August to October are peak months in the trucking industry. It’s when back-to-school and holiday merchandise is being transported to stores and warehouses. January through March are much quieter before spring crops trigger the start of the busier time of year. When it’s busy, you have lots of work, but the winter can be very slow. How do you prepare for seasonal fluctuations in the trucking business?
Account for the Expenses You Have
In the slower winter months, you may not have to pay as much for diesel or gas for your trucks, but what about heating bills in your business? Are the electricity rates higher in the winter months? If so, your electricity bills will increase. Those are added expenses you have to take into account.
If you do have loads to haul, your driver may be running heat in the truck at night when sleeping. That can drive up fuel usage as heaters are running a lot. You also need trucks that are equipped to drive on icy roads and handle colder temperatures with fluids like windshield fluid that is good at lower temperatures, chains for snowy mountain roads, and emergency supplies like a shovel and sand.
Keep a running estimate of how much you need to make each month to cover the bills and wages and still have some money left over to put into savings. Make that your goal to meet throughout the year. If you can’t make enough to cover the bills, you’re likely to run into financial problems.
Factor Invoices to Keep Money Coming In
Factor your invoices to keep money coming in throughout the slower months. If you follow a traditional invoicing routine, you’ll send an invoice to your client and wait for the payment to arrive. It might be over a month before you get that payment, but that doesn’t stop your creditors from demanding payment.
The longer it takes you to pay your creditors, the more you’ll pay in late fees. Plus, you might get dings on your credit report for those late payments and that can make it harder to get favorable interest rates. Freight factoring is the best way to keep money coming in throughout the month to guarantee that you can pay your bills on time.
How does freight factoring work? Using your cell phone, submit the bill of lading online. The freight factoring company processes it and submits payment once it’s approved. You can have the money due on the same day or in a day or two, depending on when you submit it and how fast your bank processes EBTs.
You do pay a small fee for the cash advance you get through a freight factoring arrangement. That fee is far less than you’d pay in interest on a credit card, however. So, it’s not as expensive as you might think. Plus, you have access to a number of additional services that help you grow your trucking company. Free access to business credit reports is one of them.
Another helpful service is Click & Pay API. Your customers can use the QuickPay technology to pay instantly online instead of having to mail a check. Checks can take weeks to arrive in the mail, plus you have to deposit them with your bank, wait for them to clear the issuing bank, and go into your account. If the check bounces, you could be responsible to pay overdraft or bounced check fees.
Set Aside Extra Cash When It’s Busy
During the busier spring and summer months, set aside as much money as you can for the slower months. One way to do this is by using a Saint John Capital Visa card. When you do, you save money on fuel purchases. Take the savings and put that straight into your savings account. Build up as much of a pad as you can.
In the busier months when clients are struggling to find a trucking company with availability, raise rates accordingly. If demand is high, you’ll find you can increase prices and still keep the business. Just make sure you adjust them again when things slow down.
Use a Low-Interest Business Line of Credit to Cover the Lean Months
Some freight factoring companies offer additional services to make it easier to run a trucking business throughout the year. One of them is a low-interest business line of credit. Place any necessary slow-season expenses on your business line of credit. When it gets busy again, use the extra revenue you’re making to pay off what you had to charge against the line of credit.
That line of credit helps maintain a cash flow throughout the year. Pay it off when you can and use it as a backup plan in the slower months. You can use it to pay wages, quarterly taxes, insurance premiums, licenses and permits, and emergency repairs.
Use Load-Finding Apps to Find Work
Finally, a load-finding app is going to help you find work throughout the year. Load the app and search for jobs that need a driver. You can search with your phone and find work after using filters to narrow the location, rate, size of the load, or type of load.
For example, you might have a refrigerated trailer, and that means you can take loads like milk or produce that require refrigeration. You might be looking for a load that’s large enough to fill the rest of your trailer on a trip two states away. You’ll also need loads to fill the trailer for the return trip.
Saint John Capital has a load-finding app that has millions of loads waiting for drivers. It makes it easy to find work in the slow season. You may need to adjust your winter rates to stay competitive, but it all comes down to how much competition is in your area and what the other drivers charge. You might find you don’t have to drop your rates at all.
Choose the Right Freight Factoring Partner
Choose the best freight factoring agency for your needs. When you’re researching companies to factor your invoices, look at the rates, and feedback from current clients, and ask about hidden fees. You should ask your bank if they might charge additional fees when money is being paid to you electronically or if you exceed a certain number of transactions each year.
Saint John Capital is the partner to have during the slow season. It’s so important to find all of the work you can and get paid quickly. We can help you with both. Talk to our specialists about our load-finding app and how to use freight factoring to have a steady flow of cash, even in the slow months.
