Despite the stereotype that the trucking line of work is for the common person, the common person might not understand the hidden expectations of those working in the trucking industry. When considering this line of work, you might imagine the requirements to be obvious: be able to drive for extended periods, be physically capable of lifting 150-pound tarps; however, those are just the start. Anybody who decides to join or open a trucking company enters an industry that is vital to American living as we know it. Yet the sector is hindered by an outdated system. For truckers trying to thrive in the age of disruption, it’s critical to understand the truths of back-office trucking management and how they can get back on the road faster and easier with the right software sources and partnerships.
The Challenges of Back-Office Management for Owner-Operators
Many of the back-office trucking challenges surround the issue of how truckers get paid and when. As demands keep rising, truckers will reach a threshold at which they are simply stuck waiting for payment. Yes, maintaining driver credentials and vehicle maintenance, route planning, managing a fleet, communicating with freight brokers, budgeting, and more are also compounded by a pandemic-driven supply chain issue leading to a massive freight backlog at most United States ports. As Teamster truck driver Ryan Johnson shared with Business Insider: “About 14,000 truck drivers go through [any given] port every day.… A lack of cranes and crane operators at the ports has truck drivers sitting idle for hours on end — with about one crane to every 50 to 100 trucks.” That demand means regardless of how truckers get paid, they’re in more demand than ever and must get paid for time lost waiting even faster.
In this season where supply and demand are at an all-time high, in a vertical plagued with inefficiency and truck driver shortages, it is understandable for owner-operators to become stressed with the continually complicated job of maintaining cash flow to keep their business running. While you can grow a business starting with one truck, that growth can be stunted by traditional freight financing.
Looking at it from an entrepreneurial mindset, there comes a time when you must evaluate what is best done in-house and what needs to be outsourced for the profitability of your business. One such thing to outsource for trucking profitability is bringing in a partner for your back office management.
A Back-Office Partner and Solution Shortens the Freight Payment Clock
Traditional truck financing utilizes 30-90 day payment windows that involve billing and collecting on top of an owner-operator’s other managerial responsibilities. Owner-operators who want to continue business while waiting on payment often pursue bank loans or lines of credit, both of which can be detrimental if funds are limited or if the payback schedule is an unrealistic timeline. Due to the nature of the trade, having money to float between jobs is crucial.
Freight factoring is an alternative finance method involving a company buying shipment invoices for cash and then selling them to another company to collect payment. By outsourcing billing and collecting, the trucking company can use the payment as cash flow to immediately build their business. The profits from these shipping invoice sales are just the beginning of the benefits of freight bill & invoice factoring. Minimizing tasks, stress, and opportunity for bad debt creates a space to have a clearer view of the company’s financial health without the tedious work akin to balancing a checkbook. Put simply, you can leverage freight factoring and the extra time it produces to enrich your business plan.
Additional Ways Truckers Can Improve Back-Office Finance Management
While we can’t fix the freight back-log or port inefficiencies with one article, the trucker payment evolution is just one part of back-office management that can improve the owner-operator’s work-life quality. Incorporating the right technology into your business structure can be everything for maximum trucking profitability. Here are some other ways you can continue to optimize your finance management:
- Digitize your load documents to speed up the process for same-day payments, which save time, hassle, and money.
- Find a Customer Relations Manager that fits the needs of your current business size and one who also has room to grow with your business.
- Consider your niche, and search for network partnerships that can provide high-quality loads, ranging from reefer freight moves through flatbed and beyond.
- Invest in online accounting software to organize critical documents used in your day-to-day life and yearly taxes.
Know How Truckers Manage Freight Finance by Getting on the Right Track to Faster Freight Payment With BasicBlock
While there are many timeless tricks of the trade, freight factoring is increasingly gaining momentum in the industry. Still, effective freight factoring must be low-cost, transparent and easy-to-leverage, often aspects of traditional factoring that only large businesses putto use. BasicBlock is different, built for everyone, and easily accessible for the smallest carriers and owner-operators. For those looking for more information on adding this component into their business, get started with BasicBlock today.