Accounts receivable (AR) is the payment truckers will receive from shippers who have purchased their services on credit. The credit period can range widely in a timeframe. However, typically 30-90 days, such a range can harm various companies’ cash flow. After sending the invoice, the manager must keep tabs on when they receive a payment or chase the payment and match it to the invoice.
This problem will only worsen as the trucking industry is expecting to see higher-than-average rates carry through into the following year. As mentioned by Overdrive Online, “average owner-operator income is at an all-time high at more than $70,000 a year, a 10.2% increase over 2020, according to ATBS. That increase has been driven in large part by the spot market, where rates have jumped considerably with lower capacity and more freight after the early COVID shutdowns last spring.” As this increase is expected to last through next year, trucking companies must prepare for more freight in need of transportation, turning into more invoices.
Companies can automate account receivables and let a factoring company handle the office tasks rather than manage archaic, manual processes while running a trucking business in such a competitive field.
Why Slow Invoicing Creates Problems in AR
Slow invoicing creates an issue that no company wants to handle: slow cash flow. Accounts receivable cannot assist the company’s cash flow until paid. Therefore, keeping up with invoices is vital, and slow invoicing or longer invoicing periods can quickly take a toll on the company’s cash flow.
If a company does not keep up with invoicing, it could increase the time frame until the invoice receives payment and slow down the entire process. Automating invoice generation, payment tracking, and settlement is the go-to solution to counteract this issue. Through automation, companies can keep close tabs on customer accounts and see the possibility of inaccurate addresses, anomalies, or other problems that can cause invoices to go unpaid. To prevent slow invoicing from happening and negatively affecting account receivables, truckers must use automation through invoice factoring. PERIOD.
Automated Accounts Receivables Streamline Management
With the traditional trucking accounts receivable process, truckers and team members will spend a significant amount of time for each invoice simply recording data, which can extend the payment window for some. However, automation and relying on technology can streamline the entire process and free up time for management to focus on other valuable tasks.
As business continues to grow and the number of invoices expands, the company cannot keep up manually, which will cause existing capital to go to waste. Fortunately, factoring invoices also can help truckers understand and improve their cash flow, provided they are using the right service. That’s right; the just-right service should be fee-lite, fast and easy to work with. It should also help truckers visualize who is a vital shipper to work with and who may not pay due to failing business or temporary cash shortfalls. Automating accounts receivable can take the stress off the back-office invoicing tasks and allow management to grow the business and gain new clients.
Additional Benefits of Automation
Through automation, truckers can realize additional benefits besides shortening the payment clock with invoices, including:
- Centralized freight finance management.
- Better, more accessible reporting on the performance of trucks.
- Less overhead in physically processing invoices.
- Understanding cash flow expectations.
- Same-day payments to get back on the road faster.
Get on the Fast Track to Payment With BasicBlock
As trucking companies continue to grow, they need a beneficial, sure-fire way to ensure their accounts receivable process does not suffer. A gap in the time of invoicing sent out versus the payment received will inevitably cause an issue throughout the company. The more business the company gains, the more invoices will need to be processed and the harder it will become to ensure all payments occur on time. As the number of invoices rises, the risk of error will follow in tandem through manual processes. Automating such a vital process can simplify and streamline the entire payment process and provide truckers with the cash flow needed. To begin the automating process and reap the added benefits, get started with BasicBlock today.