The trucking industry has been through a lot over the past few months, if not the past few years. While trends can help trucking companies plan for the future, they are also temporary. What seems like an opportunity or cause for concern today may turn out to be nothing in the long run. However, we have seen everything from proposed legislation to economic trends play out over the past few years, and whether trucking companies take a reactive stance or a proactive one can mean the difference between bankruptcy and success.
Reactive Trucking Companies
Reactive trucking companies tend to make changes for short-term gains in terms of growth opportunities, or they shift direction only at the last second in the case of pending legislation. When electronic logging devices were coming down the pike, there were carriers that refused to make the switch, and their drivers were sidelined until their vehicles become compliant. When the threat of tariffs had trucking companies working nonstop in 2018, carriers experienced much higher revenues. Immediately, a few of those trucking companies spent their earnings on expanding their operations by purchasing more trucks, hiring additional drivers, and opening new facilities. By 2019, we all knew there were no tariffs, and the trucking industry experienced a major slump. Trucking companies that overextended themselves with expansions were suffering financially, and a few even filed for bankruptcy by the middle of the year. When the Drug and Alcohol Clearinghouse started, reactive trucking companies only submitted data after the deadline, and received penalties for hiring driving with infractions on their records. Even something as basic as cash flow only becomes a problem to reactive trucking companies when they cannot cover overhead or payroll. Reactive carriers are prone to taking out short-term loans as a temporary fix for cash flow issues. But if those problems are recurring, the debt and impacted credit ratings from those loans can add up, forcing those trucking companies into dire financial situations.
Proactive Trucking Companies
Proactive trucking companies take a completely different approach compared to reactive carriers. Proactive trucking companies may seem fiscally conservative, only making large moves when the timing is perfect. The one thing that proactive carriers have in common is the desire not to hit any snags that could cost them time, resources, or revenue. They were among the first to get in front of pending legislation and install ELDs in their trucks. They started sending data early to the alcohol and drug clearinghouse. These trucking companies accumulated wealth from the high trucking demands in 2018 and sat on their revenue to see what would happen in 2019 instead of going bankrupt. Proactive trucking companies are already converting their fleets to EVs after weighing the initial cost against the long-term savings.
On the financial side of things, proactive trucking companies have found ways to minimize their need for loans while maximizing their cash flow. Instead of chasing every unpaid invoice, proactive trucking companies use freight bill factoring. Freight bill factoring helps to automate finances by converting unpaid receivables into cash. This gives trucking companies and owner-operators the capital they need to cover overhead, make payroll, smooth over uneven revenue cycles, and anything else they need. Freight bill factoring does not place any debt on the books, so trucking companies can build capital reserves and preserve their credit ratings. Invoices never get a chance to age out to collections because they are turned into revenue too quickly. Freight bill factoring plays a tremendous role in the staying power and success of trucking companies, and allows them to achieve growth independent of short-term trends.
Improve Your Finances Today
It is never too late to become a proactive trucking company by using freight bill factoring from Single Point Capital. We work with independent owner-operators, new trucking businesses, small trucking companies, large fleets, and everything in between to provide comprehensive freight bill factoring. We will turn your unpaid receivables into cash and make funds available within a single day. To get on the right track, reach out to the experts at Single Point Capital. We help proactive trucking companies boost cash flow and achieve long-term success. Get started today.