Being the owner-operator of a trucking business is a costly endeavor. Everywhere you look, some expenses seem to be rising each day. Like attentive drivers, owner-operators need to stay alert at all times. But in owner-operators’ case, many obstacles are not as recognizable as debris in the road ahead. With that in mind, here are a bevy of tips, call them warning signs if you will, that can help owner-operators keep rolling along smoothly.
Trucking Business Tips for Total Cost Savings
Use a TMS to Manage Requests
A transportation management system (TMS) is a logistics platform that helps a trucking business execute all the tasks needed in transporting goods. A good TMS can help an owner-operator manage loads, automate International Fuel Tax Association (IFTA) reporting, and simplify your payroll. With it, you can set up and produce invoices and bills of lading. The TMS can also provide detailed reports and statistics. While having a TMS system will cost money to purchase and run, that cost should be more than offset by the time and money spent on daily office paperwork tasks that TMS will eliminate. It’s also important to note that not having a TMS system can cost an owner-operator clients who now want the efficiency and real-time notification of a data system.
Know Your Numbers
Keeping track of your numbers is the simplest way to reduce expenses. After all, you can’t really know where to save if you don’t know where that money is going. Let’s look at places to monitor closely.
- Cost per mile: Every trucking business owner-operator would want to know their cost per mile because that would help them figure out how much to charge for transporting a shipment and still reap a profit. But the truth is that many owner-operators don’t take the time to figure out their cost per mile. Taking time to track your trucks for a while will be worth it in the end.
- Track open invoices: Open invoices, or outstanding invoices, are invoices that have been sent to a client but haven’t been paid. Keeping track of them is essential because they help monitor the owner-operator’s cash flow. A client that hasn’t paid means you don’t have the money to recoup your costs. That money can’t be put into the next job. Also, if you are not keeping close tabs on what companies are late or not paying their bills, you aren’t able to see a pattern and determine whether it is worth the grief to continue to work with that client.
- Track accounts receivable: Like with open invoices, it’s crucial to know where that money is or whether the job has been paid. Accounts receivable are the payments an owner-operator will receive from clients who pay with credit. It is the difference between worrying that you don’t have enough money and being safe in the knowledge that money will be coming soon. That said, it’s still important, for cash flow purposes, to keep tabs on when the payment is due and whether it is indeed made at or before the deadline.
Work with Reputable Load Boards
Load boards have changed the world of owner-operators. Need to find out if a load is available for shipping? Go to a load board. But the key to success is finding the load boards you can trust. There are reputable ones out there, like ComFreight, with features that can make it easier for owner-operators to understand the process and assess what will work best for them.
Get Quick Pay Options
Quick pay is a payment option that offers owner-operators a faster way of getting paid from a broker. While quick pay involves a fee, you can be paid swiftly, usually within two to five days after the load has been dropped off. Other forms of payment can take weeks or, sometimes, months. For the owner-operator, having the money faster through quick pay means you will have the funds to pay for overall expenses or costs for the next haul. Not every broker offers the quick pay option.
Procure Access to Factoring
Factoring, also known as invoice factoring, is another way truckers receive payment much faster. In this instance, a factoring company deals with invoice payment processing and collection. Owner-operators relinquish a percentage of the amount they are owed to the factoring company. Owner-operators usually get paid within less than a week or even the same day of delivering a load. Like quick pay, this rapidly puts money back on the company’s books for future use. Another benefit is that factoring can eliminate time spent by employees on invoicing, following up on invoices, collections, or checking on payments. This will free up time in the business to focus on other areas, resulting in greater productivity and profitability. Factoring is making inroads with owner-operators, as these numbers prove: “The global factoring services market size was valued at $3,235.88 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 8.4% from 2021 to 2028. The current growth of the market can be attributed to the increase in open account trade,” according to Grandview Research.
Get Automated Back Office Tools
Back office automation can deliver more savings by replacing manual, off-system office processes with automated back office management software. Automated systems not only can complete tasks but also make business logic decisions previously made by employees. All this again opens up time for workers to focus on other duties. It also reduces paper use.
