Essential Partnerships That Will Propel Your Trucking Company Forward

The trucking industry is a low margin industry. When things go wrong, you need strong relationships to draw on (not to mention a healthy cash flow) in order to make corrections. Ideally, when you foster the best relationships, you won’t hit as many stumbling blocks. Which is a good thing because errors and issues can be expensive. Here are some of the essential partnerships that will propel your trucking company forward.

Your Mechanic

You cannot afford to have trucks waiting on repairs or having reliability issues on the road. While larger trucking companies may have their own mechanics, chances are if you are starting out you will hire an outside professional. The skill and availability of your mechanic will determine how soon you can get your equipment back on the road. And it should be more affordable to bring your equipment in to this mechanic (when possible) rather than get repairs or maintenance on the road. Look for a local, independent mechanic or a shop with experience serving the trucking industry.  

Your Invoice Factoring Company

The benefits of factoring for trucking companies are huge. Getting your cash in immediately after a load is completed helps you fund the next portion of your trip. Factoring can help you deadhead for longer to get a better load, invest in equipment to help you grow your fleet and even make sure you have enough cash for a down payment. But does your invoice factoring company offer you everything it should? In trucking, bad debt can sink businesses. Consider nonrecourse factoring, a process in which your invoice factoring company may cover your customer’s bad debt.

Your Drivers and General Manager

It might be odd to think of your staff as “partners” but taking that mentality will help you get the most from them. It’s true that drivers on the road have great insights into which loads might be a better fit for your business. And, when you have a strong general manager, you can worry less about how your drivers are managing their time.

Your Customers

Your relationship with your customers matters a great deal. You want repeat business from them, and for them to spread word of how reliable your business is. When managing your customer relationships, always consider if it is in your best interests to be working with them. Larger companies may help boost your reputation, but they also tend to pay slower, and waiting for their payment can create cash flow problems (unless you’re factoring).

Your Equipment Dealer

Especially when you’re buying used, having a strong relationship with the company you’re buying or renting equipment from is a huge advantage. When their salespeople will keep an eye out for the specific equipment you’re looking for, offer you better prices on things you’d like to purchase, or just help you make better overall equipment decisions, you’ll come out ahead. Remember that it is a big trap in trucking to get in over your head with debt for new equipment. Ideally, your dealer will help you assess how much you could actually benefit from a new purchase instead of focusing on what a sale means for them.

Interested in developing a new relationship to benefit your trucking business? Reach out to J D Factors to discuss your options for factoring.

Payment Terms are Changing - Here’s What You Need to Know

Do your clients want to change payment terms because of COVID-19? Some are trying to delay payment because of their own pandemic-related financial difficulties, and it’s causing a problem for businesses across the country. 

Before the pandemic, 31% of small businesses in Canada dealt with bad debt. According to the Toronto Star, business debt and bankruptcies increased even further during the pandemic, and have affected businesses of all sizes. Global News also reported that as of January 2021, roughly 181,000 Canadian small businesses were considering closing their doors.

While you may be sympathetic to your client’s ongoing struggles, this freeze to your account receivables can seriously impact your own cash flow and undermine your business. When you can’t buy supplies, you can’t take on new orders. When you can’t pay your staff, you risk permanently losing your best people. The effects of delayed payments from COVID-19 are not just temporary, especially as we head into year two of the pandemic. Last year, 58,000 small businesses in Canada closed. If you’ve made it this far, you need a plan to keep going.

So, when clients just can’t pay because they are facing their own challenges, what do you do? You need to handle the late payment, without souring the relationship with your client. Here’s how:

1. Change Payment Terms, On Your Terms

Changing your payment terms can help encourage your clients to prioritize paying you. Shorten your payment terms from 60 and 90 days down to 30, or even have invoices due upon receipt. Add an interest charge to all late payments, so that you’re not essentially giving your clients interest-free loans while they wait to pay. It will also incentivize clients to pay, to avoid having to pay the late fees.

2. Treat Clients as Individuals

BrooksCity recommends identifying clients who are chronic late payers. Require these clients to pay early, potentially before you have even fulfilled their order or completed their work. This can force the client to prioritize paying you over the other bills that they need to pay.

3. Payment Plans

You can also offer clients who are struggling to pay a payment plan. Immediately getting even a quarter or a half of the payment that you’re owed can help your business move forward, even if you have to wait for the rest of it. You can still claim interest on the money that the client cannot pay up front.

