How Trucking Companies Can Increase Profit Margins
Running a profitable trucking company takes more than just being a great truck driver. You can be a veteran in the trucking industry, but running a trucking business is challenging if you lack cash flow. Working in the transportation industry can be cutthroat, which is why we are here to make things easier for you. We have compiled some of the best tips on how trucking companies can increase their profit margins.
Have consistent cash flow
Cash flow is a common issue within the trucking industry. Brokers and shippers typically have payment terms between 30 and 90 days, which creates scenarios where truck drivers are low on cash as they have to wait to get paid.
Take advantage of invoice freight factoring
Freight factoring is one of, if not, the best options when it comes to getting consistent cash flow for truck drivers. It is affordable, quick, and easy to utilize. Here are the top benefits of using freight factoring services for your short and long terms goals:
Instant access to consistent cash flow: The best freight factoring companies will pay you within 24-hours on every freight invoice you submit.
Quick and easy approve process: Even if you have little to no credit, most freight factoring companies will still work with you and get you approved far quicker than getting a loan through the bank.
Free credit checks on your customers: A freight factor is receiving their money from your customer, which is why their credit matters and yours doesn't. You'll avoid working with bad debtors who are unlikely to pay when working with a factoring company.
No new debt: Since factoring isn't a loan, you acquire no new debt. You're simply getting the cash you already earned, but quicker.
Excellent customer service: Most factoring companies will also offer billing and collections services. You don't need to waste time chasing payments; your factor will do it for you so that you can focus on your company profit.
Back office assistance: Most factoring companies will also offer billing and collections services. You don't need to waste time chasing payments; your factor will do it for you so that you can focus on your company profit.
Save on fuel expenses: It's essential to choose a factoring company that offers a fuel card program with nationwide discounts so that you can save thousands of dollars per year.
Access to profitable loads: Factoring companies sometimes also have partners in the dispatching industry to find their clients loads.
Find brokers and shippers that offer quick pays
Some brokers and shippers will offer quick pays on their loads. However, not all have this option. Some trucking companies run with the same network of brokers and shippers that offer quick pays, and therefore always get paid quickly. If you do not have this option, relying on quick pays can be more difficult as you have to be selective. You may have to turn down a higher paying load because the broker doesn't offer a quick pay and you cannot wait for the lengthy payment term. It limits who you can work with and what kind of loads you can run. As stated above, a factoring company pays you in 24-hours on every invoice from multiple creditworthy brokers and shippers.
Take out a small bank loan
A bank loan can get you the cash you need to operate your small business and keep your trucks on the road until your freight invoices are paid. If you qualify, it can be a good option. However, many trucking companies, especially newer ones, don't often qualify. It's a must more lengthy approval process, and you need to have a good credit score. It's also important to remember that you will be acquiring new debt with a bank loan. Typically, you'll get a loan because you're short on cash. So, paying it back will put you right back at square one.
Reduce your costs on fuel
Everyone in and around the trucking industry knows that fuel is a trucking company's largest expense. Truck drivers spend thousands of dollars a year on fuel, so it is highly recommended and beneficial to take advantage of fuel savings whenever possible.
Never pay full price for fuel
Fuel cards are being offered to truck drivers for a reason. Take advantage and utilize them. Multiple companies offer fuel cards, including factoring companies. Fuel card programs provide truck drivers with discounts on fuel, services, and other benefits at truck stops nationwide. It's important to know all the discounts and benefits you get with your fuel card program to utilize it properly.
For example, Porter's fuel card provides its users with thousands of dollars in savings per year at more than 14,000 truck stop locations nationwide.
Increase your revenue
Improving your cash flow and reducing costs will both assist in you increasing your revenue.
Know where you're getting your loads from
It's important to know and plan where you are getting your loads from. If you don't plan your loads, you may end up running a load that costs you more in fuel than you're going to make. Once you build relationships with brokers and shippers, your loads will become more consistent and profitable.
Use load boards and brokers to find new customers
Finding new customers is great for building relationships within the transportation industry. One way to do this is by utilizing load boards and/or brokers to find additional loads. Porter offers its clients a dispatching database for 250+ of the top brokers with the industry's most profitable loads.
Working with a freight factoring company like Porter will improve your cash flow, reduce your fuel costs, and in turn increase your revenue. Get your free quote today to learn more!