Overhead Costs For Trucking Fleets: Building Cash Reserves

Overhead costs make up a large part of every trucking fleet’s budget. From payroll to fuel, maintenance, equipment, advertising, and more, covering overhead costs and retaining revenue can be a balancing act. However, there is a way to accumulate capital to cover overhead costs without having to resort to loans and similar financing programs.

Overhead Costs Can Cause A Strain For Trucking Fleets

The logistics involved in running a trucking fleet requires working capital. For fleet owners, the working capital to cover overhead costs come primarily, if not solely, from shipments for customers. The financial strain arises from staggered payment schedules, which are a standard business practice. Invoices from customers have aging periods of 30 days or longer. While staggered payment schedules may be a standard practice, for the trucking industry which runs 24/7, waiting on customer payment can cause a big financial strain. Many fleet owners ends up paying overhead costs from cash reserves that would otherwise go toward growth, or by cutting the number of drivers on the road. Some even turn to short term loans.

Short Term Financing Does Not Ease The Financial Strain

When fleet owners turn to short term financing to meet overhead costs, the relief from the financial strain is only temporary. Short term loans place debt on the books and impact credit ratings. When the loans are used, fleets return to the same spot, waiting on payments from customers. Only because of the short term loans, fleet owners have to meet overhead costs and pay off the balance of the financing to their lenders. In short, loans do not provide the right solution.

Freight Load Factoring Builds Cash Reserves

Freight load factoring is a financing solution designed specifically for trucking fleets. Freight load factoring eliminates the waiting period on payments. Invoices are submitted and converted to working capital within 24 hours, regardless of the amount owed. Customers still hold to their staggered payment schedules, but because freight load factoring is non-recourse, the responsibility of getting payments is taken off the shoulders of fleet owners. By using freight load factoring, fleet owners get immediate access to revenue, which they can use to build up cash reserves and meet overhead costs.

Stop Waiting On Payments From Customers

At Express Freight Finance, we specialize in freight load factoring to keep the trucking industry running. We provide cash on unpaid invoices within 24 hours, and a host of other benefits to fleet owners. Contact our team to get started today.