4. Consider Invoice Factoring

Invoice factoring is a great solution because you receive an agreed upon percentage upfront, up to 97%, whether your client can pay right now or not. The invoice factoring company pays your invoices when you issue them, and then they handle collection from your clients. This allows you to immediately invest in your business and cover your costs, even if your client is very delayed in paying.

Non-recourse factoring is an even better idea during the current crisis. In this arrangement, the factoring company handles your bad debt, so that your business isn’t impacted. Reach out to J D Factors to learn more about how to protect your business while getting control over your accounts receivable, even in today's tough economic climate.

Tips for Spring Cleaning Your Business' Finances

In light of COVID-19, your business may be feeling the financial stress experienced by most Canadians. Are your business' finances robust enough to hold you over until the quarantine is over? Whatever state your finances are in, now is a good time to do some financial spring cleaning. Revisit your business goals, plans and expenses to make your business more robust for this and future challenges. 

Revisit Your Long-Term Goals

Now that your short-term business has changed so dramatically, you may need to change your long-term goals. If you don't have any written down, now is a great time to start keeping a written record of the things you want to accomplish, whether it's a sales goal, creating a new website, or launching a new product.

Unfortunately, because of COVID-19, many of the long-term goals you've had for the year may need to be pushed back. And, because of the current uncertainty about when things will return to normal, you may have to leave your long-term goals on the backburner.

However, you can still learn a lot about what your next steps should be by re-prioritizing your goals and identifying those that you can accomplish in the short-term. Maybe a new product launch isn't your next best step. Perhaps reaching an online audience or starting to ship your goods is now your top priority.

Better Business Management

Have you invested in new digital tools to help you manage your business? These solutions aren't just limited to finances. Cloud-based tools may be as helpful for communicating with clients as they are for invoicing or communicating with your employees.

These solutions do not have to be expensive, either. There are now many free or open-source versions of some popular business management tools. Although, depending on your current finances, now might be a great time to check out paid options too. You have the time to really get to know new software and discover if it will fit your needs moving forward.

Consider Cash Flow

Many businesses are having cash flow problems now as their sources of revenue pause or dry up. If you were already having cash flow problems before the crisis began, you may have had even less time to prepare your business to survive than you would have otherwise.

You can better manage your cash flow moving forward with factoring, a type of financing where you are paid up-front for the invoices you create, even though you have not yet been paid by your client. This arrangement gives you the capital to buy materials, tools, pay employees, and handle your other business expenses.

The team at J D Factors specializes in non-recourse factoring and remains open for business for new and existing clients. We know that the current situation has put a lot of financial stress on companies, which is why our team remains open for business and ready to help you.  Our advanced automated systems will allow you access to quick cash in under 24-hours. Simply send us your invoices and any backup documentation such as time sheets, delivery slips, etc. by email and we will fund you with a direct deposit into your bank account.

Our non-recourse factoring program will allow you to continue to work for and bill your customers with peace of mind knowing you will not have any bad debt. This is a great way to minimize your risk in times of uncertainty. Give us a call today to learn more about how we can help your business survive the financial uncertainty caused by COVID-19.

Four Tips to Get Yourself Out of Your Cash Flow Crisis

Cash flow problems can make the day-to-day operations of your business much more difficult. When you lack the money to pay suppliers, contractors, or fund your other operating costs, you miss out on critical opportunities. However, if you can make it through a cash flow crisis, the rewards can be great, including higher growth, and a leaner, more stable business. Here are some ways to get out of your cash flow crisis with a business that’s stronger than ever. 

1. Increase Prices

When you don’t have enough cash on hand due to huge demand from customers or the failure of some clients to pay promptly, increasing prices can quickly get you back in the black. This strategy is more immediately effective when you have shorter payment terms (one to 30 days). If your clients pay immediately, you could be bouncing back within the month.

However, you should increase prices carefully as there could be a negative impact of doing so, including slowing growth or losing more reliable customers that pay on time. If you’re concerned, you can selectively raise your prices for clients who don’t pay. Or, selectively raise your prices on select services. Ultimately, there’s a lot of thought that goes into pricing. Consider brushing up on pricing optimization before adjusting your prices.

