Last year saw a rise in small trucking companies across the United States. Small trucking companies play a very integral part in supply chains by taking some of the burden off of large carriers during seasonal crunches, as well as offering those “last mile” services that customers are looking for. However, a number of these small trucking companies are juggling a lot of debt, which can place a severe strain on finances. Fortunately, there is a simple two-step strategy to reduce debt, preserve credit ratings, and improve cash flow for small trucking companies.
Taking Control of Debt
Small trucking companies usually have a number of liabilities on the balance sheet. Business loans, equipment loans, and even debt from lines of credit each come with varying terms, interest rates, and payment schedules. A good portion of revenue earned by small trucking companies goes to cover overhead costs and to repay loans, leaving very little left over for growth or business savings. Debt consolidation is the first step in getting finances under control. Debt consolidation combines loans so small trucking companies only have to make one manageable payment each month instead of making multiple payments, each with their own interest rates.
Improving Cash Flow and Preserving Credit Ratings
One of the biggest contributors to tight cash flow, apart from debt, is outstanding receivables. Since trucking companies issue invoices with staggered payment schedules of 30, 60, or even 90 days, waiting for revenue to trickle in while making sure expenses are covered can cause cash flow to grind to a halt, or even reverse. By using freight factoring, small trucking companies can eliminate the wait and get access to cash from receivables within 24 hours. Freight factoring does not place any debt on the books, and small trucking companies can preserve their credit ratings in the process. Large carriers use freight factoring to ensure a strong cash flow, and small trucking companies are making the switch to get fast access to capital and take advantage of growth opportunities.
Express Freight Finance specializes in freight factoring for trucking companies of all sizes. If you are looking to boost your cash flow and stop cash flow issues once and for all, contact the experts at Express Freight Finance today.