Whether your small trucking business is sailing smoothly, treading water or moving against a strong tide during these tough economic times, having a reliable collection strategy is key to maintaining enough cash flow to remain solvent.
By taking a few measured steps, you can create a streamlined collection process to help boost your business' cash flow and alleviate concerns about how to handle late payments.
Consider these tips when developing your collection strategy:
- Create a tracking system. Develop a payment-tracking system that alerts you of overdue payments. The sooner you're aware of late payments, the sooner you can take action. Consider utilizing software specifically designed to track payments or consult your banker or financial advisor for suggestions about how to get started.
- Follow strict protocol for missed payments. With your tracking system in place, create a contract delineating clear payment guidelines so there is no room for client misinterpretations. Ask your clients to sign the agreement before providing your products or services. Have a letter outlining the consequences of a missed payment ready to mail, and follow up with a phone call to the client in case a payment becomes late. A phone call reinforces the importance of prompt payment and may provide additional insight about why the payment is late.
- Conduct credit checks. When working with a new client, it may be wise to conduct a thorough credit and background check. Consider enlisting the service of a professional credit check company or accessing credible, inexpensive online resources.
- Avoid extended payment terms. Try not to extend payment terms beyond 30 days when the economy is tight. If you have an existing contract that extends beyond 30 days, consider offering a discount for faster payment. Don't extend credit or terms unless you've verified that a customer is in a position to repay.
- Avoid spinning your wheels. If you are not having success with your collection efforts, consider enlisting the help of a collection agency or legal expert.
Consider incorporating the following tools into your collection strategy to facilitate increased cash flow:
Invoice your clients as soon as possible. The faster you can invoice your client, the quicker you can get paid. This is especially true if your client has time-based terms of payment, such as net 14 or net 7, etc. The clock usually starts when the client receives all completed paperwork and invoice. Trip Sheet Central creates an invoice as soon as all load details have been entered into the system thereby giving you the opportunity to submit the invoice as soon as your truck is unloaded.
Direct deposit. To facilitate faster access to funds, consider signing up for direct deposit, ACH transfers or Remote Deposit --a service that enables small businesses to scan deposit checks at their office and electronically transmit them to the bank. Most banks offer this service, and some financial institutions offer software that enhances clients' operating efficiency by integrating directly with their accounting software and enabling them to update their account receivables in one process.
With a reliable and efficient collection strategy in place, you can devote your valuable time to other key elements important to the ongoing success of your business.
The Hours-of-Service regulations (49 CFR Part 395) put limits in place for when and how long commercial motor vehicle (CMV) drivers may drive. These regulations are based on an exhaustive scientific review and are designed to ensure truck drivers get the necessary rest to perform safe operations. FMCSA also reviewed existing fatigue research and worked with organizations like the Transportation Research Board of the National Academies and the National Institute for Occupational Safety in setting these HOS rules.
The regulations are designed to continue the downward trend in truck fatalities and maintain motor carrier operational efficiencies. Although the HOS regulations are found in Part 395 of the Federal Motor Carrier Safety Regulations, many States have identical or similar regulations for intrastate traffic.
Read the most current HOS rules and regulations at the FMCSA website
What is IFTA?
IFTA is the International Fuel Tax Agreement. Through the IFTA, member jurisdictions act cooperatively to administer and collect motor fuel use taxes.
Which jurisdictions are members of IFTA?
The 48 contiguous States of the United States and the 10 Canadian Provinces are members of IFTA.
Should I apply for an IFTA license?
If you are based in a member jurisdiction and operate a qualified motor vehicle in 2 or more member jurisdictions, yes. If you usually operate your vehicles only in one jurisdiction, but make occasional trips outside the base jurisdiction, you may elect to purchase trip permits for that occasional travel. Permitting services can usually be contacted from any major truckstop. Contact a permitting service for rates.
What is a qualified motor vehicle?
A Qualified Motor Vehicle is a motor vehicle used, designed, or maintained for transportation of persons or property and:
- has two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds or 11,797 kilograms; or
- has three or more axles regardless of weight; or
- is used in combination, when the weight of such combination exceeds 26,000 pounds or 11,797 kilograms gross vehicle or registered gross vehicle weight.
