Tips to Save Fuel and Manage Trucking Expenses

With rampant inflation throughout the economy, especially in diesel prices, it is harder than ever for shipping and transport companies to keep their cash flow healthy and their margins strong. You’re likely paying more in operating costs than you ever have in the past. That means your accounts receivable aren’t going as far and, when there is a delay in payment, it hurts you even more. How do you save on fuel and reduce your expenses as much as possible? Here are some options you may not have considered.

Vehicle Efficiency

Vehicles with even minor issues become less efficient and burn more gas than they would normally. Work with your mechanic to correct issues before they cause major losses in efficiency. Tire pressure is one such example. Lowered pressure forces your vehicle to use more fuel to get to the same place. Your mechanic should be familiar with the other problems which could seriously impact your fuel usage.

Also consider the efficiency of the trip itself, by considering factors like load balance. Make sure drivers pay attention to and manage axle balance, especially when moving unusually shaped items on flatbeds. Proper balance can significantly improve fuel efficiency.

Newer Vehicles

It can be difficult to afford new equipment, but when you need to make an investment anyway, choosing equipment that offers much better fuel efficiency (which is often new equipment) does make sense. You can simply do the math on this one and determine, with its better fuel efficiency, how much the new equipment will save you in fuel costs and how long it will take for that amount to make up for the increased cost of the equipment. Considering how expensive fuel costs can be for even one trip, more efficient equipment is often very much worth the investment.

Fuel Reductions

If you have contracted fuel, you’re in a better position to negotiate the price down. But what if you’re a smaller business that can’t negotiate for a bulk deal? There are some options that even the smallest operations can take advantage of. One of those options is to use apps which track gas prices. Smart drivers can try to fill up only where prices are lower.

Another option is to use credit cards which offer cash back on fuel purchases, or fuel cards that are specifically for deals on fuel. There are many of these available and it is worthwhile to compare them.

Invoice Factoring

Keeping your cashflow healthy will help you afford things like higher gas prices and the investments you need to make in order to reduce your fuel usage, such as new equipment or better driver training. Invoice factoring is an excellent way to keep your cash flow healthy enough to handle high inflation in fuel prices and in general.

When you work with an invoice factoring company you get paid for your delivery the moment that you issue an invoice for it—or within 24 hours. When you immediately get your cash on hand you can invest it back into your business or use it to extend your runway.

There is more to learn about how invoice factoring can help you. Reach out to J D Factors to explore this option.

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.

Solving Supply Chain Issues in the Transportation Industry

Recent, heavy demands on the supply chain have caused issues that are affecting almost everyone, especially members of the supply chain itself. Transportation companies, freight businesses, and commercial fleets are being hit hardest and may be taking serious financial hits as a result. At J D Factors, we can show you how to roll with the punches without the debt.

Increase Financial Stability

The key to financial stability is maintaining a steady inflow of working capital. So that even if interest rates or loan payments continue rising, you’ll be able to sustain your business operations. One way to increase your working capital involves the payment schedules of your invoices. The typical payment windows for an invoice issued by a transportation company is 30 or 60 days. Sometimes businesses even offer 90-day payment windows. These lengthy waiting periods mean that you’re not generating revenue as quickly as you’re actually able to.

During the current supply chain crisis, you want to receive your revenue as soon as possible by removing these wait times. That’s why many transportation companies are using accounts receivable factoring to gain access to their revenue more quickly.

With factoring, any unpaid invoices are turned into cash and quickly made available. This is a fast, simple process that lets you access unpaid receivables while increasing cash flow. Factoring also eliminates long payment windows! The consistent working capital received from factoring will help you survive the uncertainty of the supply chain and other economic factors. With over 30 years of experience J D Factors understands the needs of those in the transportation industry and we’re prepared to walk you through the type of receivable factoring that will make you feel confident in the face of today’s economic environment.

Promote Growth and Efficiency

This doesn’t mean that factoring is only for struggling businesses, rather, factoring is utilized by many flourishing organizations to promote growth and increase operational efficiency. The stable cash flow stimulated by factoring further increases your control as you can spend less time worrying about invoices and more time making the critical decisions that separate you from your competitors.

