Please ensure Javascript is enabled for purposes of website accessibility Solving the Issue of Gaps in Revenue for Freight Carriers

Solving the Issue of Gaps in Revenue for Freight Carriers

By August 13, 2020Factoring

Freight Carriers have a lot of expenses to cover. Employees need to get paid, trucks need fuel, maintenance needs to be performed on equipment, plus there’s regular overhead. At the same time, operations need to continue in order to bring in revenue from shipments. Yet gaps in revenue do occur, especially when money is tied up in unpaid receivables, but carriers have a fast solution available to solve cash flow issues.

Delays and Gaps

The standard business practice in the trucking industry is to issue invoices with payment schedules of 30, 60, or even 90 days. In theory, these staggered payment schedules create a constant influx of revenue. However, when clients or brokers wait until the last second to make payments, or if they delay payments, gaps in revenue can occur which can completely throw off finances for carriers. Bills, payroll, and more might not get covered because of outstanding receivables. While carriers might entertain the idea of taking out a short term loan to smooth out revenue cycles, the long-term impact may have a snowball effect. Taking on debt through short term loans of a potentially recurring cash flow issue can place finances in dire straits. Multiple short-term loans can severely impact credit ratings, and the debt only means that an even larger portion of the revenue will go toward yet another liability in addition to existing financial obligations.

Solving Gaps in Revenue

Instead of taking out loans, carriers need to focus on eliminating the source of the issue – namely, delayed payments from customers and brokers. While standard invoice schedules are not going to change anytime soon, carriers can sidestep the wait by using freight factoring services. Freight factoring converts unpaid receivables to cash so carriers can access money within 24 hours, which eliminates long waiting periods and prevents gaps in revenue. Factoring also eliminates the need for short-term loans by boosting cash flow to smooth over revenue cycles. This gives carriers an advantage over businesses that do not use factoring services.

At Single Point Capital, we are proud to be a national leader in comprehensive freight factoring services. To boost your cash flow and eliminate gaps in revenue, contact our offices today.

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