From an outside perspective, the trucking industry may seem pretty straightforward, but anyone within the field knows that’s far from the case as no two fleets are created equal. A fleet’s performance is impacted by various factors that pose unique challenges. Specifics such as region, product, and proximity play a large role in shaping a fleet which explains why different fleets benefit from various solutions.
When it comes to smaller fleets, is investing in a management tool practical? Will it really help your fleet to expand or just end up costing you money?
We took a look at what services like freight factoring and preventative maintenance can do for small to mid-sized fleets and found that they all strive for the same objective: seamless fleet operation. These tools work together to provide the same advantages in different areas of your fleet.
Freight factoring, also known as load factoring, allows for greater stability when it comes to your fleet’s revenue flow, while preventive maintenance management software focuses on stabilizing your fleet’s functionality.
What is freight factoring?
Freight factoring is essentially a way for fleets to easily manage their cash flow. One could assume that since low-volume fleets have a smaller overhead, a cash management tool would be superfluous. Although, factoring has more perks than meets the eye.
A factoring company buys invoices from fleets and pays them out quickly, generally for a small fee. By handing the invoice process off to a third party, fleet managers are ridding themselves of potentially chasing customers for payments, invoice confirmation follow-ups, and, most importantly, the waiting period. With advance payments, fleets can put that money right back into their operations by means of equipment, fuel, wages, insurance, preventive maintenance, and so on.
Successful feet operations are the result of an extensive team with skills ranging from organizational vision to mechanical engineering. With so many moving parts come plenty of expenses, making it difficult for smaller fleets to compete on a large scale. Freight bill factoring allows fleets to establish uniformity within their expenses by providing payments within days rather than weeks.
Is freight factoring right for your fleet?
There are a lot of factors to weigh when considering outsourcing, but if you find your organization struggling to make ends meet between cleared invoices, then load factoring could allow for business expansion and increased profitability. Gaining a competitive edge requires working capital, so investing in services like factoring could be worthwhile depending on company goals and financial obligations. By adopting load factoring and increasing cash flow, fleet performance can be enhanced by developing a more in-depth preventative maintenance plan or adding more vehicles.
If growth is your company’s biggest objective, then chances are load factoring is an economically savvy decision, but if the intent is to dig yourself out of debt, freight bill factoring won’t be a quick solution. How your team takes advantage of the time they save needs to outweigh the fees associated with factoring.
Can freight factoring really help small fleets grow?
Various reports and case studies showcase that load factoring is proven to help small and large fleets alike. Overdrive Magazine has been invested in these analytics in the past, publishing a series of articles that took a closer look at the results of a four-year study conducted by their sister company RigDig Business Intelligence.
In that study, RigDig found that small fleets (10 power units or less) that employed load factoring services grew by 90% while similar-sized fleets that didn’t adopt load factoring services only grew by 30%.
Todd Dills of Overdrive dove into how using load factoring helped those fleets achieve such impressive results. Outsourcing introduces excess time to fleets as well as risk management, resulting in this substantial growth. While acknowledging that not every fleet requires factoring services, Dills notes that a fleet’s needs can change as it expands and new shippers are added, as that’s when the odds of delinquent accounts increases.
Past-due invoices don’t just withhold money from a fleet’s budget, but they strip companies of financial stability. A strong financial footing provides a company with security while also eliciting trust and dependability from its customers.
Load factoring can be adopted even as a preventative measure. Fleets will often employ the service even if it’s rarely utilized, almost as a backup option if expenses begin to build up faster than account receivables. A stack of unpaid invoices can even be within the parameters of a contract, which was the case for Louisiana-based company Alexis Group Logistics.
Before implementing load factoring, they could wait up to two months to be paid by some of their top customers, which required longer payment terms. Freeing up cash flow allowed for faster transactions and even led them to qualify for equipment financing to add more vehicles to their fleet.
What can load factoring teach us about preventive maintenance?
Just as load factoring rids fleet managers of monitoring collections and cash flow, preventative maintenance absolves time-consuming tasks such as data entry and facilitating communication.
Preventive maintenance management software takes all of the moving pieces that make up your fleet and your team and gets them into a central platform that you can use to add and track assets, schedule inspections, manage workflow, and track expenses. Limiting manual processes is just one of the ways that preventive maintenance management software can help small fleets achieve their bigger-picture goals.
Smaller fleets mean smaller teams, and when company growth is the objective, that typically means all departments are working overtime. When fleet managers, drivers, technicians, and other personnel are working tirelessly to follow up with clients, verify inspection schedules, manage budgets, and keep vehicles safe, it doesn’t leave much room for anything else. Freeing themselves of those tedious duties allows small fleet owners to concentrate on other aspects of their business.
With a growing business, efficiency is the most valuable thing. The real benefit of these tools is the gift of time.
Reliability, risk management, and efficiency; are these the keys to growth?
In the end, load factoring and preventative maintenance share the same core principles: reliability, risk management, and efficiency.
Smaller fleets have to stay on top of expenses and cash flow to guarantee they’re always ready to hit the road, especially when they’re interested in expanding. Turning down jobs is out of the question for a growing fleet, so having sufficient funds available to deliver exceptional service is essential.
Cash flow is part of the equation, but so are other factors, such as equipment and staffing. In an ideal system, the revenue and the operations division work hand-in-glove to fuel smooth daily operations and generate profits that generate growth.
A preventive maintenance plan is the best way to get your fleet’s operations into a routine that achieves the same reliability, risk management, and efficiency that you expect from your revenue. Preventive maintenance is a proactive approach to making sure your assets and team members build momentum over time, but getting everything in place and maintaining a plan can be a huge challenge without the right tools.
Fleetpal delivers preventive maintenance management tailored to small and mid-sized fleets
Here at Fleetpal, our passion lies in optimizing fleet efficiency for all. In order for that to happen, fleets need to eliminate manual processes and introduce tools that allow for more time, flexibility, and cash flow.
Dills said it best when stating, “People don’t get into the trucking business because they love pushing paper around”. In today’s digitally progressive world, manual processes are a thing of the past.
Both load factoring and preventive maintenance software are designed to make challenging parts of our industry easier to manage for fleets that are looking to grow. They approach problems from different standpoints, but all aim for predictability, the elimination of risk, and efficiency. When you deliver those benefits to a fleet, they are free to focus on excellence in their everyday operations and the persistent pursuit of their long-term goals.
The advantages that load factoring and other outsourcing services bring to small and mid-sized fleets are the same advantages that Fleetpal aims to provide with a full-suite fleet maintenance management solution. Schedule a call with us today to discuss your preventive maintenance challenges and hear about all problems Fleetpal can solve for your fleet.