Where should I go to apply for an IFTA license?
You should contact the jurisdiction where you are based. Your base jurisdiction is the jurisdiction where you have your qualified motor vehicles registered, where you have some travel, and where the operational control and operational records are maintained or can be made available.
What if I have qualified motor vehicles registered in more than one jurisdiction?
It is important that you contact one of those jurisdictions. You may be able to consolidate your operations under one license. The jurisdiction you contact will assist you and give you information on how that can be accomplished.
That's an odd headline, but I figure it oughta catch anyone's attention fairly quickly.
As an owner operator, or independent truck business owner, you may fall into the category of small business owners that do not have big company benefits like health insurance or life insurance. Insurance of any kind these days is outrageously expensive, and even with the folks in congress talking about it all the time it is still a few years away from being useful to us right now when we need it.
I want to focus for now on life insurance. Driving a truck is much safer these days but there is still the odd chance that as a truck driver you could be involved in a fatal crash. Back when I was driving a truck, there are times I would be just so tired and yet I could not stop because I needed to cover more miles to make an on-time delivery. In many of those instances I dreaded falling asleep at the wheel and the thought of being in a crash often kept me awake. I thought of my wife and kids back home who depended entirely on me for the bread on the table, clothing, shelter, -you name it. I thought about buying life insurance and the one quote I got was so high I immediately shelved the idea.
Well, I'm now more informed about life insurance and the kind to buy. I'm not an expert on this, but I do know that Guaranteed Level Term Life Insurance can be purchased for less than a couple lunches a month. For instance, you can buy a $400,000 15-20yr guaranteed level term life insurance policy for about $30/month or a couple hundred/year depending on your age and health. This is a good buy, and peace of mind knowing that you're taking care of your family the last time you do. To get a free quote and see just how affordable it is go to Zander Insurance' website www.zanderins.com
This is a difficult subject to discuss with the shipper because it means raising rates -you could lose the business you've been getting from that shipper. So how do you go about get the fuel surcharge to cushion the high cost of fuel hitting your business?
If you have had this shipper/customer for a while, the task is somewhat easier and could be discussed over the telephone and followed up with a letter spelling out the details. Of-course any time you are about to raise, check to see what the market is doing and then tread carefully. Here is a sample letter that you can use when notifying your shipper about the pending increase:
City, State Zip
123 Main Street
Your Town, USA 12345
I am sure that you are aware that fuel prices have spiraled upward over the past several months, and presently are higher than they have ever been in our history. We have acted in good faith in our attempt to resist seeking relief, but this has placed an undue burden on us. We had hoped that this would be a short term inconvenience, but now it looks as if it will last longer than expected. Due to the critical nature of the current situation, we can no longer continue to absorb these increased costs.
Therefore, we must implement a temporary fuel surcharge on all shipments. This fuel surcharge will remain independent from our base rates and will be shown as a separate entry on our freight bills. We will compute the fuel surcharge on a mileage basis, and it will reflect the extra cost of the fuel used in the specific trip.
Our computations will be based on the U.S. National Average Diesel Fuel Index. (You may view the charts provided by the Department of Energy by visiting their website at http://tonto.eia.doe.gov/oog/info/wohdp/diesel_detail_report.asp . We will review this data and calculate our actual costs on a weekly basis. The figure used for cost per gallon is also region specific, established by the average cost of fuel per gallon, on the date and in the load's origination point.
We regret that this action is necessary and deeply appreciate your understanding and partnership with us in helping to share the burden of these fuel cost increases. Together, we will keep our nation strong during this time of crisis. We hope that this solution will keep the goods and services that power our great nation’s economy moving.
I am sure there are other ways that this subject can be approached. Any thoughts out there?
To maximize profit, manage TIME instead of rate/mile.
Choose the load with the best average revenue/day
In the trucking business, fixed costs usually run about $80 - $100 per day. As an independent owner-operator you still need about $100 a day for personal, family and home expenses that you must meet whether you're loaded or not -even on weekends!