Every licensed driver has had to learn to drive alongside the buffeting of a semi-truck. If the trucking industry is not hidden, why the lack of transparency in business dealings? As reported by the American Trucking Research Institute, “This year’s total marginal costs per mile amounted to 76.6 percent of the average contract van rate per mile.” Why the low profit margin? Hidden freight factoring fees are just one of the things that should be brought to light for best business practices.
Why Poor Transparency Leads to Higher Trucking Costs
When building a business, it is crucial to understand your operation costs to know what profits should be expected and when. Proper profit estimations guide which shippers to take loads from and so much more. Limited trucking transparency can produce problems that occur such as:
- Hidden or manipulated freight costs
- Delays in the purchasing process with customers
- Struggle in time-sensitive decision-making
- Unrealistic expectations
- Less time on the road
While starting a trucking company can be costly, it shouldn’t be due to poor transparency. A clear view of the company’s overall financial health is necessary for making pragmatic decisions to boost one’s working capital.
Strong Customer Support From Factoring Providers Helps Truckers Get Back on the Road
Freight factoring is when a company purchases an unpaid invoice from a trucker for 70-90% of the cost upfront to take on the responsibility of collecting on the invoice themselves. When the invoice is collected, they pay truckers the remaining 10-30% minus the agreed-upon fee. Now, this only benefits the trucking company when business is conducted in a way that customers want to deal with. Incorporating trucking transparency shows customers they will be communicated with clearly and fairly and gives them everything they need to proceed with the purchasing process. Owner-operators have more time to drive when this customer support system removes the stress of recovering freight costs. As customer rapport increases, the ability to grow a fleet starting with one truck is even more possible.
Additional Benefits of Transparent, Fee-Lite Factoring Service
Furthermore, a trucker payment evolution can provide a ripple effect into other areas of business management. It can affect things such as:
- Better management of assets. Possessing something of value for future benefit is only of great worth when handled in a way that maximizes its long-term value.
- Lower back-office costs. Choosing a transparent back-office management partner with affordable freight factoring fees creates the potential to keep more action items in-house rather than outsource them.
- Performance tracking of assets. This is a crucial aspect of reliability management by observing what service requirements may be necessary due to wear and tear.
- Ability to understand operating ratios. Having a visual guide will help those adjusting operating ratios for profit or cash reserves achieve consistency.
- Knowing which loads to take based on the market, not unusual pay windows. A company with the freedom to choose its loads is also free to grow its area of expertise or even narrow its area of service.
- Automated accounts receivable. Taking accounts receivable out of one’s daily decisions can give more mental space to achieving goals.
- Leverage data for long-term business goals. Full business transparency essentially provides a data gathering net that can provide unique aspects otherwise missed amongst daily work.
Choose the Right Factoring and Invoicing Solution by Partnering With BasicBlock
In an industry that needs some adaptation to the times, finding the right methods to build trucking transparency for a company can take some time. However, the benefits of freight bill and invoice factoring are only available when working with the right back-office partner. For those looking for a partner to see how transparency can change their business for the better, get started with Basic Block today.