An article that appeared earlier this year at Team Run Smart titled Avoiding Stress When Money is Tight examined several ways truck drivers, owner-operators, and fleet business owners can make it through times when there just doesn’t seem to be enough money available. Most of us have been there at some point… expenses are coming in, unexpected costs rear their head, and there just isn’t enough cash on hand to satisfy what’s on your plate.
Team Run Smart had some great suggestions that we thought were worth sharing, so with full credit to them, here are their suggestions:
- Slash expenses ruthlessly. Everyone has overhead that can be cut, the question is whether we have what it takes to cut them. Here they focused on vices and nice-to-have’s such as alcohol, cigarettes, cable TV, and other unnecessary purchases that we all enjoy, but aren’t critical. Needless to say, in times of need these expenses can add up quickly.
- Bring in money on the side. If you’re a truck driver, you might have the skills to teach at a driving school, or perhaps even pick up knick-knacks in your travels that you can sell online. The key here is being creative and using your unique special talents in a way that can be monetized. If you’re a fleet owner, you likely don’t have the time available for these side activities. You can, however, possibly add some value-added services to your service offering and charge for it. Maybe there are rush fees, or other charges that your competition is including that you’re not?
- Cut up the credit card. Most credit cards have interest rates that stay steady in the double figures, resulting in costs that can easily soar out of control. Cutting up the card, while not easy, can save you money down the road, and prevent those expenses and nice-to-have’s mentioned in point one above from escalating out of control.
- Use your budget. Do you have one? Most people don’t, so start by writing down all of the costs that are deemed essential that you incur each month. Then add in additional expenses that might come up – medical, dental, maintenance – and then stick to it! It’s not going to be easy especially when you first start, but be honest with yourself and it will become manageable.
These four areas that Team Run Smart highlighted in their article are all great ways to help manage cash flow when money is tight, but there’s one area that might be worth including on this list that they did not, and that’s invoice factoring.
Most independent truckers or fleet owners think that when they send along customer invoices the speed at which they get paid is out of their hands. They think that payment terms are set by their customers and there’s nothing they can do but wait. The reality is that invoice factoring – often referred to as freight factoring in the transportation industry – puts invoice payment terms in your control!
With freight factoring, you essentially sell your invoice to a factoring company (like eCapital) that pays you less a small percentage quickly – usually within a day or so. The factoring company then assumes all accounts receivable duties. It’s quite common across a number of industries, including transportation, so your customers will have likely worked with factoring companies before. Unlike credit cards or bank loans, there are no ongoing interest charges or penalties to concern yourself with and it doesn’t touch your credit history. It’s your money, you’re just getting it paid faster… on your terms.
Freight factoring can put your money into your pocket faster, helping you better manage those times when money is tight.