Multi-pronged approach of truckers to cash flow
With economic difficulties showing no bias, companies across all industries are still reeling from the continued volatility of the pandemic market. The trucking industry is no exception, even in the midst of a continuing increase in digital commerce activity and, consequently, shipping and transportation needs.
Fluctuations in freight rates, late payments and high costs can put a strain on trucking companies, especially small businesses and self-employed drivers. While many businesses and retailers struggle to manage their cash flow, late payments to their trucking service providers have created a capital backlog, adding pressure on supply chains.
Congress’s impending stimulus package could help ease some of these pressures on cash flow. According to CCJ Reports, the first cycle of Paycheck Protection Program (P3) loans transferred $ 12 billion into the pockets of trucking companies, and it is likely that truckers will move again to get their share of the next cycle of funding.
But that may not be enough – and according to Andy Lupo, vice president of strategic partnerships at Pilot Company, truckers should adopt a variety of strategies to alleviate their financial stressors. Speaking to PYMNTS, Lupo explained how a mix of cost-cutting measures linked to external financing tools can support the trucking industry during a turbulent and uncertain time.
Between driver salaries, high fuel costs, and unforeseen expenses for things like truck maintenance and repairs, keeping a trucking business profitable isn’t easy, even though transportation costs increase.
At the same time, organizations often withhold payments from their trucking suppliers in order to bolster their own financial situation, putting fleets in a bind. In Australia, CreditorWatch’s research revealed how hard hit the trucking industry amid the pandemic, seeing a 500% increase in late payments as the average bill payment 15 days late in 2019 rose to 90 days late in 2020 .
Not only does this strain finances, but it creates an even deeper lack of transparency and predictability as to when truckers will see money pouring into the company. As such, truckers and fleet managers need to be flexible and dynamic in how they reduce costs and increase margins.
“Truck fleets operate on tight margins, and any area where they can save on expenses or streamline their operations helps significantly,” Lupo said.
There are opportunities in fleet cards and other credit products that can connect truckers with rewards programs or fuel discounts, as well as in external finance products, which are important tools for the industry today. hui. Factoring can be particularly beneficial, given the late payment habits that plague the industry.
“Given these slow payment trends, which have impacted fleets of all sizes [as well as] With new carriers entering the market, factoring has become essential to keep businesses on the road, ”Lupo added.
There are no quick fixes to cash flow problems, so trucking companies should take a multi-faceted approach to strengthening their financial positions. In an effort to help the industry do so, Pilot Company recently announced a partnership with RTS Financière to combine Pilot’s refueling services with RTS’s factoring product. This bundling approach can provide a more streamlined approach to managing cash flow, Lupo said, while accelerating the pace at which end users can access finance.
However, it is important that trucking companies are aware of the financial service providers they work with. Earlier this month, reports revealed that a Georgia trucking company has filed a legal complaint against a merchant cash advance company, 800Fund.com, over allegations of excessive fees and costs. This matter would have been settled.
There is a range of financing options available to truckers today, from cash advances from traders to factoring solutions to PPP loans. Understanding the right mix of products can ensure that trucking companies, especially small farms, can move business forward for the benefit of the economy as a whole.