Preparing for as many eventualities as possible is a constant battle for transportation companies. When the forecast brings bad weather, plans often have to alter. Any delay in the delivery process can cause a delay in payment, which can in turn contribute to cash flow problems.
In a recent blog from The Road, Todd Smith, the Vice President of Sales for Leonard’s Express explains the impact on trucking companies when it comes to winter weather. The blog obviously states that safety is a number one concern, but goes on to discuss the financial and logistical challenges resulting from bad winter weather, such as:
- Delivery delays
- Potential product expirations due to late delivery
- Equipment shortages due to accidents or failing parts
- Scheduling chaos
- Hours of service problems due to drivers maxing out on hours
- Added fuel costs due to increased miles to circumvent weather
Delays of this sort can lead to disgruntled customers who are expecting an on-time delivery. Preparing customers for the possibility of delays is obviously crucial. A bad storm not only impacts the roads in the immediate area, it has a domino effect on the whole delivery route. The end result can mean days of productivity lost, and this can lead to a large financial hit not only to the trucking company, but to their customers also.
Coping with a financial hit of this nature can be devastating to a small to mid sized trucking company. Similarly, delays in payment on invoices from customers can contribute to a cash flow crunch. One commercial form of financing that can help greatly with on-time payment is invoice factoring.
Invoice factoring for trucking companies is also known as freight factoring. This form of financing allows trucking companies to receive cash now for work already completed, but not due to be paid straight away because of extended customer terms. Bay View Funding has been helping trucking companies for over three decades through this simple process. Outstanding invoices are purchased from the trucking company, minus a factoring fee, providing cash now for the purchased invoices due to be paid later.
It is impossible to prepare for every eventuality. Trucking companies know they have to deal with the inherent complications bad weather brings, but from a financial perspective, accounts receivable financing can help maintain a regular payment schedule so it is easier to forecast cash flow.