While the transportation industry can be very profitable, running and growing a trucking company can be very challenging. Not only do you need to know the transportation business very well, you also need to be an expert at juggling and prioritizing the constant business demands. From managing drivers to managing loads, the tasks are never ending.
However, there are a few things you need to do very well if you want to succeed in this industry.
Find and deliver loads
Sales is the lifeblood of your business. This means you must find loads from reputable clients, and service those clients well. The best clients are those that offer repeat business, like grocery stores, certain freight brokers and other commercial clients. Developing these relationships will be key to your success and your ability to grow your trucking company.
You can also find loads by using trucking load boards like Getloaded and Transcore. These boards are very popular so you will find quite a bit of competition. They have value if you are just getting started and if you have spare resources. However, the real business and revenue comes from getting your own contacts and commercial accounts that provide repeat business. For more information, please read “How to use a trucking loadboard to grow your business” and “How to find profitable loads“.
Obviously, you will need to deliver these loads according to your agreements. Make sure that they arrive on time and that your client is satisfied with the service. Making sure your clients are satisfied is the key step to building repeat business from them.
Most company owners are trucking professionals who know everything about delivering loads on time. But if you are going to run a business, you will need to learn to manage it’s costs. You will need to make sure that your drivers get paid, on time. You will need to ensure that your trucks are in working order and have all appropriate maintenance. And, you will need to deal with the constant pressure of paying for fuel. Many truckers rely on fuel cards, from companies like Comdata, to provide their drivers with fuel money while trying to realize some volume savings.
However, managing your costs can be very difficult if your clients pay slowly. Slow payment can be common in the industry. You need to make sure that you manage your revenues and cash flow properly if you want your trucking company to grow.
It’s all about cash flow: using quick pays
There are two ways to get paid for loads. Many shippers offer quick pays and will pay for your freight bills in 10 days or less, often in exchange for a discount. However, if your shippers don’t offer quick pays, you will have to give them 30 to 60 days to pay their invoices. Be sure to check their commercial credit before you give them terms. The last thing you want is a client that won’t pay on time.
Regardless, waiting for payment can be very difficult. Especially if your business is new, growing quickly and you have not had the opportunity to build a cash reserve. This can create cash flow problems. And if you don’t manage your cash flow correctly, you could miss driver payments or run out of money to pay fuel and other expenses. It can be a quick recipe for disaster.
Factoring – the quick pay alternative
If you have customers that won’t offer a quick pay but has good credit, you can still work with them and get funds quickly by factoring your freight bills. This tool allows you to accelerate the payments that are tied in slow paying freight bills. It provides many of the benefits that you would get from quick paying clients, without having them pay any sooner.
It works by partnering with a factoring company, who acts as a financial intermediary in the transaction. The finance your invoices, provide you with the advance, and wait for your clients to pay. To learn more, please read “What is freight bill factoring?”
Using this financial tool correctly will allow you to take on new clients, even if they pay slowly, and grow your company.
One last word
One last word of advice, if you just started a new trucking company be sure to spend some time understanding the financial aspects of running a transportation business. Truckers have a tendency to focus on what they know best – finding and delivering loads – and can neglect the financial side of things. The problem is that if you neglect your cash flow, you will run into problems soon enough. Often, these problems will be serious and could threaten your ability to stay in business.
Get more information
Are you looking for factoring? We are a leading freight factoring company in Canada and can provide high advances at low rates. For information, get an online quote or call (877) 300 3258.