2. Cut Costs

Cutting costs is a straightforward way to make the most of the money you do have in the bank. Take stock of all of your costs and find out if they are truly necessary for your business as it stands now. Many older businesses become encumbered with superfluous expentidures, such as software they don’t really use, staff positions they don’t really need to fill, or advertisement methods that aren’t providing a strong return on investment. Though this process can be challenging, it is very healthy for a business over the long term.

3. Revise Your Billing Practices

Increasing prices and cutting costs are rather large-scale changes to your business. You can pull yourself out of a cash flow crisis without by changing your billing practices. This is a slower method, but it can help. 

Consider the following changes to your invoices:

• Send complete and correct invoices right after the job is complete
• Change billing terms to immediate payment, or not more than 30 days
• Increase the interest you charge on late payments
• Follow-up weekly on missed or late payments
• Hire a collections agency or a lawyer to reach out to late clients
• Request up-front payment from clients who have paid late before.

4. Choose Invoice Factoring

Luckily, there is a way to quickly get yourself out of a cash flow crisis that doesn’t require large structural changes to your business. It also doesn’t require you to invest your time or money in new billing practices or methods of following up on bad debt. Invoice factoring is a simple solution that makes your business more stable.

You send your invoice to a factoring company like J D Factors, and we pay you immediately. We take on the work of forwarding the invoice to your client and following up on late or missed payments. Meanwhile, you already have the cash in your pocket, and you don’t need to dedicate resources to debt collection.

J D Factors also offers non-recourse factoring, which means that if your client goes bankrupt and can’t pay, we’ll protect your cash flow by taking the loss. Reach out to us today to learn more about our non-recourse invoice factoring services.

Never Have to Write Off Bad Debt Again

When a client of yours is unable to pay you, you simply have to take the hit. You can write off bad debt, but you can’t recover the strain on cash flow you’ve been suffering, and you can’t get back the time you spent trying to recuperate the debt. In fact, bad debt hurts companies in both B2B and B2C industries more than you might anticipate. 

The Negative Effects of Bad Debt

Typically, you will complete a quote or project for a client well before you realize they won’t be paying you. The result is a reduced cash flow that doesn’t just affect the un-paid project, but also your projects with other, more stable customers.

How does reduced cash flow from a delinquent client negatively impact customers with whom you have a strong relationship? Reduced cash flow means you run the risk of not being able to quickly fulfil customer’s orders and it can prevent you from expanding your business, buying new equipment, or taking advantage of opportunities for growth. Writing off bad debt can cause you to lose a hundred little opportunities.

One bankruptcy can ripple throughout a whole industry. The bankruptcy of Target Canada Co. left more than 1,700 companies with bad debt, ranging from a few thousand dollars to a few million. Any amount of bad debt can threaten a company’s future success, and all of these companies will have to handle this shortfall somehow.

Five Tips to Avoid Bad Debt

It’s best not to let yourself get into this situation in the first place. Here are our best business accounting tips to avoid bad debt:

1. Use Credit Checks

You can avoid a landmine of bad clients by checking their credit. Even if you do want to take on clients with less than stellar records of payment, when you use credit checks you’ll understand what kind of risk you’re taking on. When you work with J D Factors you receive complimentary client credit checks.

2. Send Invoices and Follow-Up Aggressively

Even a few extra days of non-payment can affect your business, so you need to send invoices right away to get the ball rolling. What about following up? Don’t be aggressive in tone, of course, but following up on missed payments is important to keep the pressure on clients and be sure you’re at the top of their payment list.

3. Penalize Late Payments

Think about it, if a client has more than one outstanding invoice, they’ll pay whichever one is costing them the most first. That’s why it’s important to charge interest on outstanding payments.

4. Hire a Collection Agency

How do you chase after bad debts without taking up too much of your staff’s time? It can be more effective to use a collection agency whose staff have the training to get payments faster. Even better, use a factoring service like J D Factors and the invoicing and debt collection becomes our job.

5. Use Non-Recourse Invoice Factoring

Non-recourse factoring protects you from ever having to write off bed debt. The factoring company pays your invoice right away and takes on the risk that your client may not pay if their business goes under. At J D Factors we will not ask for your money back if your client never pays us due to bankruptcy. You significantly reduce your risk, and don’t have to waste time and resources chasing after payments. Give us a call today to learn more about factoring.