Fear is griping the nation with everyone holding on to cash like it was, well, money. After years of living on various forms of credit in the shape of plastic cards and home equity, the whole shebang came to a screeching halt. Despite the astonishing downturn affecting everyone I know, I believe that the upturn will be just as dramatic so it is important to position your business now for when that happens.

Many carriers have never faced such an absence of financial support but there are alternatives out there if you take the time to look for them. Factoring your invoices can be a temporary way to free up cash flow that is tied up in receivables. At Freight Capital, we have a “Kick the Tires” program that lets you try out factoring for 30 days to see if it works for your business. Surviving a dry spell is a temporary situation that absolutely will end in the future, but you need to be ready to take advantage of situations when the business starts picking up again.

In the meantime, do not just control your expenses but eliminate the ones you can. If you allow Freight Capital to monitor and manage your accounts receivables, you can reduce back office staff. Or you can redirect your office staff into marketing your business to a wider net, essentially seeking out new opportunities where another carrier may have dropped out or a specialized need can be filled. Consolidate routes and optimize your personnel wherever you can.

Be aware that accepting a low-rate load or a quick pay trip has hidden cost in the discounted load and extra fees in the prepay process that only delivers smaller and smaller paydays. Negotiate for full-rate loads that pay higher even if they require extended terms because in the long run, servicing good-paying customers will keep your business afloat until the pendulum swings back.

Practice the very best customer service by contacting your present customers and making sure you are doing everything right by them. Personalized, heartfelt sincerity is appreciated everywhere so let them know that you value their business. Be the trucking business that is always on time, doing what you promised and providing courteous, friendly service.

Keep current on your bills and protect your credit by only hauling for reputable brokers and shippers. Some of these businesses have cash flow problems and unless you credit check every time, you may not realize that they are not keeping current with their invoice payments but moving from trucker to trucker to delay payment as long as possible.

Most all, believe that this downturn will end. There will be a pent-up release of consumer purchases as soon as the economy appears to be stable. A positive, optimistic attitude will carry your business through and telegraph to your customers that you are going to be there to deliver loads when they need you. Present yourself with confidence even if you do not feel it.

In this case, you have nothing to fear but fear itself.

A transportation industry expert, John Downing is the President at Freight Capital who specializes in financial solutions for the trucking business.

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These days there’s lots of bad economic news and most of it affects you in some way, but nearly all of it is beyond your control. Of course we all understand that the trucking industry goes through peaks and valleys due to the seasonal and sometimes volatile nature of the business.

Whadyaygonnado? The answer is to grab control of whatever you can and hold on until the economic earthquake stops shaking.

The “experts” which usually turns out to be some corporate analyst from an investment banking firm will tell you to “diversify your portfolio” and have a “financial strategy” which may make sense to larger carriers with hundreds of trucks and a line of credit at a bank. Then again, maybe not. What we need is a straight talking, no-nonsense, practical plan.

There are three basic earthquakes that can break down a truck business in a matter of months:
•    Increased Bad Debt
•    Rising Interest Costs
•    Lack of Available Credit
As bad as these 3 are, they are also the ones you can control just KNOWING what to look for instead of standing in the middle of the road and getting t-boned.

Increased Bad Debt: The transportation industry has traditionally enjoyed a low rate of bad debt, however, given the current economic downturn that could change overnight. Slow-paying customers can quickly turn into no-paying customers. If you let customers slide further and further behind, you may end up the last in line and holding the bad debt bag.

• Always credit check a customer’s credit worthiness BEFORE you accept a load
• Always manage and monitor your accounts receivable every day to collect on invoices
• Always get non-recourse that protects you if your customer seeks bankruptcy protection

Rising Interest Costs: If you carry debt you may find steadily increasing costs to manage lines of credit at conventional banks. The very people who created the toxic credit crisis are the same ones who are raising rates and lowering credit lines, squeezing out the trucking industry from financial resources necessary for demanding operations and growth.

• Change your financial partner to a company who offers you a low fixed rate
• Use a Receivable Finance Facility (factor) that can grow capital as your credit rating improves
• Steer away from companies with volume or minimum requirements that cost you monthly

Lack of Available Credit: The traditional banks routinely deny anyone credit with less than a two year track record of stellar business activity. If you have shaky credit, short-time credit or no credit history because you’re new in business, you don’t have a chance there, but there are alternatives.

• Find a factoring company that also accepts new truck companies with no credit rating
• Look for the lowest rates, fastest turnaround of working capital, and the best collection service
• Try factoring which is simply selling your unpaid invoices that deliver cash and reduce expense

There isn’t anything you can do about the price of fuel or weak demand from the consumer sector. So concentrate on the things you can control such as choosing a financial expert in TRANSPORTATION, not banking, that can shake-proof your trucking business. Once you get control of your cash flow, expenses decline, bills stop piling up and instead of survival-mode you will find you can think about the future.

