Running a trucking business is about more than just booking more work and trucks on the road. When you own a transportation company, you have negotiations to handle, drivers to hire and schedule, licenses to keep current, insurance policies to research and purchase, invoices to send, payments to track, and paperwork to organize.
If you’re an independent owner-operator, you’re the company president, driver, and office staff combined. You wear a lot of hats, and juggling all your duties is exhausting. Many companies have already discovered the massive benefit of freight factoring. It eliminates the 30-, 60-, or even 90-day waits for client payments to arrive.
What you may not realize is that factoring companies have data that helps you run your business. When you log in to the freight factoring app or platform, you have access to a wealth of data that makes it easier to manage your business. Find out how the data that freight factoring companies collect helps you improve business operations.
Four Factoring Reports That Matter the Most
Reports offered through a freight factoring company’s app or website portal may vary from one company to another, but these four reports are key. Their names may be the only thing that differs from one company to the next.
1. Customer Concentration Reports
How balanced is your workload? If 90% of your work is with one client, what happens if that client suddenly shuts down? You’re left with too little work to cover your expenses, and that puts you at risk of financial distress.
When you analyze your customer concentration report, you see if you’re focused too heavily on one income stream. You can expand your client base. This way, if a broker or shipper closes its doors, you’re still working.
2. Customer Risk Reports
One way to expand your client base is by taking on more clients. Scanning load-finding boards makes this easy, but you never know whether a broker or shipper is too much of a risk.
Customer risk reports analyze the credit histories of all brokers and shippers. Before you agree to haul a load, you already know if the client is likely to pay or not. You can quickly accept work or move on to someone else.
3. Funding Reports
Use funding reports to see a breakdown of exactly what your payment includes. You might need to check both the Schedule of Accounts and the Advance and Reserve reports, depending on the factoring app you’re using.
These reports break down any chargebacks, factoring rate, money held in escrow, and unexpected fees. It may cover the advance amount you’ve signed up for, whether it’s 90%, 95%, or 100%. You’ll see exactly how much you’re getting and can plan accordingly.
This report can help you determine where you’re losing money, especially if you’re being hit with hidden fees. You can then review your contract to ensure you’re being charged what you agreed to.
4. Invoice Aging Reports
This report lists all invoices clients haven’t paid yet. It takes every invoice you’ve submitted for advanced payment and breaks them down by how long they’ve been outstanding. Typically, you’ll see 0-30 days, 31-60 days, and 60+ days.
This is important because any invoices not paid by the due date could become your responsibility. You have to repay the money you were advanced, or you could be charged a fee for each day it’s late.
If you monitor invoices and catch them before they’re overdue, you have the chance to act before they impact your finances.
Use Those Reports to Implement Key Strategies
With the data you get from those reports, you can implement operational strategies that drive the success of your trucking business.
5. Check Driver Habits
Looking over fuel card reports, does the data show that your drivers always get discounted gas? If not, your drivers might stop at fuel stations outside the provider network. Make sure your drivers aren’t going to the closest station and are actively seeking out gas stations in the fuel discount network.
You’ve noticed that Truck A is burning through fuel faster than Truck B. This could indicate that Truck A needs maintenance. It could also be that the driver is speeding.
6. Grade Brokers and Shippers Before Working for Them
You’re scanning load-finding boards and see a per-mile rate that piques your interest. You take the job, but it’s been 60 days, and your NET 30 invoice is still unpaid. Stop making this common mistake by using report data to grade clients on creditworthiness.
Or, you’ve been working for Client A and Client B for the past year. Client A always pays invoices before they’re due. Client B pays two weeks late every month. Those late payments are getting costly, and nothing you’ve done has gotten Client B to pay you on time.
It’s time to decide whether the late-paying client is worth keeping. Even if the per-mile rate is 20 cents higher than Client A’s rate, are you losing money because of late payments?
7. Manage Cash Flow Wisely
Trucking is an industry where money woes can be especially frustrating. You do the work, but it’s weeks or months before you’re paid. It’s not like most jobs, where you get a paycheck every week or two.
Each trip your driver takes costs money. You have money going out for fuel, wear and tear on the truck and trailer, wages, tolls, etc. You need to have the funds available for those expenses.
When you have reports showing exactly how much you’ll receive from the factor, including a breakdown of fees, it’s easier to budget. You know you’ll get $3,000 tomorrow, so you can plan jobs that won’t exceed the cash you have available. That eliminates the need to rely on high-interest credit cards for the rest of the month.
Use the data from the past year to identify slow periods. When are your earnings lowest? Is your fuel consumption higher in September? This information helps you save enough in advance for slow periods and maximize the use of load-finding boards to increase your workload. You also know when drivers are busiest, so you can ensure you have trucks ready to roll.
You can also look at common problems with factoring. The report shows any rejected advance requests. They’re all linking back to a specific truck driver.
With a bit of research, you learn that the driver keeps forgetting to obtain a time stamp on the bill of lading, leading to rejections. The clerk isn’t double-checking the information before submitting. Resolve that issue for future payment requests.
Is It Time to Grow Your Business?
You’re considering buying a new truck. Use the data in the different reports to ensure you have the work for an extra truck. If you can only fill that new truck once or twice a month, you’re spending more on the truck payment than you’re making in extra profits.
Saint John Capital’s expertise in the trucking industry goes back decades. With our financial insights and field knowledge, we’ve helped many companies grow from small start-ups into large trucking companies. Sign up now to get a free quote and see how easy it is to get paid fast and have a data resource for business operations.