Some back-office areas where an office automation system can be effective include finance,
human resources, IT, marketing, legal, sales, and security. No longer will employees have to spend time and effort sending emails that request information that must be entered into another system. For instance, ComFreight’s automation with API can integrate with an owner-operator’s existing system and automate the user’s factoring, collections, payments, and risk mitigation.
Mind Your Cargo
Cargo theft can often be an expensive crime, and owner-operators need to be aware that truckers are often targeted by thieves. They must educate themselves on ways to deter those thieves. Cargo theft is a $15 billion to $30 billion a year problem in the U.S. So what can owner-operators do to not add to those massive totals each year? Here are some suggestions:
- When parking, try to back into a spot so that you leave little room behind you — it could be up against a building, a fence, or even another trailer — to dissuade or make it difficult for thieves to break into and remove any items. Also, make sure wherever you stop has heavy traffic and is well-lit, preferably with security cameras.
- Drivers are often targeted and followed before they make a stop. They should pay attention to vehicles around them throughout each trip. Slowing down to see if the suspected vehicle will pass is a helpful tactic, as is switching lanes. If those don’t shake the other vehicle, try pulling off at the next exit and parking in a safe spot.
- There are times when it pays to be extra cautious. Break-ins happen more often during holidays and on weekends.
- Making sure your partner is on the up and up. Some dishonest companies specialize in internal theft. It doesn’t hurt to do an extensive background check when working with a new company.
- It doesn’t hurt to beef up your security equipment. High-grade padlocks, bolted-door hardware and frames can be valuable assets in deterring thieves.
Keep an Eye on Insurance Costs
The bad news is that trucking insurance is very costly. The good news is that shopping around could result in saving quite a bit of money, possibly to the tune of thousands of dollars, for the owner-operator. Remember, outside factors such as credit scores, FMCSA’s SAFER scores, and driving records can impact insurance rates. The better those are, the better your insurance rate can be.
Fuel Saving Tips
With the rise in gas prices over the last few years, conserving fuel can make an even bigger impact on an owner-operator’s expenses.
Curtail Your Average Speed
For owner-operators, decreasing cost at the pump starts with how drivers handle their speed behind the wheel. You can reduce fuel consumption by traveling at certain speeds (55 mph to 60 mph). But any speed reduction can cut down on aerodynamic drag and keep a little more fuel in the tank. For example, a truck going 65 mph will have a fuel efficiency increase of about 27 percent compared to one traveling at 75 mph. Those fuel efficiency moves can add up to a great deal of savings in an industry that used 44.8 billion gallons of fuel in 2020. A speed reduction can also help reduce the wear and tear on a truck’s engine and tires.
Lease On to Get Fuel Discounts
Another excellent way to save is by working out a lease deal with a company that offers discounts on fuel. Much like fleet drivers, owner-operators can pull into major truck stop chains around the country and use the discount to save when filling up. Not all lease-on deals are the same at each company, so it is important to shop around for whoever can give you the best deal.
Employ Cruise Control
Cruise control allows a driver to keep a constant speed by reducing the number of times needed to accelerate or brake. In the case of acceleration, cruise control is also better able to increase speed gradually. This all means increased fuel efficiency. Using cruise control wisely on flat and straight highways in the right conditions xan helps control fuel costs. It provides another benefit: It reduces the temptation for drivers to go over the speed limit and may save another cost in speeding tickets.
Invest in an APU or Engine-off Climate Control System
An Auxiliary Power Unit (APU) is a power generator for 18-wheelers that provides energy to run the heater, air conditioner, and TV without the truck idling. With an APU, an owner-operator’s truck will consume .25 gallons of diesel fuel per hour. That is quite a savings when you consider consumption can be 1.1 gallons per hour without an APU. Added benefits include that not idling reduces air pollution, assures that you are not breaking idling laws, and extends the life of the engine. Engine-off climate control systems, which are self-contained systems that provide the juice for AC-powered devices, also offer a way to eliminate idling while still letting drivers enjoy the creature comforts.
