Nearly all business sectors are feeling the economy’s weight, and trucking is not any different. Challenges continue even as more shopping goes to the web increasing the demand for shipping and transport services.
Freight rates are up and down, truckers suffer past due invoices and high operation costs causing financial constraints. Most affected are startup firms and solopreneur drivers. Late payments can cause cash flow hiccups amid a tough economy further affecting supply chains.
Startup trucking companies are betting Congress’s long-awaited stimulus package might help remedy these cash flow issues. After all, News from CCJ reports hint Round One of Paycheck Protection Program loans allocated $12 billion to the sector, and most companies will move to apply for a share in the next series of funding.
Still, this might not suffice. Andy Lupo, VP at Pilot Company feels truckers should employ multiple strategies to reduce financial constraints. Below are some tips according to Lupo.
Financial Constraints
With payroll, escalating fuel prices, and unanticipated expenses like truck checkups and repairs, maintaining a profitable trucking service is a primary challenge even as freight rates go up.
Meanwhile, business owners prefer delaying service provider’s payments as a strategy to fortify their financial positions, leading truck owners into a dilemma. More and more past-due invoices not only adds a financial strain to the trucking process but cause further uncertainty and unpredictability of when service providers will see cash flow into their businesses.
That being said, trucking companies must develop creative ways to cut expenses while expanding their bottom line.
According to Lupo, strategies that help cut expenses like fleet cards and other lines of credit carrying offers like fuel price cuts, rewards, or commercial funding are increasingly important tools for the industry.
Other strategies like Invoice Factoring can help reduce industry troubles like delayed payments.
Sector Collaboration
No single remedy can solve all cash flow issues in trucking. Therefore, companies must follow an all-around approach to fortify their financial standing.
To empower trucking businesses, Pilot Company launched a collaboration with RTS Financial to blend Pilot’s gas services with RTS’ invoice factoring. This strategy can further streamline the cash flow process while speeding up access to financing.
Final Words
But while searching for funding and invoice factoring products business owners must strive to understand their financial service provider’s terms and fees. We’ve heard horror stories of trucking companies left unable to fend for themselves due to exorbitant fee and rates on products like Merchant Cash Advances.