Any trucking company requires the right team to ensure the business runs smoothly. Suppliers play a big part in this, and you need to ensure that your supplier relationships do not disintegrate due to miscommunication, poor management, or unpaid bills.
Every company works with suppliers for the goods and services needed to run a business. For a trucking company, your suppliers are your fuel providers, insurance companies, truck repairs and maintenance providers, fuel partners, and even the brokers and shippers who find your business more loads to haul. Did you know that freight factoring is one of the best ways to maintain strong relationships with your suppliers?
How Does Freight Factoring Work?
To understand how freight factoring helps maintain supplier relationships, you need to understand the basics of freight factoring.
- You agree to haul merchandise or items for a client.
- You have a completed bill of lading that you typically generate an invoice for and send to that client.
- Instead, you sell the invoice to a freight factoring specialist at a discount.
- The factor pays you the money you’re owed after the fee is deducted.
- Instead of waiting weeks or months for payment, you have money as quickly as that same day.
- The factor generates the invoice and collects payment from your client.
While you do pay a small fee, it’s not anywhere near as high as the interest rate on a credit card. It’s also much lower than the late fees your suppliers charge when you don’t pay your bills on time.
Five Ways Freight Factoring Helps Build and Maintain Supplier Relationships
A strong relationship with your suppliers involves paying on time, delivering loads as quickly and safely as possible, and ensuring you stay on budget. Freight factoring offers six distinctive benefits that help with this.
Access Load-Tracking Software to Ensure Timely Deliveries
Whether you’re working with brokers, shippers, or the actual manufacturer, you need to make sure you’re keeping your promises. If you say you’ll deliver the materials or merchandise before 3 p.m., make sure that happens.
Load-tracking software helps your team keep track of where a truck is. If there are unexpected weather delays or an accident that has created a traffic jam, you can reroute drivers ASAP to ensure they still arrive on time.
Build a Strong Financial Plan
You cannot make promises if you don’t have a financial plan that supports your business goals. You’ve promised to deliver a trailer full of pallets to a toy store’s warehouse. You have to have the funds to pay for the fuel, truck maintenance to ensure your truck can make the trip, and a driver who is properly licensed. Your truck and trailer must be insured.
If you haven’t considered all of these expenses in advance, you might take a job and realize you don’t have the money available to meet all of the expenses you face. You could charge these expenses, but then you have credit card interest building up. Freight factoring helps you create a strong cash flow so that you can plan monthly budgets correctly.
When you’re working with suppliers who you pay, make sure you negotiate the best rates. Don’t be afraid to shop around and ensure you’re still getting the best deal, even if you’ve been with that supplier for years. A savvy business owner continues to negotiate lower rates.
Create a Collaborative Business Climate
When you work with a freight factoring client, that expert joins your team as another partner in the collaboration you form with suppliers. You do the work, the freight factoring company generates the invoices that go to your clients, and you get paid. Everyone knows what’s expected of them.
Part of collaboration is having clear contract terms. To work together, you must know what’s expected of you and what your supplier will do for you. A contract that follows the laws and protects both parties is important.
Invoices Go Out in a Timely Manner
As a trucking company owner, you have to find time to create and send invoices. It’s one more thing that you struggle to find time with. Meanwhile, your suppliers expected the invoice by now. It hasn’t arrived and they’re getting frustrated. With a factoring company taking over the invoice, everything goes out when it’s expected.
Pay Bills on Time
You’re factoring your invoices and getting paid the same day. That makes it a lot easier to pay your bills on time. You save money by avoiding late fees. Plus, your credit history doesn’t get impacted by late or missing payments, which lowers your credit score and makes you less favorable to other clients and suppliers.
Other Things That Strengthen Supplier Relationships
Finances are only part of the responsibilities you have to your suppliers. There are other aspects to running a business that will form a stronger bond.
Your supplier is a partner in your business, so treat them as such. If they don’t feel like you value them, it’s not going to work out in the long run. Make sure they know you value them. Your team should make this a top priority.
Have a strong team that agrees with your business ethics and wants to please your suppliers as much as you do. You want drivers who do their very best to arrive on time and keep you in the loop if there are delays that they cannot avoid. You need employees who follow company rules and the terms of the contract. They want your business to succeed.
Use technology to your advantage. Freight factoring apps make it easy to get paid on time and track what’s been paid, what hasn’t, and where you may need to reach out and see what’s going on. Load-finding apps help you find more work, which is necessary for making money.
If there are disputes between your company and its suppliers, your office workers need to address the issues quickly and thoroughly. You need to have a team that works on a fair resolution that both continues to support your business and keep your suppliers happy.
You also need to know when it’s time to look at other suppliers. If insurance rates are getting too high, you need to negotiate lower rates without losing important coverage. With the right freight factoring partner, you have a strong monthly budget and know exactly how to use your revenues wisely.
Partner with a freight factoring company that has decades of experience in the trucking industry that you need. You want a company that has expert insights into maintaining strong relationships with suppliers. Saint John Capital is the freight factoring specialist you need on your side.