Devise Detailed Plans for Your Trips in Advance
Planning the trip of each haul is the easiest way to save fuel, along with time and grief. A route that is well-planned in advance can prevent missed exits and wrong turns. High-quality GPS units are worth investing in to help an owner-operator find the best route, avoid getting stuck in traffic and reduce the excessive miles that consume precious fuel.
Maintenance Saving Tips
The truck owner-operator’s version of Benjamin Franklin’s famous quote would probably go a little like this: “An ounce of engine prevention is worth a pound of truck repairs.” That’s why inspections before and after every trip are a wise idea to suss out any maintenance issues that could turn into big problems. Preemptively taking care of potential issues before they happen on the road can help save costs related to towing and finding a mechanic that likely will charge more than the one who regularly works on your rig. Plus, keeping the truck in motion helps prevent shipment delays. Pre-trip inspections can have a twofold effect. If you keep your engine running well, it doesn’t have to work as hard and, in turn, uses less fuel.
If that engine appears to be reaching the end of its line and the owner-operator is toying with the idea of getting a new truck, that can open up another way to reduce costs. Instead of buying a new truck, consider leasing from a reputable company. Weekly payments for leasing a truck are usually higher than the payments that come with buying a truck. Still, the package that comes with leasing is often far superior, especially when it comes to the maintenance benefits. The chances of experiencing a maintenance issue are far less with a new truck than with an older one, and most leasing deals include warranties, meaning out-of-pocket expenses for a breakdown are less likely.
Owner-operators can save money on food costs as well. Here are three ways to cut expenses:
Purchase Cooking Equipment
It’s easy to get caught in the mindset that eating out is the only option when you are on the road. But that is not really the case if you put some time and a little money into it. Buying low-cost cooking equipment and cooking in the truck is certainly an avenue to consider. You can start with a mini fridge to keep food cold and fresh. From there, purchases could include a microwave, portable stove, crockpot, and electric skillet. It might even help you healthwise because you can now control the ingredients.
Opting for Prepared Meals
Maybe cooking in your truck is too much of a long haul. There is an option: prepared meals.
Pre-made breakfasts, lunches, and dinners can prevent you from stopping at fast food places during your breaks. All that’s needed is a mini fridge to keep your meals cold and a microwave to heat them.
Shop at Grocery Stores
If you are on a long haul and cooking in your truck, you might need to purchase groceries along the way. While grabbing your needed items at a truck stop might be more convenient, it will be more cost-effective to plan a trip to the grocery store. If you plan ahead and make a list, you can find a store with semi-truck parking along your route and quickly get the products you need. Grocery stores also have a lot more variety than most truck stop stores, so it will allow you to find some options that suit you more.
Other Tips for Saving
There are plenty of ways to save while being an owner-operator. Here are a few more to wrap up our savings spree.
Create a Budget and Don’t Waver From It
Expenses can get away from you fast if you aren’t diligent. Owner-operators trying to stay on point must create a budget that covers all operating and personal expenses. Adding a trucking expenses spreadsheet to determine your cost per mile is a good idea. On your hauls, keep track of all your receipts and make a note of every purchase. Those help you quickly see where, when, and how you spend your money.
Prevent Unnecessary Fees
With this focus on costs and expenses on the road, an owner-operator can forget that bills at home must be paid, too. It’s important to stay on top of them to avoid late payment fees. One way to prevent those fees is to set up as many automatic payments as possible for business and personal expenses. There is also the option of paying on your phone if you are not home before the bills are due.
Use Rewards and Points Programs
Like many places these days, from supermarkets to coffee shops, major truck stop chains now offer rewards programs to truck drivers and owner-operators. These rewards usually require no additional effort from drivers other than fueling their trucks. Owner-operators often can use the rewards or points for free showers, drinks, food, and discounts on other essentials from the truck stops.
Make the Financial Road Smoother with ComFreight
For trucking business owner-operators, the road is full of expenses and sometimes hidden costs. These money-saving tips will help make the journey a little easier. ComFreight, a digital payment and finance solution for the transportation industry, can also smooth out those financial rough spots by unlocking a client’s growth with innovative factoring and payment financing embedded in supporting software or integrated into the client’s existing systems. To learn more about ComFreight’s freight factoring and payments, as well as our load boards and API integration, visit our website.