Planning your fleet’s route through the financial landscape of a year can be a daunting task - trying to stagger routine maintenance costs, registration, insurance, and more so you always have enough cash on hand to keep things rolling.
Even the best laid plans of fleet operators can fail to account for the costs of accidents, injuries, and other unforeseen circumstances. Keeping enough cash on hand to cover all your operating expenses can be a major headache, forcing you to make bad decisions about things like preventative maintenance.
The key to ensuring your cash flow is always healthy, allowing you to absorb any bumps in the road, is finding a great freight factoring partner to work with. A factor can pay 60-90% of your invoices as soon as your truck is empty, with the balance available when the customer pays for the trucking.
This service can cost between 1.5% and 5% of your linehaul revenue, but for many organizations that expense is well worth the benefits factoring offers. Let’s quickly look at some of the ways having a stabilized cash flow thanks to factoring can help your fleet thrive and grow.
Maintenance, Planned and Unplanned
Routine maintenance of your fleet on a healthy, regular schedule is one of the best ways to save money in the long run and keep the number of unpleasant surprise trips to the shop as low as possible. Finding the right schedule and sticking to it is the key to unlocking the benefits of routine maintenance, but without a stabilized cash flow a fleet owner can be faced with some hard choices.
According to PEAK Commercial & Industrial, when asked to identify the engine issues affecting productivity, fleet professionals noted corrosion as the leading issue (as reported by 42% of respondents), followed by scale (33%) and cavitation erosion (24%) - all issues that regular preventative maintenance can keep in check.
When an accident occurs and immediate maintenance is required, it’s easy to push preventative maintenance back. With limited cash on hand the decision between getting a vehicle back on the road immediately or preventing some possible future problem seems cut and dry - revenue you are losing versus revenue you might lose one day. Neither of these are the best choice though, which would be repairing your vehicle and keeping the rest of your fleet on its maintenance schedule.
Stabilized Cash Flow Opens Doors
“With freight levels up, fleets want to buy more trucks so they can get into more traffic lanes,” says Mary Ann Hudson, executive vice president of operations for Bibby Financial Services. “With freight levels up, fleets want to buy more trucks so they can get into more traffic lanes. Many fleets are finding they can tap their cash flow to grow their business. For them, it’s a new way to look at factoring.”
With a freight factor stabilizing your cash flow, you can confidently put your resources to work to grow your fleet. Every part of your operation can become easier when there’s more cash on hand to keep things moving.
For more information about starting your own trucking business be sure to check out this blog post: Thinking of Starting your Own Trucking Company?