Often, a trucking company experiences severe cash flow issues during times of transition. As part of the planning process, it is important to consider the benefits of Invoice Factoring, Fuel Cards and Load Advances from reputable invoice factoring companies to overcome the inevitable cash flow challenges.
Business transitions come in all shapes and sizes:
- Trucking businesses going through restructuring
- Bringing a new partner into your trucking company
- The changeover of the ownership of a trucking business when an owner retires
- Changing your customer market focus
- Rebounding from a tough financial year
What do these varied business transitions have in common besides change? They all affect your trucking business's demands on cash flow. That can include an increased demand for working capital to finance the change itself or a decrease in revenues as you adjust to the change. Often, it involves both.
Addressing cash flow issues during planned business transitions
Many of the transitions a trucking business faces are part and parcel of the growth and survival strategies to keep it healthy. In other words, they're planned. Often trucking companies fail during times of transition because they spend all of their time planning the process, assessing equipment and resource needs but precious little time considering how the transition is going to impact their cash flow.
Unplanned business transitions
There is a misconception that just because you don't see an obstacle coming at your business, you can't plan for it. While you might not always be able to predict the full impact of a sudden dip in market demand, for example, you still can have a back-pocket plan to provide cash flow in emergency situations. Any good business plan includes contingency planning. It's a "what if" thought process where you list the things that could go wrong in your trucking business and then create a plan for what you'll do when that happens. Part of that planning must include how you'll deal with cash flow demands and shortages.
If you haven't already performed your contingency planning for your business, it's time to meet with your accountant, business coach or mentor to talk it through (and create your plan).
When planning for the "what if" scenarios, be sure to have a clear plan on where you'll go for cash flow. That can include solutions like:
- A pre-approved business line of credit
- Business continuity insurance
- Creating cash reserves
- Freight factoring and invoice discounting your accounts receivable invoices
- Load advances
- A factoring line of credit (an exclusive product of Accutrac Capital)