How many weeks go by between payments from your clients? If your brokers or shippers pay invoices once a month, it may be weeks before you get your next payment. Meanwhile, you have salaries to pay. Your electric company doesn’t care that you haven’t been paid yet. You need to fuel up your trucks to keep drivers on the road and making money.
If you haven’t started using same-day payments from your freight factoring company, it’s time. Being paid the same day is essential with today’s rising costs.
How Much Do You Spend Each Month?
It’s estimated that a trucker’s expenses are around $17,500 per month. Driver salaries and benefits are the biggest expense each month.
Wages and Benefits
A big portion of your expenses are your truck drivers’ wages. It’s estimated that a tractor-trailer truck driver gets an annual monthly wage of $4,195 per month. That’s just wages. You also need to offer a benefits’ package that keeps your employees happy. Without drivers, you won’t make any money.
Health insurance for your employees and yourself is important. Dental is also desired by employees. You might want to offer short-term disability and life insurance, too. If workman’s comp isn’t required in your state, you should consider adding that to a benefits package.
A large percentage of this cost is fuel for your trucks. You’ll be filling up trucks regularly, and those costs will fluctuate.
Rising fuel costs may quickly increase your expenses. Between May 9th and May 16th, the average cost of gasoline went from $4.328 to $4.491 per gallon. That’s almost $1.50 per gallon higher than a year ago.
Diesel prices went down slightly from $5.623 to $5.613. The small drop doesn’t help when you think about the fact that diesel prices are up $2.364 from last year. As fuel costs increase, the need for a steady flow of cash is more important than ever to keep up with the rising costs.
Truck Loans, Insurance, and Maintenance Expenses
The third biggest expense is for your trucks. You may be paying truck loans still, so those monthly payments are a regular expense. You also have to pay for regular maintenance and tires. When tires wear out, it’s recommended that you replace them in sets. A general rule is that tires will be replaced every three to six years, so the expense of replacing them gets costly.
You need to price and sign up for commercial truck collision and comprehensive insurance. Bobtail insurance covers times when your truck is not hauling a trailer. Cargo insurance is also essential and covers the items you drivers are hauling.
In addition to the insurance that protects your trucks, cargo, and drivers, there are other insurances to consider. Gap insurance pays off your business vehicle loan if the vehicle is totaled or stolen and the depreciated value is less than the amount you owe. Suppose the depreciated value of your truck is $100,000, but you owe $110,000 still. Gap insurance covers the extra $10,000.
What other monthly costs do you have? Registration, training, licenses, and business permits are fees you’ll pay every year. If you use any subscription-based office software for tracking loads, finances, and office supplies, you’ll pay for those throughout the year. Utilities, rent, and business loans are other possibilities. On the road, there are tolls, traffic fines, food costs, and parking fees. Drivers may need accommodations, too.
Finally, you need to pay for load board sites and software that helps you find loads. The best way to maintain revenues is by making sure your drivers never travel with an empty trailer. With find load software, you can search for loads on routes your drivers are taking each day. If you have a driver delivering a load from Chicago to Atlanta, what happens on the way back from Atlanta to Chicago?
Understanding Freight Factoring
Freight factoring your invoices ensures you’re paid the same day or within a day or two of delivering a load. But, how does freight factoring work?
Freight factoring is a helpful service where you pay an invoice factoring firm a small fee to process and pay you for the money you’re owed by a broker or shipper. Submit the bill of lading to the invoice factoring firm. It’s processed, the fee is removed from the amount due, and the balance is paid to your bank account or credit card.
Here are a couple of things to keep in mind with freight factoring. First, there are recourse and non-recourse arrangements. With non-recourse arrangements, you’re not responsible to give the money back if your broker or shipper never pays. Recourse requires you to repay the freight factoring company if your client fails to pay an invoice.
Second, you need to see how much money is advanced. Some offer 100% advances, so you get all of the money that’s owed, minus the freight factoring fee. This is usually offered if you submit the bill of lading after delivering the load. You can also get paid when you pick up the load, but it is a percentage of the money owed rather than the whole amount.
What happens if you have a client you work with and know they always pay as soon as you invoice them? If you register with an invoice factoring company, don’t you have to factor all invoices with them? No, you’re free to pick and choose as you want.
Don’t Overlook the Benefits of Freight Factoring
What are the benefits of freight factoring? The biggest is that you get paid immediately and no longer have to wait until the end of the month or next billing cycle. Same-day payments sounds great, right?
You also no longer have to generate invoices and mail, email, or fax them to your client. Saint John Capital does the invoicing for you and gives you a file that you can download directly to your accounting software. It’s quick and easy and eliminates a lot of your bookkeeping tasks.
How Do You Get Same-Day Payments?
Ease stress by getting paid quickly. As long as you submit bills of lading by the daily deadline, same-day payments are possible. You do need to pay attention to cut-off time, though.
Same-day payments are by Saint John Capital as long as your drivers take a picture of their bills of lading and submit them through the app by noon EST for processing. If they miss the deadline, payments are submitted the next day. You must have a Saint John Capital credit card to get same-day payments. If you prefer to get an electronic payment to your bank, that will take a few days to reach your account.
In addition to same-day payments, talk to Saint John Capital about our business credit card that helps you save money on travel expenses, fuel, and more. Our app can help you find loads, assign and track loads, and run free credit checks on brokers or shippers you haven’t worked with before. You’ll have peace of mind knowing you’re about to work with a reputable client.
Saint John Capital works with trucking companies of every size. Whether you have one or two trucks or have an entire fleet with more than a dozen trucks, our fees are the lowest you’ll find and our dedicated customer service team is happy to address any questions or suggest other services that would help you grow your businesses.