Why do businesses fail?
According to a US bank study, 82% of businesses fail due to poor cash flow. Not because of their customer base or their service capabilities, but because they had a cash flow problem.
As the owner of a small trucking business, you know cash flow trouble will keep you up at night. It’s a very real problem that all trucking business owners face. Planning and preparing ahead for business cycles are critical to owning a successful business.
Invest in cash flow management
Seriously consider investing in processes (or software) that will help you manage your company’s cash flow. Business owners often have problems because they failed to pay attention to the details involved in managing their cash flow. Things to consider:
- Create an easy to read invoice that states your payment terms.
- Acquire a system for sending invoices out promptly and one that can help with budgeting and managing cash flows.
- Invest in people to aggressively managing your accounts receivable.
- Or consider outsourcing billing & collections. Contact reputable accounts receivable factoring companies (that specialize in the trucking industry) to discuss options.
Running a trucking business is hard work. Any trucking company owner can tell you that when your business takes off, billing and collecting will end up taking a back seat to getting the freight moved. But growing quickly can be dangerous. Before you know it, you can find yourself with lots of revenue, but no cash to pay bills with.
You should consider establishing a monthly meeting with your accountant. Have him/her provide you with a monthly statement of cash flows and a prediction for what to expect in the weeks and months ahead. It’s much better to know what’s coming than to suddenly find yourself drowning in it.
Sooner or later a time will come when your cash-on-hand won’t cover operating expenses. That’s especially true for trucking companies that are exposed to business cycles. Plan ahead and have a way to access cash! No one intends to get caught in tough times, but we should be prepared for it.
Factoring your freight invoices creates immediate cash flow and is a service you may want to know about. For more information about invoice factoring as a cash flow solution for your trucking business, visit www.truckingpartners.com.