If you’re still hesitant to pursue factoring, you should know that not all of your invoices need to be factored! Together, we can decide how many invoices you’d like factored and the priority of each. With heavy supply chain demands, invoice factoring offers a lifeline of stability to companies within the transportation industry. Give our team a call to learn more.

Invoice Factoring for Fleets: How to Grow in the Transportation Industry

The transportation industry can be tough, even in times of great demand. There are so many variables, a large financial commitment for growth, and changing economic conditions to throw a wrench in the best laid growth plans. One of the top things you can do to make your fleet more successful is to use factoring for at least some of your invoices. If this comes as a surprise to you, you’ll be interested in the data from RigDig Business Intelligence, which shows that since 2017, and especially during the Covid-19 pandemic, fleets that use at least some factoring have been outpacing those that don’t. 

Here’s the data, and why we think invoice factoring plays such a pivotal role in supporting the transportation industry specifically.

Fleet Growth Over Time

From 2016 to 2020, the size of fleets that use some form of invoice factoring has grown by 90%. In the same time period, the size of fleets that do not use any factoring has only grown by 30%. This is on average, so individual companies will have grown more or less depending on their circumstances. Still, the overall impact of factoring is clear. Transport companies that use at least some invoice factoring can better leverage opportunities to grow.

Why Is Invoice Factoring Successful?

Transportation is one of the industries that can benefit from invoice factoring the most. You have small margins and very long lead times. Potentially, your clients may take 30 or even 90 days to pay you, and that is after the delivery is completed.

When you’re trying to complete a new order, you may need to make investments and then wait for the cash to reach your pocket for even six months from the time you first wrote an estimate. In the meantime, you need fuel, payroll, and the cash to cover your other operating expenses. Putting business from more reliable customers on hold to handle large new accounts can jeopardize the stability of your business overall.

With all of these challenges to growth, and even day-to-day stability, invoice factoring is an excellent solution. After the delivery is complete, you send out your invoice to a factoring company like J D Factors. We pay you within 24 hours, meaning that you immediately have the cash to cover expenses incurred in the delivery, and keep investing for the next ones. That cuts you down from 90 days to one and keeps your business running smoothly.

Invoice factoring gives you better cash flow, which means that you can take advantage of opportunities that pop up, whether it’s a new fuel card, an order from a new client, or making new investments in quality trucks.

Cash flow isn’t the only benefit. Your factoring company will deal with invoicing your client and receiving payment. That means you spend no time chasing accounts receivables, reminding people about payments, or sending out ignored emails and calls. In fact, with non-recourse factoring, you are protected further against clients who don't pay because of credit issues, stop answering your calls, continuously break promises, or even file formal bankruptcy or bankruptcy protection. You reduce your burden of bad debt and have a significantly more stable business. Looking for an advantage this year? Discuss invoice factoring options for your transportation company with the team at J D Factors.

Negotiating Terms? Avoid These 4 Common Mistakes

The biggest mistake a small business owner can make when they are working with a bank is to think that the terms the bank presents are non-negotiable. The truth is that you can and should ask for a better interest rate or other more favorable credit terms. However, small business owners who are not used to negotiating these important financial arrangements often make mistakes. 

Here are the common mistakes you need to avoid in order to get the best terms when negotiating credit with a bank.  

1. Avoid Being Intimidated 

It can feel daunting to negotiate with such a large organization, and one that has so much power over the future of your business. But remember that there is more than one bank out there and the others want your business too. There is no reason to be intimidated by the bank or the people you speak to there. The person negotiating for the bank is not all-powerful and is a person, just like you.

2. Do Your Homework

Why do you deserve better terms? Just wanting them will not be a compelling enough reason. You should demonstrate the reasons that your business is more likely than average to pay back your loans or to be a good customer to the bank over the long term. Arrive to the meeting aware of all the information that may be important to bring up. Discuss your credit rating, the future prospects of your business, or the kind of investment you’re making with the credit the bank is offering you, if any of those facts would be compelling.

Whatever your argument, preparing it ahead of time will give you the opportunity to pull the numbers and make it more appealing to the bank’s representative. 

3. Listen to Build Trust

The bank will have its own reasons that the initial terms they offered you are acceptable. By listening to the representative’s counter arguments and perspective you gain valuable insight about which terms the bank might be more open to negotiating and what they would need to see in order to offer you better terms where they currently cannot.