A transportation industry expert, John Downing is the Vice President at Freight Capital who specializes in financial solutions for the trucking business.

I am a big sports fan and have coached football, swim teams and baseball for many years. I love all the sports analogies that one can use to motivate people. Words that resonate somewhere down deep - - words that strengthen resolve and stiffen the spine.

So it is with apologies to Vince Lombardi: Cash flow isn’t everything, it’s the ONLY thing.

When you don’t get paid right away, bills sit to accrue interest and late fees. Too many times, you borrow some money to get by and then it becomes impossible to pay it back right away, so it becomes another bill, costing you more interest and fees. It is a vicious cycle.

Some truckers resort to quick pay solutions. It looks good on the surface, but in reality they are accepting a discounted load.  The Broker knows that usually a trucker who needs a quick pay will be more than happy to take any load in order to get the money upfront that he needs. This leads to another vicious cycle of smaller and smaller paydays that squeezes the best intentioned trucker - - so the key is to stop the cycle.

Here’s the game plan: Stop waiting to get paid. If you take a moment to compare a factor rate of 1% over the possibility of permanently losing opportunities to better financed truckers, passing up customers who need extended credit terms, or accepting discounted loads just to make expenses, you’ll realize that waiting costs you more money than getting paid right now.

When you accelerate your cash flow, bills disappear fast, your credit rating improves, and debts decline quickly. Factoring invoices turns the collection process over to professional managers who monitor your accounts, without charge, to ensure you keep getting paid. Now watch your profits accumulate rapidly which allows you to get ahead of your payments and take advantage of cash discounts.

So get in the game and stay there. Stop playing around with shuffling bills, flying credit cards and underthrown paydays. Cash flow is the ONLY thing that matters and once you know how to play the game, you win.

A transportation industry expert, John Downing is the Vice President at Freight Capital who specializes in financial solutions for the trucking business.

I find it very odd that when Washington needs something from the people they talk about family, but when the people need something from the government, they talk about business. I think they are using doublespeak to confuse everyone.

An example of doublespeak: The federal government is demanding trucks have more fuel efficiency and better emission controls and with the next breath, state governments talk about adding toll roads  - - a lot of them. It seems in their haste to acquire new revenues, the states are making federal guidelines hard to achieve.

I really like this one: In Connecticut, New Jersey and DC they are poised to fine drivers who fail to clear the snow and ice from the vehicle rooftops. It’s already been approved by the state Assembly’s Transportation Committee, but it is loaded with “unintended consequences” and risks. That is doublespeak for “we have not thought it through.” For instance, when would the snow and ice need to be removed –before, during or after the load is delivered? How high or thick does it have to be to pose a threat to others? How safe is it to make drivers climb up to the roof to dislodge ice?

The biggest problem with all this doublespeak is that it drowns out any voices coming from independent trucking businesses and owner operators. It is not hard to understand the frustration and sense of abandonment that truckers feel when they hear doublespeak with a Catch-22 thrown in for good measure.

However, if there ever was an argument for joining the ATA or OOIDA right now, this is it. One trucker’s voice is easily muffled but thousands joined together are called VOTERS and that gets their attention. Tough times call for action, not despair and only those who survive this credit crunch will come out on the other side. Take a look around at solutions you may have dismissed before because you either didn’t need them or had preconceived notions about how they work.

As an alternative to troubled banks, factoring invoices is a safe financial haven that was designed specifically for the trucking industry. It does not create a debt against your company or place a lien. All it does is purchase your unpaid freight invoices for a fee as low as 1% and pays you within 24 hours instead of waiting 30-60 days to be paid.

Lucky for you, there is no doublespeak spoken here.

A transportation industry expert, John Downing is the Vice President at Freight Capital who specializes in financial solutions for the trucking business.

I want to hold someone responsible for the mess our economy is in. It makes my teeth hurt to know that the very stewards of our banking industry walked away with huge bonuses even after driving the stock market and the housing industry to its knees. The resultant fallout from their excesses of questionable loans and iffy assets is that other enterprises like trucking are being locked out of lines of credit that bridge the gap between invoices and payments.

The American Dream is not dead but it sure is taking a butt kicking these days. Between the foreclosures and disappearing retirement accounts, it is enough to make you want to opt out until it is all over. Unfortunately, in the trucking business there is no place to hide.

The average truck driver is expected to wait 30, 60, sometime 90 days to receive payment for a delivered load. In the event that a carrier cannot wait, a negotiation for an 8-10% discount for quick payment is often reached, forcing the driver into smaller and smaller paydays. Call it survival of the fittest if you want, but I think it is taking advantage of the small carrier during this credit squeeze.

Factoring is a real alternative and a simple financial solution for the trucking industry. In practice, a driver sells his freight invoice to a factoring company who advances the money quickly, minus a fee as low as 1%. With an immediate advance on invoices, profits accumulate quickly and allow the trucker to get ahead of payments, take advantage of discounts, negotiate for higher-paying loads and extend credit terms.

