10 Tips to Maximize Trucking Business Cash Flow

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10 Ways to Maximize Trucking Business Cash Flow

No matter the size of the fleet, trucking business cash flow is always important, and is often a top concern.  Here are ten tips that can help you run a leaner trucking business and maximize cash flow, so you can grow your organization.

6 Signs of Inadequate Trucking Business Cash Flow

Cash flow is important to every business – so much so that one of the most commonly used financial statements for any business is called a cash flow statement. Understanding the flow of money coming into, and going out of your business can bring eye-opening revelations, especially if you are experiencing symptoms that point to inadequate cash flow; such as:

  • Scrambling to fund payroll
  • Inability to take advantage of vendor’s early-pay discounts
  • Failing to meet investor’s expectations or repayment schedules
  • Not reducing long term debt or increasing equity
  • No reserves for emergencies
  • No money to buy new equipment or fund expansion

Last year we published an article titled Which Came First, the Chicken or the Cash Flow Problem in which we talked about the ten most commonly cited reasons new businesses fail, noting both their relationship to cash flow and the warning signs that might point to problems on the horizon.  Although we have published other articles with tips for running a lean trucking business, it is such an important topic that we thought it would be worthwhile to take a fresh look at the topic.  With that in mind, here are ten tips that can help you maximize trucking business cash flow so you can stretch every dollar and put it to work to help you grow your organization.

10 Tips for Improving Trucking Business Cash Flow

1. Raise prices.

If it’s been a while since you set or raised pricing, you may be surprised to find that some of your profit margins have been diminished or disappeared altogether.  Make sure you schedule a time each quarter to reviewing pricing and profit margins in relationship to not only current expenses, but long range plans and the competitive marketplace.

2. Improve upgrade and add-on sales.

You’ve landed a new customer – now what? Before you finalize a contract or sale to a new customer, make sure you aren’t leaving money on the table in the form of upgrades, additional services, expediting or add-on sales that could give you a bigger return on the cost of customer acquisition.

3. Cut costs.

No matter how lean business operations are, over time there will always be new ways to cut costs and eliminate waste. Along with scheduling a regular review of pricing or profit margins, set aside time each year to review line item expenses and look for those which are no longer needed.

4. Incentivize innovation.

This is a perfect example of a time when you should spend money to make money. Enlisting staff in coming up with ways to improve your trucking business, cut costs, become more efficient and eliminate waste is a great investment for the long term.

5. Speed up collections.

Yes, you can speed up collections (and expedite cash flow) by putting the pressure on your customers or setting up quick-pay discounts; but you can also get immediate access to unpaid customer invoices by factoring them with a top transportation receivables financing.

The minimal cost of invoice factoring (often from 1-5% of an invoice amount) may be more than offset by the competitive advantage you gain when you can extend longer payment terms to your own customers.  Factoring fees can also be more than offset when expedited cash flow means that you can take advantage of vendor and supplier’s early pay discounts yourself.

We would be happy to help you review our freight factoring program and even help you do the math, so that you can discover whether factoring would represent an overall cash flow gain for your trucking business – at no cost to you. Use the form below to request a free, no-obligation trucking factoring quote; you could go from approval to your first funding in hours, instantly expediting trucking business cash flow.

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6. Take advantage of trucking industry discounts and offers.

From group buying discounts to trucking industry offers and fuel discounts like Fleet Fuel Card and TruckersB2B programs, there are many opportunities for you to get more from every dollar you spend.  Sometimes the only investment that you will need to make to take advantage of these offers and discounts is time!

7. Eliminate petty cash.

Once upon a time, there were no trucking fleet fuel cards, debit cards, POS debit card readers and 24×7 ATMs, and it was smart for business owners to keep a little – or even a lot – of cash on-site for emergency use or to fund incidentals.  The problem with petty cash is that keeping track of where the money is actually going or removing the temptation to dip into it unnecessarily is no petty matter.  If maximizing cash flow is your goal, make sure that you can account for every dollar that is leaving your business.

8. Negotiate.

Some people have a natural talent for negotiating. For the rest of us, it must become a learned skill. Failing to negotiate (or at least find out whether there is room to negotiate) with vendors, investors, customers, lenders, landlords and other entities that impact your trucking business cash flow – in-coming or out-going – will nearly always mean that you spent money you didn’t need to spend or did not receive as much money as you could have earned.

9. Audit.

It’s easy to set it and forget it when it comes to vendors and suppliers. Make sure you have a time established, especially before auto-renewals or in the case of perpetual agreements where you will review terms, renegotiate, and compare other options.

10. Flex your muscles.

Cash flow represents buying power and leverage.  Make sure that you are asking vendors and suppliers for early-pay discounts and taking advantage of all that exist. Remember that factoring invoices can speed up cash flow, which could give you the ability to negotiate lower prices and reduce your expenses. These discounts may not show up on your cash flow statement or any other financial statements, but that doesn’t meant they don’t add up quickly.

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