Perhaps the bank is inflexible on the interest rate, but more flexible on monthly payments or overall credit amount. By listening you can find opportunities. You’ll also build more trust with the bank’s representative, who will realize that you understand their perspective and will therefore be more willing to work with you.

4. Know What's Good Enough

It’s rare in any negotiation to get precisely what you ask for. You’ll walk into the negotiation knowing what you want, but you should also know where to settle. What terms would be good enough to get your business the credit it needs? When you know the bare minimum you’d be willing to accept you will know when you should walk away and pursue other options.  

If the negotiation doesn't go well, keep in mind that you have other financial options available to your business. Invoicing factoring is a great option, particularly if your negotiations with the bank don’t fare well. Reach out to J D Factors to learn more about this alternative option.

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.

Invoicing Do’s and Don'ts - Advice from the Experts

You've done the work, now it's time to get paid! Are your invoices encouraging your clients to pay quickly and on time? Your invoice is part of your customer's experience with your business and doing it well will encourage them to pay you faster. 

It's important to be paid quickly – a good payment turnaround can benefit your business because strong cash flow lets you pay your bills, capitalize on opportunities, and remain stable. It all starts with invoicing. Here are our invoicing tips and guide on how to get paid quickly.

Include a Due Date

You shouldn’t think of your invoice due date as optional. Clients absolutely need a reminder of when the invoice is due whenever they look at it, or there’s no real motivation to go and pay it. You should also think carefully about the terms of your invoice. If your industry standard is 60 or even 90 days, you may want to buck the trend with something more reasonable, such as 30 or 15 days. These terms help you get paid faster and help you get on missing payments faster, too.

Also, keep your due dates consistent so your clients understand when they should pay.

Create a Self-Service Portal

Mailing or hand delivering invoices is outdated, and even emailing them creates the opportunity for them to get buried or land in someone's spam box. Try a self-service portal instead that offers payment methods to customers. Deliver the invoice through the portal, so that your customer is immediately able to pay the moment that they get the invoice.

Choose a portal with lots of payment options, or you will discourage your customers from using it.

Direct Your Invoice Properly

Sometimes your point of contact in the company is not the best person to send the invoice to. When you start working with a client, ask them who should receive the invoice. Often, you’ll have a dedicated contact in accounting who should get all of your invoices. This can save you time, as you won’t be relying on your contact to send your invoice to the right person. That extra step can actually add a lot of time if your contact is busy.

Offer Early Pay Discounts

If it is affordable for your business, offering a small discount for early payment can really help you get paid faster. Try offering a two percent discount for payment before the 15-day mark, or even earlier. Customers who want to take advantage of this discount will often pay the moment they get their invoice. That can save you a tremendous amount of time and work in collecting the invoice.

Don’t offer too much of a discount, or a discount for common pay terms like 30, 60, or 90 days. Those who pay exactly on-time should be motivated by late fees. Use a discount only to encourage the fastest turnaround possible, or you may simply be losing money without getting enough benefit.

Are you still struggling to get paid quickly, even when using these best practices? You can get paid even faster and have a healthier cash flow with invoice factoring! At J D Factors, we pay you as soon as you send your invoice, which can have huge benefits to your business. Reach out to learn more about factoring today.

5 Ways Factoring Can Reduce Your Operating Costs

We normally think of factoring as a way to fix cash flow problems. While that's true, factoring can also reduce your operating costs. Simply having consistent cash flow on hand and reducing the overhead you need to manage your accounts receivable can significantly lower your operating costs, making your business that much more efficient and profitable. Here are five ways that you can use factoring to reduce your operating costs: 

1. Outsource or Better Manage Staff

Do you currently use subcontractors to fulfill the larger orders you get? Do you have to lay off staff sometimes when your cash flow dries up? Factoring ensures a consistent cash flow, which allows you to manage your payroll or outsource some tasks to make your business more efficient.

Consistent cash flow may also mean that you can keep more, higher quality staff on hand. Creating a better work environment will enable your employees to give you their best, which can reduce overtime payments and the high one-time costs of hiring and training.

