Four Cash Flow Tips for Small Trucking Businesses

Four Cash Flow Tips for Small Trucking Businesses

Accutrac Capital 26-Jul-2013 0 Comments

As the owner of a small trucking business, you know that limited cash flow is the kind of unwanted trouble that will keep you awake at night. Yet, it's a real problem that every small trucking business owner faces. Planning and preparation for challenging financial times are key to a successful business. Contacting reputable accounts receivable factoring companies that specialize in freight transportation is just good preparation. 

Here are four cash flow tips specifically for the small trucking business owner.

Invest in cash flow processes and resources

It may seem counter intuitive, but the best way to start off is to invest time and money into the people, tools and processes that will create, track and manage your cash flow. That's because most small business owners experience cash flow problems because they don't pay attention to the details involved in managing their cash flow. These can include such things as:

  • the creation of a simple and easy to read invoice that clearly states payment terms and options
  • a system for sending invoices out promptly so your customer can pay you promptly
  • a system for budgeting and predicting cash flow so you don't resort to knee-jerk reactions when blindsided by a sudden cash flow crisis
  • a system for determining the amount of credit and payment terms that you'll offer your customers
  • the people, tools and processes for following up on accounts receivable to reduce the number of days it takes to get paid

Beware the business owner who thinks that they can do everything

Unless you've a strong financial background, as a trucking business owner, you're probably the last person who should be performing all cash flow follow up. For one thing, running a successful and growing business is hard work. To keep it at peak performance, you need to concentrate on growing it. Any trucking business owner who's tried to wear all hats will tell you that once your business takes off, invoicing and following up on receivables always takes a back seat to getting the job done. In a short period of time, you find yourself with lots of sales, but no cash in the bank. Start out right by hiring someone to help you with receivables management. Whether you choose to perform these functions with in-house staff, or outsource them to a professional receivables management company, investing in the resources pays great dividends with better managed cash flow and reduced bad debt and chasing receivables.

Keep your finger on the pulse of your cash flow

As problematic as the trucking business owner who tries to wear all hats and do everything, is the business owner who delegates important financial functions and then completely forgets about them. Have a system for regularly reviewing where you stand with cash flow. That can be a monthly chat with your company accountant who gives you a summary statement of cash flow today and what's predicted over the next month and quarterly.

It's better to know when you're most likely to experience a cash flow problem than to suddenly find yourself neck deep in it. Which leads to the fourth cash flow tip:

Have a back-pocket plan to see you through cash flow lows

It doesn't matter how well you plan or how successful your small trucking business is, a time will come when your cash-in-hand won't cover your operating expenses. That's especially true for trucking companies that service customers with seasonal businesses. Have a place to go for cash when you hit those cash flow lows. Solutions can include:

  • In times of cash flow excesses, set aside a cash reserve to be drawn upon when needed.
  • Pre-arrange a business line of credit. Remember, the best time to organize a line of credit is when business is good and you don't need it. Where that's not an option, consider a factoring line of credit.
  • Freight factoring your invoices will create immediate access to cash.

By having a deliberate, well thought out plan for managing cash flow, you'll minimize the impact to your business and reduce those sleepless nights worrying about cash flow.

For more information about invoice factoring (invoice discounting) as a cash flow solution for your trucking business, visit www.accutraccapital.com.

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