Cash flow is crucial to every business, but new trucking companies rely on cash flow to sustain operations and thrive. Cash flow issues for truckers can come in various forms when a trucking company is just starting. However, we have identified a straightforward solution to keep revenue coming in at a fast pace.
Starting a successful business in any sector costs money. For new trucking companies, costs include permits, insurance, branding, payroll, equipment, fuel, and more. The first few jobs usually go straight to covering expenses and obligations. However, revenue should exceed costs at a certain period, and a trucking company can start to grow. Until that point, it is vital to maintain a healthy cash flow.
No trucking company has an entirely smooth start. Unexpected costs can place a dent in the budget. These costs can include anything from paper for the office printer to expenses related to compliance, vehicle maintenance, or legal fees. After starting a trucking company, those early days can have owners wearing multiple hats, including being the in-house accountant. However, closely monitoring cash flow so there is enough to cover the unexpected can prevent the need to take on extra debt from short-term loans.
Normally, growth opportunities are very lucrative and beneficial. However, if there are existing cash flow issues, achieve any type of growth can be challenging. Strong cash flow is required to sustain operations as your trucking business grows. Additionally, there are times when time-sensitive business opportunities come along, and if cash flow is not robust, fleets and owner-operators will have to miss their chance.
Delays in Customer Payments
Trucking companies issue freight bills with staggered payment schedules of 30, 60, or 90 days. This has been a standard business practice for a very long time. The idea is to give some leeway to customers, shippers, and brokers, while also setting up a system where there is a constant stream of revenue. That might work in theory, but in the real world, trucking companies need to cover payroll and fuel costs, and waiting for payments from customers can place a severe strain on cash flow, and not every new trucking company can afford to take out additional loans to smooth over revenue cycles. Your trucking business can be flush with shipments and large totals on the receivables tally, but if your clients are not paying the balance owed in a timely manner, severe cash flow issues can occur. Sending overdue invoices to collections only adds to the delay in payment. An invoice has to go unpaid for 30, 60, or 90 days before it goes to collections, and then it can take up to 45 days on top of that before any payment is received from the client.
Freight Factoring for New Trucking Companies
To prevent cash flow issues for truckers, new companies use freight bill factoring. Instead of waiting a month or longer to receive payments, freight bill factoring converts invoices to cash, and funds are made available quickly. As a result, freight bill factoring is debt-free, fast, and transparent. By boosting cash flow with freight bill factoring, new trucking company owners can worry less about accounting and focus more on running their businesses.
At Single Point Capital, we provide comprehensive freight bill factoring and make funds available within a single day. In addition to boosting your cash flow, we also offer significant savings on fuel and assistance if you are trying to launch your own trucking company.
Ready to get help managing your cash flow?
Well, Single Point Capital can help you get paid today!