Owning and operating a small trucking company can be challenging, with financial hardships making it difficult to stay afloat without the right tools. From fluctuating operating expenses to the high cost of equipment, small trucking companies face numerous roadblocks that can impact their bottom line.
In this blog, we’ll explore some of the key financial challenges that small trucking companies encounter and how to reach financial stability with tools that are available to carriers in the US.
Lack of Reliable Cashflow
Unlike larger companies that may have more consistent revenue streams, small trucking companies often struggle with consistent, reliable cashflow because it varies month to month, and payments can be slow from shippers using Net 30 or Net-45 or even Net 60 payment terms. This can make it difficult to cover operating expenses and plan for the future since many carriers are more worried about keeping the lights on tomorrow.
Fluctuating Operating Expenses
Operating expenses for small trucking companies can vary widely, making it challenging to budget effectively. Fuel costs, for example, can fluctuate significantly due to changes in oil prices and are often the most expensive operational cost for a small trucking company. Additionally, maintenance and repair costs can be unpredictable, as unexpected breakdowns or accidents can quickly empty carriers’ pockets.
Expensive Equipment
The cost of equipment is another major financial burden for small trucking companies. Purchasing a tractor and trailer can be a significant investment, and insurance premiums are nothing short of expensive. For small companies with limited financial resources, these expenses can quickly pile up.
Lack of Accounting Team
Finally, many small trucking companies lack a dedicated accounting team or resource to manage their finances. This can lead to financial mismanagement and make it difficult to track expenses and revenue accurately. Without proper financial oversight, small trucking companies may struggle to stay profitable.
Ok – So What Tools Do Carriers Have To Help With All Of These Challenges?
Problems like these are exactly why OTR Solutions was created over 13 years ago. OTR Solutions offers a range of services designed to alleviate the financial hardships faced by small trucking companies. By providing reliable cash flow solutions, OTR Solutions helps trucking companies manage their finances more effectively and stay on track.
Factoring Invoices for Reliable Cash Flow
One of the key services offered by OTR Solutions is invoice factoring. Factoring invoices allows trucking companies to receive immediate payment for their services, rather than waiting for customers to pay on net 30 or net 45 terms. This brings reliable cash flow to carriers, ensuring they have the funds needed to cover operating expenses and invest in their business.
True Non-Recourse Factoring
OTR Solutions offers True Non-Recourse Factoring, which means that trucking companies can count on receiving payment 100% of the time. With True Non-Recourse Factoring, OTR Solutions assumes the risk of non-payment, providing peace of mind and financial stability for small trucking companies.
Using a tool like factoring can eliminate the need for an additional ‘collections’ or ‘accounting’ role for smaller trucking companies. OTR Solutions pays you the same day and chases the broker down for payment, so you don’t have to.
Conclusion
In conclusion, owning and running a small trucking company comes with a unique set of financial challenges. From unreliable cash flow to fluctuating operating expenses and the high cost of equipment, small trucking companies must navigate a complex financial landscape.
By understanding these challenges and implementing effective financial management strategies, small trucking companies can improve their chances of success and sustainability.
OTR Solutions plays a crucial role in helping trucking companies overcome these financial hardships, offering reliable cash flow solutions through True Non-Recourse factoring as well as customizable factoring programs for larger trucking companies.