However, it can be even more cost-efficient to outsource specific tasks, including IT, accounting, and marketing, all of which can substantially decrease your operating costs. 

2. Buy Materials in Bulk

For some industries buying in bulk can be a huge savings. Suppliers can afford to give you significant discounts when you buy up more of their product, and this can even lead to a better working relationship with the supplier over time. You become a better customer, who gets more of their time and attention.

Unfortunately, not every business has the cash on-hand to buy in bulk, even when they know they’ll use all the material quickly. Invoice factoring can give you the cash boost you need to make better purchasing decisions, including getting those bulk discounts.

3. Buy Based on Subscription

Working with perishable goods? Those in food manufacturing and similar industries may not be able to buy in bulk because they won’t use all of the supplies in time. In this case, suppliers are more likely to work out discounts based on how consistently you purchase from them. Some suppliers have moved to subscription models; however, you may not be able to take advantage if you have an inconsistent cash flow. Invoice factoring can help. 

4. Accounts Receivable Management

When you use invoice factoring you do not need to manage sent invoices or chase clients to pay you. This can save a ton of time and money. Not having to remind clients about invoices and arrange for payment may mean that you can reduce your accountant or receptionist staff or freeing them up to maximize your business in other ways.

5. Save on Collections Agencies

There are some clients who just won’t pay, so you need to use collections agencies or other expensive measures to get your money from them. One great thing about non-recourse invoice factoring, is that you never have to worry about collecting from a client. If they don’t pay, your factoring company will do the work of taking them to court for you.

At J D Factors our team will work with you to create a plan to reduce your operating costs. Reach out today to learn more about how factoring can help your business.

5 Ways Factoring Can Fix Your Payroll Woes

For millions of Canadians, the first of the month, mid-month or end of the month is a time of relief. Pay day! A time when bills can be paid, savings accounts topped up, and for the 53% of Canadians who are living paycheck to paycheck, necessary purchases made. 

However, pay day may have the opposite feeling for many business owners, especially those without a healthy cash flow. For businesses struggling to make payroll, it can be a time of stress and a scramble to come up with the cash to pay employees what they’re owed. To do so might mean investing time and resources chasing overdue invoices, transferring funds from one account to another, or even drawing on debt. This moment of panic often takes place quietly, so as not to raise concern with employees, which can add further to the stress and isolation experienced by business owners.

Sound familiar? If so, then it’s time to consider factoring for payroll.

One Simple Process to Remove the Stress Associated with Payroll

Factoring for payroll is a service offered by J D Factors and other factoring companies that’s designed to reduce the common stress and uncertainty associated with payroll.

Here’s how it works: Your business turns over your invoices to the factoring company who will then pay your employees consistently and on time. The factoring company will collect the money owed from your clients when each invoice is due. In this way, factoring for payroll is the ideal solution to solve your cash flow issues and ensure that your employees are paid, no matter when your client’s invoices are due.

The Benefits of Factoring for Payroll

Factoring ensures that your employees are taken care of, stabilizes your cash flow and reduces your stress come pay day, but these aren’t the only benefits. Factoring eliminates the time spent chasing clients for overdue payments, a process which is often uncomfortable and can strain important relationships.

Factoring is also a way to provide your business with the cash it needs to grow and stay competitive, because when you use factoring, you know you have cash on hand when you need it rather than having to wait for payment, or wait for a commercial loan to provide the funding that you may need now. This benefit is especially useful in cases where there’s an opportunity to take on a new client but doing so requires an immediate upfront investment in product, equipment or people.

How Much Does Factoring Cost?

Factoring companies will take a percentage of each invoice as their payment. This amount will depend on factors such as:

• Monthly sales
• Terms of sale (net 30, net 60, etc.)
• Level of concentration (one customer at $100,000 vs 10 customers at $100,000)
• Your customer’s credit profile
• The industry.

At J D Factors, we’ll sit down with you and discuss your goals, challenges and finances to ensure that you choose the type of factoring that’s most beneficial for your situation and industry. We’ll also take the time to explain all the terms and conditions of your contract so that you have the knowledge you need to make an empowered decision that supports the future of your business.

So, what are you waiting for? Eliminate your payroll woes and protect your employees and your business. Give J D Factors a call to explore the benefits of factoring for payroll.