Small carriers may not have the pull or volume of businesses of larger fleets, but they can do things that large trucking companies can’t. Small carriers can provide “last mile” services. This has been crucial during the COVID-19 pandemic, and will likely become a standard business practice even after the virus has moved on.
Small carriers can also offer support for larger fleets, as evidenced during periods of high demand in 2016 through 2018. But just like every trucking company, small carriers depend on cash flow to keep operating.
However, staggered payment schedules consistently cause gaps in revenue that can place small carriers in precarious financial positions. By eliminating staggered payment schedules, small carriers can keep operations rolling and make plans for growth.
Small Carriers and Cash Flow
Small carriers rely on a steady cash flow. Shipments yield receivables. Receivables yield revenue. Revenue helps to pay drivers, cover liabilities, and allows small carriers to grow. Staggered payment schedules theoretically ensure that cash flow is steady.
In reality, staggered payment schedules can cause gaps in revenue. When receivables have payment schedules of 30 days or more, it creates a situation where more capital is leaving the company than coming in. To help speed things up, carriers rely on a tried-and-true solution.
Freight Factoring for Small Carriers
Freight factoring eliminates staggered payment schedules for small carriers. Freight factoring is a very simple process that turns unpaid receivables into cash in a single day. This allows carriers of all sizes to stop waiting on payments from clients and brokers and get fast access to revenue.
Freight factoring boosts cash flow without placing debt on the books, so trucking companies can pay their drivers, cover their liabilities, and build up capital for growth. Best of all, factoring is not a loan, so carriers can maintain cash flow without needing short-term loans to smooth over uneven revenue cycles.
At Express Freight Finance, we provide comprehensive factoring services to carriers of every size. If you want to boost your cash flow and eliminate staggered payment schedules, contact the team at Express Freight Finance today.