Debt seems like a necessary evil in the trucking industry. Trucking companies take out loans to purchase equipment, expand facilities, and even use short-term loans to overcome cash flow issues. One New Year’s resolution trucking companies should make is to pay down or eliminate debt to better position themselves for long-term success.
1. Check Your Credit Report
A credit report holds much more information than a score. Credit reports show outstanding balances owed to creditors, and occasionally, they contain mistakes. Every month or so, trucking companies should go over their business credit reports to see if anything is owed, to start paying off those balances and improving the bottom-line ratings. If there are mistakes or lingering balances which have already been repaid, contact your credit agency of choice and get those red flags removed.
2. Consolidating Debt
Trucking companies take out loans for a number of reasons, and it is not unusual to have multiple loans listed on the balance sheet. Making multiple payments on different loans, each with its own interest rate, can create a headache for accounting and place a strain on cash flow. Debt consolidation combines all of those loans into one simple loan with manageable monthly payments and low interest rates. Additionally, most debt consolidation services will remove those nagging calls from creditors reminding you to make payments on your outstanding debt. Some debt consolidation loans have no prepayment penalties, so trucking companies can pay off the debt well ahead of schedule without incurring additional fees.
3. Build Up Working Capital Reserves
To alleviate the cash flow strain of paying down debt as well as other expenses, trucking companies need to build up their working capital reserves. But if a good portion of revenue to going to creditors, holding onto revenue can seem like a challenge. By factoring receivables, trucking companies can get access to revenue faster. Factoring converts receivables to cash in 24 hours, so trucking companies can boost cash flow, pay down debt faster, cover expenses, and build up working capital to grow and get ahead.
Express Freight Finance is a leader in factoring services for the trucking industry. Our team will work with you create a factoring strategy tailored to your needs, and provide your trucking company with a host of tools to manage your account and check up on the creditworthiness of your clients. Contact our offices today, and start reducing your trucking company’s debt in 2020.