It can be one of the greatest frustrations of owning your own trucking company – you do a great job delivering safely and on time, but your customers won’t pay on time. If not managed correctly, this frustration can eventually ruin your business. Too much revenue sitting in accounts receivable can seriously damage your company’s cash flow and negatively impact operations. Cash management is a key component of business, yet it is one of the most difficult tasks for a trucking company to handle.
Here are five tips to help you manage and minimize those dollars sitting in accounts receivable:
Start the process early.
Establishing an effective accounts receivable management strategy is a vital part of your success as a business. Discuss payment terms in the early stages of new customer relationships and commit your company to making accounts receivable a priority.
Prepare for accounts receivable before they happen.
In every business, it’s a certainty: if you extend credit, you will have customers who won’t pay on time. To minimize the number of dollars in accounts receivable each month, you need a formal process for:
- Determining how and when you’ll extend credit
- Issuing timely and accurate invoices that identify credit terms
- Tracking systems that automatically alert you when accounts are coming due
- Automated systems that flag milestones in the collection process (e.g.: due, 15 days past due, 30 days past due) and trigger a follow up response (phone call, letter, etc.)
- Escalating delinquent accounts for further action
Know the facts before you escalate a receivable to collections.
Before you send a sternly written collection notice or submit an accounts receivable to a collections service, be sure you’ve actually communicated with your customer to see why they haven’t paid. There will be some times when it’s simply an oversight, or the check really did get lost in the mail. A good test is to see how your customer reacts when you bring the late payment (politely) to their attention. If they immediately look into the problem and issue payment promptly, simply chalk it up to experience and remember to say “thank you”.
Communication is the key. Keep it professional and consistent.
- To communicate means to connect. Be sure that the media you use to inform your customers about late payments fits with how they typically communicate. Email is the norm, but it’s a good idea to try other methods as you attempt to get an appropriate response (phone, text messaging, letter mail, etc.). If you discover a customer’s preferred way to communicate, make a note of it in their file.
- Always keep it professional by keeping a cool head and having your facts ready before you make the call. If you can’t keep your cool when discussing money with a customer, pass the job to a qualified individual who can.
- Be consistent – a customer should know that as soon as their account becomes overdue, they’re going to hear from you. Remember, by not following up consistently on accounts receivable, you are training your customers that it’s okay to pay you late.
Get help if you need it.
If the idea of tracking invoices and following up on late payments makes you break into a cold sweat, consider outsourcing your collections to a professional accounts receivable management company. You can leverage their experience, processes and knowledge to greatly improve your accounts receivable follow-up without the headaches and hassle of doing it in-house. Alternatively, you can partner with a freight factoring company to get paid faster and improve collections.
Why work with a factoring company for trucking?
You own a trucking company to haul freight, not get bogged down by paperwork. Freight factoring is the fastest, smartest, easiest way to get paid and gain control of your accounts receivable management. When you work with a reputable factoring company for trucking such as eCapital, all of your billing and collections are handled so you can focus on hauling your next load.
This mainstream financial option is the preferred cash flow solution for a growing number of truck company owners. Benefits of working with a freight factoring company include:
- Invoices paid within 24 hours
- Cost free professional accounts receivable management included
- Free, unlimited credit checks to improve risk management
- Dedicated account manager to provide seamless services
Keep providing great service to your customers
In an industry with daily expenses and slow-paying customers, maintaining positive cash flow can be difficult. That’s why having an effective accounts receivable management collection process is so critical. Commit your company to making accounts receivable a priority and ensure you are financially stable to continue providing great service to your customers.
Learn more about how freight factoring will help your business grow.