Your Customers
Without due diligence, freight carriers face the risk of receiving slow payments, or even no pay at all, especially with new customers. Conduct the proper due diligence and verify the shipper or broker’s ability to pay before accepting the haul. Having an informed outlook of the shipper or broker’s finances and credit standing can avoid many risks. Running a credit check can allow the customer’s history of possible unpaid bills, poor credit, or other exclusionary factors to be taken into consideration.
Efficiency Is Key For Profitability
Maximizing equipment utilization allows companies to operate at peak capacity to enhance profits and maintain a positive cash flow. Utilizing digital technologies for freight finances can fix areas where businesses are running below optimal efficiency and analyze areas for change. By leveraging the latest technology, freight factoring specialists can provide an online load board allowing instant access to a new load opportunity.
How Freight Factoring and Simple Steps Creates Consistent Cash Flow
Optimizing through freight factoring of invoices can bring stability to cash flow with a fast and flexible solution. By factoring in freight bills, trucking companies can keep taking on new loads and stress less about waiting for payment. Working with a freight factoring company can take the stress out of late payments from shippers and focus on running operations. In addition, freight factoring can provide services with the following value-added processes:
- Automated invoice aggregation and processing.
- Streamlined invoice management with digital document management.
- Integrated freight finance systems with your TMS.
- Tracking the ease of pickups and deliveries, so you know when to award shipper of choice status.
- Using analytics to better manage your cash flow too.
Furthermore, this allows a company to increase cash flow, and continue to pay operating costs such as payroll, fuel, insurance, tires, and maintenance while also seeking out the next load. Factoring enables carriers to have money on hand and continue to focus on building the business and ensuring positive growth.
Maximize Your Cash Flow and Efficiency by Becoming a HaulPay User
Partnering with a freight factoring company can create positive cash flow consistently while using automated technology to improve efficiency. By utilizing factoring, carriers can receive next-day payments from shippers and worry less about credit risks. Get ahead of the competition by requesting a demo of the HaulPay platform to learn how ComFreight can increase your cash flow!