If you’re like most trucking company owners, you went into the business so you could make some good money while setting your own hours and working on your terms. Those are excellent reasons to run a fleet of trucks, but profitability isn’t guaranteed. Even when you have experience in the trucking industry, you have to compete against established companies with solid reputations who often provide the best rates to their customers.
Even though it takes time to establish many of the factors that drive profitability, there are several things you can do immediately to improve your revenue and cash flow.
1. Use a freight factoring service
Nothing is more frustrating than a stack of unpaid invoices from customers who either forgot to pay, procrastinated, or are hoping you’ll forget. Everyone has their reasons for not paying invoices, but the bottom line is that it decreases your cash flow and makes it harder for you to make necessary purchases.
Freight factoring provides immediate cash flow when you have outstanding invoices and don’t want to wait to collect on them. Through this service, you sell your invoices to a third party, who pays you an upfront percentage of the amount due from the customer. When the third party collects the debt, they’ll pay you the remaining balance minus the agreed-upon fee. If you have cash flow problems and unpaid invoices, this can make a positive difference.
2. Use fuel cards
There are so many good fuel card programs for trucking companies, and you’ll probably want to sign up for a few of them depending on where your drivers travel. Some are more regional while others are national.
Fuel card programs offer all kinds of perks, including discounted fuel, free fuel, free and discounted food, and even cash back.
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Using a fuel card will also help you track fuel consumption and costs easier. They work like a credit card but are only for fuel-related purchases. You can give all your drivers a card to use for fuel to keep the expenses isolated rather than having them use a company credit card.
3. Stay on top of maintenance
Regular truck maintenance can go a long way to support your profitability. When you ensure that your trucks receive all of their routine, scheduled maintenance and make timely repairs, you prevent unnecessary breakdowns, which limits repairs.
There will always be something to fix on your trucks, but many problems can be completely avoided through regular maintenance. For instance, getting oil changes on time prevents the need for excess engine flushes.
4. Train drivers into better habits
Everyone has their own driving habits, but some habits are detrimental to your profitability. For example, speeding, braking too hard, accelerating too quickly, and idling all contribute to unnecessary fuel consumption. Since fuel is expensive, over time, bad habits add up to a large amount of wasted money, especially when you have multiple trucks. Wasted fuel is easy to eliminate when your drivers ditch the habits that increase fuel consumption for no reason.
When you take on new drivers, train them out of those habits. They may be used to doing things a certain way after being in the industry for a while, but they will need to change those habits to work for your company.
5. Use route planning
The longer it takes your drivers to get to their destination, the more fuel they consume. To optimize their journeys and reduce your costs, equip your drivers with a GPS-based application that will create and alter their routes based on current traffic conditions. This will not only help you save fuel but also help your drivers meet delivery times and avoid delays by being rerouted when there’s an issue.
For instance, when there’s a weather-related backup on a main road, your GPS system can calculate an alternative route for your driver. You’ll save time and money, and you won’t leave your customers hanging.
Consider expanding your business
Once you have a good system in place for controlling your expenses and generating a profit, consider expanding your business. You will eventually reach the point where you can’t do anything more to increase your revenue without a larger fleet to serve additional customers. The faster you establish a system that keeps your current fleet profitable, the sooner you can expand your business successfully.