Of the 577,000 motor carriers in the U.S., 95.5% of them have 10 or fewer trucks per FMCSA’s March 2024 registrations. The trucking industry employs around 8.5 million people, not counting self-employed truckers.
While there are still well over 555,000 motor carriers in the U.S., almost 88,000 shut down in 2023. Higher operating costs and rising wages and benefits all play a role in these company shutdowns. The good news is there are also tight markets that make it easier than normal to find work. Landing that work is key. When there is a tight market and a lot of competition, how do you stay afloat? Partnering with TBS for a steady cash flow is one of the best ways to ensure your company’s stability.
You Must Stand Out Against Your Competitors
In a tight market, there may be more shipments than carriers, but that doesn’t mean the work is guaranteed. You need to stand out, and that’s not always as easy to do as you might think. A few things help you top the list of trucking companies in your area
Check out prospective clients to make sure you’re not being scammed.
Research brokers and shippers who are offering work. Check their business credit history. Look them up to see if the information you’ve been given matches what it shows online. You don’t want to accept a job, deliver it, and find out the broker you thought you were working for doesn’t exist and that you’ve been scammed.
Don’t be afraid to fill your trailer with multiple loads.
Sometimes, it makes sense to find partial loads going to the same area and avoid having a half-empty trailer on the trip there and an empty trailer on the return trip.
Have a strong cash flow.
A strong cash flow helps you avoid the unexpected. You’ve taken a job and have engine problems on the way there. If you don’t have the money for urgent repairs and can’t deliver the load, you put your business at risk.
Hire the best drivers and keep them happy.
Your drivers represent you at loading docks and on the road. Make sure you hire the best. Run background checks, invest in training, and establish a benefits package that keeps them from moving on to the competition without warning.
Keep your trucks in prime condition.
Your trucks have to get to their destinations. When you have mechanics inspect and maintain your trucks before each trip, you’re less likely to encounter problems on the road.
Maintain a high credit score.
Just as you should be checking the credit score of companies you deliver loads for, they’re checking your business credit report to ensure you’re responsible. Keep your credit score high by paying bills on time, avoiding too much debt, and growing your company responsibly to avoid taking on too much too soon.
Plan efficient routes.
Your drivers do their best when thought goes into route planning. Research construction projects, seasonal closures, and weather forecasts in advance. If there are potential issues, have a second route to recommend to ensure your drivers don’t run into long delays getting to their destination.
The Advantages of a Consistent Cash Flow
Many of the best ways to stand out among the competition involve having a strong cash flow. Freight factoring is an ideal way to ensure you have the money needed to invest in your trucking company and drivers.
If you’re not familiar with freight factoring, it’s a financial service where you get paid instantly instead of having to wait for a client to pay you. Send your bill of lading to the factor. Your factor processes your bill of lading and pays you a percentage of the money owed minus the freight factoring fee.
Freight factoring fees are very low, far lower than credit card interest. It’s typically a rate that’s less than 5%. It’s hard to pinpoint the exact rate as it depends on factors like these.
How much of an advance do you want? 80%, 85%, 90%, 95%… The remaining balance is held until your client pays the invoice.
Do you want a recourse or a non-recourse arrangement? With recourse, you have to pay back the money you received if your client doesn’t pay. Non-recourse offers a layer of protection against non-payment.
How many trucks are in your fleet? The more loads you haul and work you do, the lower the freight factoring rate.
If you have completed a load paying $8,000 and agreed to a factoring fee of 3%, you’d pay a fee of $240. It’s not a lot to pay to get the remaining $7,760. You won’t get it all right now. If you have an 80%/20% arrangement, you get 80% of the $7,760 as quickly as the day you request it. The remaining 20% will come later.
The benefit is that you no longer have to wait until the end of the month to send your client the invoice and wait for them to pay you. You have cash available for truck maintenance and repairs, driver salaries and benefits, and other expenses that you pay each month.
With that money coming in, you can pay bills on time, which improves your credit score. You’re not wasting money on late fees and higher interest rates on credit cards that you’re relying on. A positive credit score also lowers the interest rate you pay on credit cards and business loans.
Additional Services That Help You Navigate a Tight Market
Being able to pay your bills on time is one aspect of improving your status as the best trucking company in your service area. Freight factoring companies like TBS Factoring offer fuel discounts where you can save as much as 90 cents per gallon.
You get paid instantly. When you gas up at a participating station, you’ll get the discounted price. It may be taken off immediately, or it could be refunded to you at the end of the month. It depends on the arrangement that’s made. Either way, use that discount to invest in your trucking company.
The other perk you get with TBS Factoring are the free business credit checks. Before you take a job with a new client, run a credit check and make sure they have a history of paying bills on time. If you come across a client with loads of unpaid debt, you must reconsider taking that job. If that client owes a dozen other trucking companies, it’s unlikely you’ll get paid. Move on.
Doesn’t the thought of a steady cash flow and no more late payments sound wonderful? TBS Factoring is ready to answer your questions and go over the details in depth to help you get started maximizing profits, contact us today!