It's Always About Building Relationships
 

• Start by building strong relationships with current customers. When supply is limited, you want to make sure they're calling you first. 

• Equally important is to diversify your customer base. Relying too much on business from one customer can increase your risk if they begin to experience challenges like a reduction in demand or loss of contracts. You may also experience a large claim,  limiting  your ability to haul loads for them. Keep your concentration at 25% or less. This will also make you look less risky to current or future financial partners. 

 

Maximize Your Savings
 

• Optimize your fuel efficiency by defining and managing a regular maintenance schedule. This will save you money in the long run and allow you to maintain clean inspections and above average safety ratings. 

• Revisit your vendor relationships. Are there subscriptions or services that you're not using anymore that you can eliminate or scale back? 

• Save on expenses. Do you have an existing fuel discount program? Do your drivers route plan based on those potential savings at network stops? There are several apps – mostly through your fuel card providers – that can help optimize fuel savings. 

• Embrace the technology boom in freight. Over the last few years, there has been significant investment and innovation in the freightech space. Look for ways to level up your operation with technology. Reach out to other trucking companies to see what they're using in their day-to-day that you can use for your business. 

• And finally, you should always have a contingency plan, so you are prepared for times like this. How much are you able to save each month in order to bridge toward a freight recovery?     

 

Maximize Your Cashflow
 

On average, truckers are on the road 200+ days per year and many times cannot wait 30 to 60 days to get paid from their customers. Factoring can offer you peace of mind and transparency when working with credit-worthy brokers. Thousands of truckers turn to factoring for predictable funding and a consistent, immediate influx of debt-free capital to maintain their operations. A driver can finish a load, upload the bill of lading and rate confirmation to the factor, and they can get you paid on the same day. This allows drivers to keep their fuel tanks full, drivers paid and puts literal food on the table for themselves and their families.

 

For some, factoring is a bridge between economic cycles. Perhaps their credit line has been reduced or withdrawn by their bank. For others, they leverage factoring as a long-term financial tool that taps into their accounts receivables for fast financing. In seasons of high demand, trucking companies could leverage the capital for buying or upgrading their equipment.   

 

 

Different than traditional financing options, factoring reduces your administrative headaches and even costs. Factors handle your back office services like billing your customers, managing collections and handling the payment posting. 

 

Many factors also provide pre-load insights on potential clients (debtors) to protect trucking companies for running for non-credit worthy or slow-paying brokers. 

 

All totaled, factoring services frees you to focus on your business, rather than worry about when you're going to get paid. Many trucking companies working the spot market can work with several brokers a year.  For smaller operations, chasing yesterday's money is far more costly than focusing on booking today's load.  

 

When considering working with a factoring company, think about the total solution they are offering your business, and what that would cost for you to do on your own. That nominal factoring fee is an investment in your business and adds a team of experts and people behind you. 

 

 

We've covered some of the basics of why trucking companies leverage factoring. Compared to other financing options, factoring is the better option for the transportation industry. During times like these, companies have difficulties holding onto bank facilities where financial covenants are tough to withstand. 

 

Even worse, finding quick cash from an MCA (merchant cash advance) company is extremely expensive and places additional burdens on the trucking company that already faces tight profit margins. As mentioned, there are factoring companies that offer fuel discount programs that potentially offset the cost of factoring. When inquiring about these programs, you should ask about the savings comparison against the cost of factoring. Some factors even offer access to bundled services like insurance and equipment finance. It can be a great one-stop-shop for carriers. 

 

The road to recovery is around the corner and factors are here to help in the best of times and the worst of times Keep trucking. The world depends on you and what you do matters.