As the trucking industry moves toward 2017, independent operators and fleet owners are making preparations to file taxes. In order to adjust for sales made in December, and ensure accurate reporting for either the end of the fourth quarter, or the first, depending on the choice.
Early Payment Schedules
Some trucking entrepreneurs adjust their payment schedules near the end of the year to get early payments from their customers. The reasoning behind this is that all revenue will be accounted for before filing taxes after the end of the year. This can theoretically keep accounting records straight and clear when entering 2017. There are a few flaws with this plan, however. New customers do not always take kindly to condensed payment schedules, as they are used to payment periods of 30 days or longer. Additionally, regular customers may be so used to your regular payment schedule, so they may miss the new dates for remittance. The plan may seem great on paper, but real world practices can make things fall apart quickly.
Deferred Payment Schedules
At the other end of the scale, trucking companies use a deferred payment schedule near the end of the year. With this payment schedule, all invoices issued in December have due dates pushed into January. This option also allows truckers and fleet owners to balance books and square things away to make filing taxes easier. A deferred payment schedule also seems great on paper, but it also has its flaws. With due dates extended even longer than usual, trucking companies may experience a strain on cash flow heading into the new year. Waiting on staggered payments from customer can cause a strain on finances to begin with, and intentionally delaying them for the sake of accounting can only increase the strain.
Freight Bill Factoring
Instead of adjusting your payment schedule in order to make filing taxes easier at the end of the year, freight bill factoring offers a more manageable solution. Freight bill factoring gets fleet owners and independent truckers payments on open invoices within 24 hours. There is no need to demand early payments or push them into the next year. Freight bill factoring offers immediate payments without having to place the responsibility on your customers, or having to juggle finances until payments come in with the following quarter.
If you would like to learn more about freight bill factoring, and how it can help you with your end of year accounting and give you a healthy cash flow as your enter 2017, contact Express Freight Finance today.