I am really tired of all the recommendations coming out of so-called financial experts who are telling the trucking industry to tighten their belts and look for ways to survive this economy by reducing costs and improving the performance of their trucking operations.
Who are these people to think that there is any room for another notch on the belt? Do they drive 11 hours a day, fighting traffic, deadlines, weather and fuel prices? Are these people sleeping in their trucks, sitting in weigh station lines, and weaving through bureaucratic policies that dictate their every move?
Probably not.
I consider myself a trucker. My granddad was a trucker and so was my father. I was in the broker business and now the financial services business for over 20 years, so at least I am better qualified to speak on the subject than some of these guys.
The truth is, being in the trucking business is more than a job. Although I would not go so far as to label it a calling, it is a near mystical experience. Being a part of a proud legacy of hard-working Americans who daily travel the roads delivering necessary goods creates a sense of accomplishment and fulfillment few other career choices achieve.
As a trucker, every day starts with a goal, whether it is to make the California to Chicago run in under 3 days in the middle of winter, or transporting Florida produce to a distribution center before it spoils. Not unlike Nascar, it is a race against the clock, the never-ending quest to beat time while playing by the rules of speed, pit stops and other vehicles on the road.
Every truck driver understands optimizing performance and reducing costs by conserving fuel, and utilizing bypass transponders to blow by most weigh stations. Most of them carry fuel cards that provide rebates and discounted fuel across the country. A whole lot of them belong to the ATA (American Trucking Association) that delivers discounted tires, maintenance services and free expert advice as well as represents their interests in Washington DC when it comes to regulating the industry.
Lately, many financial institutions have withdrawn their support of the transportation industry, stranding a reliable, if not critical, partner in our economic recovery. The trucking industry is responsible for delivering food, medicine and manufactured products to every corner of the country. Like the housing industry, truckers need practical, affordable, financial solutions for daily demands on cash flow.
So instead of implying truck drivers are not working hard enough to help themselves, we should talk about practical solutions to getting paid for delivered loads. Rather than recommending a trucker call his vendor and negotiate an 8-10% discount for early payment, we should tell them that factoring, with rates as low as 1%, are available with programs designed specifically for trucking.
You can also tell them that nearly every retailer on the planet accepts Visa and MasterCard which is the same as factoring their sales receivables. The retailer deposits the day’s receipts into the bank and receives payment immediately. In the meantime, the credit card company bills the card holder for the payment at a later date. Factoring freight invoices is no different at all!
For those who do not collect a payday at regular intervals, waiting 30, 60 or even 90 days to get paid makes it impossible to keep up with expenses. However, once cash flow is accelerated, profits accumulate quickly and allow truckers to get ahead of payments, take advantage of discounts and negotiate for higher-paying loads because they can offer extended credit terms. Factoring invoices is a quick solution to slow cash flow.
Why criticize a practical, acceptable and financially smart business solution offered by people who understand the volatile and seasonable nature of the trucking industry? In all fairness, maybe there are a few trucking businesses still out there that have not optimized their performance and reduced their costs. Let me know if you ever find any.
A transportation industry expert, John Downing is the Vice President at Freight Capital that specializes in financial solutions for the trucking business.
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