Despite the thick fog of pandemic fatigue that permeates many public spaces and homes, the supply chain is continuing to reveal that it cannot move on as quickly as others. Peter Tirschwell expanded on this in IHS Markit’s January 2022 paper, saying, “Ocean carriers and freight forwarders report that there are enough ships and containers to handle even the elevated demand. The problem is that so much of that capacity is idled or circulating more slowly. The result has been to take significant capacity off the table.”
Although this capacity reduction has not been felt by overworking fleets and owner-operators, the disruptions in the supply chain have affected the stability of their working capital and will continue to do so. So, how do owner-operators improve cash flow without an end in sight? Here are seven tips for doing just that.
1. Integrate All Systems of Record
Trucker fleet management members understand the vast amount of documents that go into moving every load. By integrating and digitizing all recordkeeping, fleets and owner-operators can minimize the opportunity for money to get lost with a missing document. Since many truck drivers must utilize various systems, integration to a central TMS or other document management system is vital.
2. Know Your Total Trucker Costs Per Mile
When individuals evaluate their budgets, most start by assessing their bills and other required payments. This method is similar when seeking how owner-operators can improve cash flow. Before trucking companies find and get paid for their loads, they must have an accurate estimate for their total trucker costs per mile to quote and invoice accurately.
3. Only Work With Pre-Vetted Brokers With the Right Creditworthiness
Trucker fleet management personnel can boost their cash flow by carefully choosing their partners. Carriers can vet out the inexperienced or unequipped broker by simply doing a credit check. Are these brokers prospecting shipper customers who pay their bills on time? What type of freight finance options is the broker utilizing, and are those available to the carriers who partner with them?
4. Eliminate the Hassle of Lengthy Payment Windows
One of the biggest challenges in transportation freight finance is the traditional lengthy payment window. Fleets and owner-operators alike can minimize this delay in cash flow by adopting current options such as freight factoring with a company like HaulPay. Freight factoring buys invoices from truck drivers, gets cash to them immediately, and removes the need to follow up.
5. Know Your Obligations for Full Payment
It’s essential to have a keen understanding of the shipper-carrier and broker-carrier agreements. What are the client’s most significant concerns? Some may have simple requirements for full payment, such as on-time delivery without damage. While other times, there may be specific stipulations such as loading and unloading, consistent route updates, and more. Trucker fleet management must always pass these obligations on to the drivers to maximize the likelihood of a successful haul with full payment.
6. Use Analytics to Understand Your Financial Health
Today’s supply chain specialists understand that answering how owner-operators can improve cash flow will always include analytics and logistics. Analytical tools provide automated data that instantly reveal missed patterns and actionable data for fleets and owner-operators. Correctly understanding a business's financial health is crucial to improving it.
7. Keep an Eye on Fleet Maintenance Costs and Needs Too
The costs of trucker fleet management are high in the maintenance department. However, preventative maintenance will always be less costly and more accessible to budget than sudden repairs. Those in charge of this aspect for a whole fleet, or just themselves, can improve their cash flow by removing unnecessary pulls from the working capital.
Boost Fleet and Operator Cash Flow Management With ComFreight
The struggles and successes of fleets and owner-operators often look different daily. One consistent thing is the desire to work with financial partners who are radically transparent, cost-effective, and fee lite. Request a demo of ComFreight’s HaulPay to get started improving your financial health.