Once the holiday season ends, many within the transportation industry experience a slower time of the year. The loads that have kept you busy dry up, and it’s hard to find enough work to keep your company profitable.
Even if you have enough work, winter itself can be a major problem with ice and snow impacting how quickly you can get from Point A to Point B. One accident can destroy your truck and leave you with massive debt. How do you survive the winter in the trucking industry?
It’s time to better understand the benefits of freight factoring and how to use it to avoid risk and maximize profit. When you partner with TBS, you’ll have a wealth of benefits that make it easy to stay strong financially all winter.
Understanding the Challenges the Trucking Industry Faces in the Winter
One of the biggest challenges you encounter in the winter is seasonal fluctuations. With the holidays over, demand for holiday supplies, presents, etc. dwindles. Some sectors remain busy, but deliveries of holiday hams, beef roasts, or turkeys come to an end. You’re not going to have a lot of work delivering pallets of the hottest toys.
Until the gardening season picks back up, the trucking industry slows down for some and eats into the savings you’ve built throughout the year. This heightens competition, too. More trucking companies are competing for the limited loads that are available. Having access to a load-finding app is essential.
Winter driving is also a challenge. While plows and maintenance crews do what they can, you can’t stop a snowstorm or freezing rain from happening. All it takes is one weather event to create icy roadways. The loss of traction can lead to massive pile-ups.
There are things you can do to prepare for wintry roads, but it’s not a guarantee that you’ll avoid a crash, jackknife, or slide-off. Chains help though it’s work getting them on and not every state allows them. Having good tread on your tires helps a lot. Also, make sure your drivers know how to drive on icy roads and when to pull off and wait for plows to go through.
Have emergency supplies like flares, a shovel, and blankets or extra clothing to buffer against the cold. Non-perishable foods and bottles of water are also important. If your driver ends up off the road and must wait for tow trucks to clear a large pile-up, staying warm and nourished helps.
Make sure your trucks are maintained. You don’t want a driver running out of windshield washer fluid on slushy roads. Tires need to have tread and be properly inflated for the conditions. A battery needs to be in good shape and not at risk of losing the charge and preventing the engine from starting in brutally cold temperatures.
There are things you and your drivers can do to stay safe while driving. It’s also important to keep profits coming in as quickly as possible. That’s where freight factoring helps.
What Freight Factoring Is and How It Works
Freight factoring is a service specifically for the transportation industry. Instead of waiting weeks to get paid, you deliver your load, whether it’s a trailer full of fresh produce or a FEMA load following a catastrophic storm. Finish up by submitting the bill of lading and get paid as quickly as that same day.
Typically, you’d return to your office, hand over a bill of lading for your office workers to generate an invoice, and send it to your client. You then must wait for the client to pay that invoice, which might not be until the end of the month. Waiting weeks for payment is stressful. Plus, they could shut their business unexpectedly leaving you at a loss.
With freight factoring, you send your payment request to the factor for processing. Once approved, payment is remitted immediately. You often get that payment on the same day your driver delivered the load. Even if you miss a daily cutoff, you’ll have payment within a day or two at the latest. Stop waiting weeks to get paid for the hard work your company did.
Freight factoring is advantageous because it allows you to create a steady cash flow. You’re not stuck in a pattern of sending an invoice and waiting weeks. You have money continuously coming in.
Plus, there are additional services that help you retain your profits, such as discounted insurance plans, fuel discounts, and less burden on your office workers. Instead of spending hours every day calling to ask if payments have been sent, they can focus on important tasks like finding more work, making sure current clients are happy, and planning efficient routes while monitoring road conditions and weather events.
How Freight Factoring Helps You Maximize Profits All Winter
What exactly does freight factoring do to help you maximize profits? First, it enables you to get cash immediately. Your broker or shipper may not pay for a month or two, but it won’t matter to you. You get paid immediately and can keep up with bills, fuel costs, and truck repairs and maintenance.
When you have the cash you need to keep your business running, you avoid late fees from your creditors. It prevents banks and financial companies from raising interest rates due to a lower credit score. Lower interest rates go a long way to helping you save money and make you look more appealing to new clients.
With stronger finances, it’s easier to afford a new truck if one is needed. You also have the steady income needed to add to your fleet if you want to expand your business.
One of the biggest perks to a freight factoring arrangement is that you get fuel discounts. At TBS Factoring, discounts of up to 90 cents per gallon are possible if you fuel up at the Comdata or EFS participating stations. After just 100 gallons of fuel, you’ve already saved $90. Fuel savings add up quickly and help you maximize your profits.
Tips for Finding the Best Freight Factoring Partner
When choosing the best freight factoring company for your needs, rates are a key consideration. Make sure the rates and any fees seem reasonable. Watch for unexpected fees like penalties for not meeting a quota on how many loads you deliver each month or what happens if your client pays a day late.
Get the different fees for non-recourse and recourse arrangements. Non-recourse arrangements will have higher fees, but they offer a level of protection if your broker or shipper shuts down unexpectedly and never pays an invoice. Recourse arrangements have lower fees, but you must repay the payment you received should your client fail to pay the invoice.
What technology is available? If you have to email or fax each bill of lading to the freight factoring company, it’s less convenient than snapping a picture and sending it from your truck.
If you sign up with the company, can you choose which clients you use freight factoring for or do you have to sign up every client for factoring? If you have reputable clients with a strong history of timely payments, you may not want to factor those invoices. Make sure you still can.
How accessible is the customer service team? Can you get help through an app or use email to communicate? Or, do you have to make a phone call? Phone support may not be convenient if you’re driving during the factoring company’s office hours.
Use Our 50 Years of Transportation Expertise to Improve Your Revenues
A comprehensive freight factoring partnership ensures you stay profitable throughout the year. Embrace the benefits of lightning-fast payments, no more spending time chasing down late-paying clients, and shouldering costly fuel bills. Let TBS show you how effective factoring is when it comes to running your trucking company.