The trucking industry can be quite stressful. You do everything you can to deliver the goods within tight deadlines- but you have to wait for the customer to pay you. In the meantime, you still have to pay for your equipment, maintenance, payroll, and other overhead expenses.
For a business to be sustainable, it must generate positive cash flow- but this is one of the hardest things for trucking companies to manage. To ensure your success, you must make sure your trucking invoices get paid fast. In this blog, we’ll explain why it’s important to maintain positive cash flow and give you some tips to get your invoices paid faster.
Why is Positive Cash Flow Important in Trucking?
No matter what type of business you are running, cash flow is important and is either positive or negative:
Positive cash flow means you have more cash flowing in than out.
Negative cash flow means you have more cash flowing out than in.
Your business may look profitable, but if you don’t have cash reserves to take care of expenses, your business will ultimately fail.
When you’re in an industry where you have daily expenses and slow-paying customers, it can be hard to maintain positive cash flow. This is why it’s important to have an accounts receivable collection process in place- to keep your cash flow positive.
Tips to Effectively Manage Your Accounts Receivables
By taking control of your accounts receivables, you can reduce your stress over when and if your customers will pay. Here are a few things you can do to speed up payments:
Create a business cash flow system built for success
Immediately issue your trucking invoices
Follow up when customers are late with payments
Getting Invoices Paid Faster
Ideally, you should be able to deliver your load, invoice the customer, and get paid in one day. This would make your business finances stable. That being said, if you want to remain competitive in the industry, you must offer your customers 30, 45, or 60 days- which is exacerbated by the fact that trucking customers almost always pay their invoices late.
However, even though these customers are late, you still have to cover your over-the-road expenses and other overhead. When this becomes a struggle, it’s important to note that you do have an alternative: freight factoring. This is where you sell your invoices to a factoring company in exchange for immediate cash. You will get a portion of the money up front and the rest (minus the factoring fees) when the customer pays.
This is not a loan, but a way to get the money you’ve already earned within 24 hours after taking delivery. This is a funding option that is designed for trucking companies and is the fastest way to get paid.
Benefits of Freight Factoring
There are lots of benefits associated with freight factoring:
Immediate payment for you
The factoring company handles the collections process
Regardless of the tools, strategies, and practices you use, you must maintain control of your accounts receivables. If you want to ensure positive cash flow and a profitable business, contact Array Financial to learn how freight factoring can help your trucking business.