Jeremy Robison is the president of Tetra Capital, an independent company offering quick and easy freight bill factoring services to trucking companies of all sizes. He’s dealt with a variety of trucking fiscal issues over his career, including equipment financing, equipment purchasing, lease operator programs, driver recruiting, plus payroll and equipment maintenance. He draws from that experience here to provide owner-operators with some cash flow management advice.
At times, expenses for owner-operators seem to never stop adding up. Especially when you consider insurance, fuel, meals, expected and unexpected maintenance and repairs - just to name a few. With all of these expenses, one of the biggest challenges facing owner-operators is cash flow. Being proactive about cash flow is always the best option when you are running your own trucking business. Here are some tips to help you potentially avoid a cash flow crisis.
Ensure your customers are paying you for the loads you haul: Without predictable money coming in, there is no way you can manage your cash flow. With this, there are two things to consider – if and when your clients are going to pay.
Unfortunately, I did say IF your clients pay. Without conducting credit checks on your potential clients and brokers, you don’t know what their past payment history is and if they pay their bills on time or at all. The easiest way to determine if you are hauling loads for clients and brokers who will pay you promptly is to conduct credit checks.
The good news for owner-operators is there are financial partners, such as certain freight bill factoring companies who offer FREE credit checks to their factoring clients, helping them to save money and ensure they get paid.
Remember, though, that when your clients pay impacts your cash flow. It is not unusual for it to take 30, 60 or even 90 days for freight bills to be paid. But meanwhile, your bills are piling up. One option to eliminate the uncertainty of payment terms is to partner with a freight bill factoring company. Freight bill factoring gives you access to immediate funds for your freight bills, allowing you to have the money you need to pay your bills when you need it.
Accurately track expenses and get the help you need when you need it:
Accurately tracking your income and expenses is the only way to know what your cash flow situation truly is, and this can be difficult when you spend most of your time on the road. Depending on your level of comfort and the amount of time you have to devote to financial matters there are a few options you can take advantage of.
- Certain fuel programs can track your fuel spending and include fuel management tools and purchase controls to help you manage fuel and other expenses.
- Some freight bill factoring companies offer their clients the benefit of free back office services such as invoicing, processing, postage, collecting and more.
- For owner-operators who need someone to handle it all, there are professional bookkeeping and accounting services that will do just that.
Look for ways to save money: The more money that stays in your pocket, the less you have to worry about your cash flow. There are many places owner-operators can look to save money.
In addition to the above-mentioned financial tools that fuel programs provide, they are also a great source of savings. With fuel cards, you can save up to 10 cents per gallon with no minimum fueling requirements, and you get the cash price while being able to pay with a card.
Another bonus, if you work with a freight bill factoring company, you can load your funds right onto your fuel card. This will save you time and help you ensure you will have the funds you need to cover your fuel expenses.
Equipment leasing is often an overlooked option for many owner-operators searching for ways to save money and increase cash flow. There are several different options an experienced equipment leasing company can offer to tailor a solution that will best fit your needs. Leasing options may include ways to lower your payments, help you get upgraded equipment that will save you money on maintenance and fuel, and repayment plans that take into consideration any seasonality changes in your business.
Remember that while there is no single solution that will eliminate all your cash flow concerns, if you can stay ahead of any potential issues, you will be in for a smoother financial ride.