5 tips to optimize cash flow in transport & logistics

Tips to improve cash flow for your transport business

Here's how you can achieve a healthy cash flow for your transport company

The objective of all transport companies, beyond providing a valuable service to society, is clear: to make money. Nobody has a business to generate losses and, in the end, the profits must always outweigh the expenses. However, in the logistics and transportation sector, not everything is so simple.

The count is clear: if demand increases, truck companies need to increase their operations. This means higher upfront costs for trucks and equipment and quite possibly long weeks of waiting to receive the revenue from your services. Something that can translate into a cash shortage that threatens your transport business.

Most transportation professionals might encounter some hurdles in keeping a healthy cash flow. The increased competition in the market and the growing demand to incorporate emerging technologies and high fuel prices place a heavy burden on operations. 

On many occasions, the high maintenance costs for fleets of trucks, personnel, or facilities, mean that we must incur unexpected capital outflows that can disrupt your business plan. For this reason, the first thing we must stress is that it is essential to have a sustainable cash flow.

Against this backdrop, it may be difficult to have an optimistic outlook for cash flow. But all is not lost. There are already specific solutions to save and, more importantly, to obtain fast and reliable financing.

Customer verification and invoice control for transport professionals

Three ways for transport professionals to remain solvent and protect cash flow:

1. Analyse your potential customers: Don’t panic; there are several ways to stay ahead of the curve. First of all, it is important to analyze a new customer's ability to pay before closing a new contract. No matter how renowned the company may be, if it has a long history of non-payments or long delays in payment, it will hardly be any different in our case. In this sense, before closing a transport deal, it is possible to reach an agreement with the customer to pay you immediately, just after the delivery of a load.

2. Document your transport invoices and keep a client register: It is quite common that, due to the chaos of the day-to-day, some invoices may be misplaced. A mistake that can be very costly. Keeping an exhaustive follow-up of invoices is essential, and in case you have to claim a payment, if you do it politely and have given the customer the benefit of the doubt beforehand, it can even strengthen your business relationship. It is also interesting to keep detailed records of the clients you have worked with. This way, if you work with them again, you won’t encounter any problems due to negligence.

3. In addition to all this, we can count on external help. Teleroute, for example, is the only freight exchange on the market that offers Fast Payment, so when you need your money quicker, we can get it to you within 48 hours.

In addition to these purely administrative decisions, there are other tasks that can help you improve our cash flow.

- Good planning of regular expenses will help you calculate in advance your costs according to the average price of the resources you need and the number of kilometers you expect to travel.

- Likewise, having up-to-date equipment, with which you save on maintenance and fuel, will save you money at the end of the month.

For most transport companies, the use of digital technologies is one of the best ways to end inefficiency. In fact, one of the biggest hurdles in in transportation businesses is to improve efficiency by reducing empty kilometers. This is where freight exchanges such as Teleroute come into play. Through its online platform, Teleroute connects supply and demand for capacity. Having access to this information makes it possible to manage the company's daily activity in a more sustainable way, with multiple alternatives for contracting, thus reducing empty kilometers.

Finally, we can think about reducing costs in areas that do not contribute to your company. Are all the services you provide cost-effective? Is the company outsourcing work that can be done more cheaply in-house? Are there new technologies that can eliminate more costly methods of getting a job done?

It seems like a lot of processes, but in the end, once they are internalized and routinely performed, they allow your business to run much more smoothly.