How to Increase Cash Flow for A Newly Started Trucking Business; We cannot stress enough the importance of cash flow, regardless of how small or large a trucking company may be. Cash flow is vital to every business, including the trucking business. It can involve anything from cash to checks to PayPal payments.
Customers may take 30 to 90 days to make payments in the trucking industry. Being a truck owner, waiting for payments from your customers for such a long time can be a little distressing. Delayed cash flow can significantly hinder your business.
Since truck owners have to look after several expenses, and with an extended waiting time for money, it can become increasingly difficult to pay for the same expenses. However, they can increase cash flow by following simple steps and identifying where they need to make major changes.
One of the best ways to increase the cash flow is to automate business operations using an advanced TMS solution. For example, LoadStop TMS can help trucking companies maximise cash flow and increase the bottom line.
Let us go through some basic steps to learn how to increase cash flow for a newly started trucking business.
Reduce Fuel Expenses
Fuel is one of the most significant expenses for every trucking company. Ironically, no trucking business can operate without it. But you can take the necessary measures to try to reduce fuel expenses.
The first step towards reducing fuel costs is training your drivers to slow down the speed of the vehicles. They should drive about ten mph slower than usual, slowly accelerate, and gradually slow down. Incorrect driving behaviours such as harsh braking, slamming on the brakes, idling, and aggressive accelerating can burn the fuel.
Drivers should also be educated to avoid longer routes. By using advanced technology and telematics, drivers can search for the quickest and shortest routes and find the lowest fuel rates around their location to look for the best places to fill up the tanks.
Another best way to reduce fuel expenses is to avoid traffic and idling time. It is recommended for drivers to take the backroads during peak hours or drive early in the morning or late at night to prevent dealing with traffic jams.
Cut Down on Maintenance Costs
One of the best ways to increase cash flow for your newly started trucking business is to look out for high maintenance costs and try to cut them down. You must never miss out on basic preventive maintenance schedules.
Ensure you frequently change your oil, replace your seat belts, rotate your tires, check the headlights, inspect AC lines, etc. By providing scheduled maintenance to your fleet of vehicles, you can increase their lifespan and keep them in working condition for longer without having to replace them anytime soon. This will also reduce the risk of breakdowns on the road.
When you bring your maintenance costs down, you can save a lot of dollars and expect a better cash flow for your trucking business.
Save Food and Lodging Expenses
Newly started trucking companies can often spend a lot of money while trying to figure out what works for them and what does not. They often let their drivers sleep in the motels and order food from the restaurants that fall on their way.
That way, truck owners waste a lot of money on food and lodging expenses. The only way to eliminate these major expenses is by asking drivers to sleep in their rigs instead of motels. It would help if you also asked them to pack food and beverages for all their trips instead of dining at the restaurants.
Pay some amount to your truck drivers and ask them to buy their groceries and snacks before starting their journeys. Purchasing food items in bulk can provide your business with major savings. You won’t have to hand over extra money to your drivers to buy expensive fast food meals whenever they become hungry while driving.
Optimise Your Trucking Business
It is important to optimise your trucking business. Optimisation increases operational efficiency. With the help of the latest technology, you can keep your trucking business ahead of your competitors. Using electronic logging devices (ELDs) allows you to keep your trucking business efficient.
You can also consider optimising your fleet of vehicles, i.e., providing regular preventive maintenance to your fleet. As a result, this will reduce the risk of unexpected repairs and breakdowns in the future. Effective and reliable transportation management software (TMS) can help you with dispatching, expenses, maintenance, and IRP and IFTA reports.
With a solid TMS solution, you can manage your trucking business and track all your expenses efficiently. At the same time, you can get complete 360-degree visibility into your shipments, drivers, and trucks.
Customer Due Diligence
Customer due diligence or evaluating new customers for your business is essential. In case another business hires a trucking company to take care of all its transportation needs, the trucking company should be able to evaluate the customer’s risk profile.
Before providing services to a customer, a trucking company should determine its risk profile. Truck owners should know how much risk they are willing to take in a new business relationship when conducting customer due diligence. If a customer has a history of late payments, poor credit, unpaid bills, or other factors, it can be too risky for the trucking company to take them as their customer.
It is noteworthy that due diligence does not end when forming a new customer relationship. Truck owners should maintain detailed customer records that they can use to determine which customers are problematic. Every truck owner should determine whether certain customers are an asset or a liability to the company.
Follow Up on Your Payments
One of the easiest ways trucking companies can increase the cash flow is by following up on their payments or invoices professionally and politely. Typically, most customers make the payment after only receiving one reminder.
With the help of advanced technology, you can generate multiple invoices in one platform and send them across to your customers. For example, advanced cloud-based TMS helps ensure fast, easy, and seamless invoicing processing, leading to an increased cash flow and an improved organization.
Author Bio:
Anees Shami is an SEO Specialist at LoadStop TMS with around 8+ years of experience. He is passionate about marketing and helps to rank higher in SERP. He has made an immense contribution as an SEO Consultant. Other than his professional life, Anees loves to travel and discover new cultures and places. He loves to express his thoughts through writing.
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