No, the American Dream is not dead, but we cannot wait for Washington to solve our problems or fix what is currently broken. As much as we would like to identify who is responsible, we do not have that luxury because there are loads to deliver, bills to pay and no matter what, we keep on truckin’.

A transportation industry expert, John Downing is the Vice President at Freight Capital who specializes in financial solutions for the trucking business.

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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This is a response to an article in Transport Topics from October 13: “Cash-Strapped Carriers Resort to Quick Pay Plans, Factoring.”
By John Downing, VP of Freight Capital

I would like to set the story straight.
There is a financial squeeze play going on in the trucking industry between the carrier who hauls the load and the shipper who pays the freight bill, while at the same time bank lines of credit for truckers are being lowered or eliminated.
The challenge of any size trucking company is paying for fuel, payroll and repairs every day they are in business while waiting for payment for days, weeks or months. Since the trucking industry is the backbone of commerce in this country, there is simply no way that truckers or shippers can stop doing business.
Factoring is a safe financial service solution that helps truckers continue to haul freight, employ people and ultimately stay in business during these tough economic times. It also enables the carrier to accept higher-paying loads from shippers who may need the extended credit terms. Not only does factoring speed up critical cash flow, most top-tier factors offer many other necessary services like collections, credit, account management, mitigation, fuel cards, and other supportive programs.
Our company, for example, provides cash advances to trucking companies against creditworthy accounts receivable. This advance, up to 95% of the invoice, is paid to the trucking company within 24 hours of receiving the bills of lading. The small fee we earn is not collected until the invoice is paid from the originator, which could take 30, 60 or 90 days. When the invoice is paid, the factoring fee, as little as ½%, is assessed and the remainder or reserve of the invoice paid back to the trucker.
To explain factoring in a different way, consider each time you use your VISA to buy a sandwich; the deli that has accepted your card has just factored its receivable. VISA will deposit the funds into the deli’s account that evening, charge the deli a 3% to 4% fee, and then bill the consumer for the charge — waiting the 30 days or so for the consumer to pay his or her credit card bill.
We have literally hundreds of testimonials from truckers letting us know that factoring has helped them concentrate on hauling freight while we managed their receivables and facilitated collections. Funding takes place automatically every day and with online access to account information, they can see the money going into their bank accounts and onto their fuel cards, safely and securely.
It relieves the small independent trucker from account management, but provides real assistance and sophisticated reporting to the bigger fleets. Most of all, it provides a solid cash flow — the lifeblood of any industry.
Quick-pay plans initially are appealing to cash-strapped carriers, but they contain advance fees and processing costs on what is usually an already discounted load, creating a smaller and smaller payday.
Factoring, on the other hand, allows truckers to forgo “discounted” loads and focus on taking the best-paying loads they may not have considered, since many good-paying shippers and brokers do not offer a quick-pay solution.
We also offer professional credit and receivables support, including collection service and non-recourse protection in the event the shipper goes bankrupt before paying his invoice. Since factoring is not a loan and does not create a debt for the trucker, it allows a trucking company to actually improve their company’s credit rating, expand their business and, most importantly, accept more profitable routes.
Every trucking company is different and the same goes for factoring companies. Look for a factoring provider that offers flexible, customized programs; knows and understands the trucking business; and has a good track record when it comes to spending as much time with carrier clients as they need to understand how their businesses can be maximized by finding good paying loads for the lowest cost.  Not every invoice requires factoring, so some truckers factor only the companies that are slow to pay.
At the end of the day, factoring can help take a trucker out of the pickle and literally ease the squeeze play between bills and payments. With bank lines of credit not available in the foreseeable future, factoring is a low-cost solution that provides a safe haven for the American trucker.

Based in Carlsbad, Calif., Freight Capital provides daily invoice funding along with professional credit and collection support to the trucking industry through customized factoring programs.

Everyone wants to feel like they are in control of their own destiny. But lots of times, we don’t.

So at Freight Capital we thought that everyone could relate to wanting to be more powerful, more able to face the world, especially these days when it’s so easy to get lost in the bad economic news. We thought: wouldn’t it be great to have some special power. Maybe not even a super power but something that could make you feel more in control.

We decided that the important thing was to feel that you could “Get the Power You Need”, even if you aren’t a superhero.  We designed this year’s advertising campaign based on quickly recognizable images that convey regular people disguised as “superheros” or even an awesome way to call up someone to the rescue.

Of course advertising has a purpose and we want you to see that the financial solution programs at Freight Capital can make you look like a hero to your family. Bills get paid, debts get gone and life in general doesn’t seem so glum. So we hope we got your attention to deliver our simple message.

So smile a little and enjoy the thought that there is a little superhero in all of us.