Why Fast Carrier Payments Matter
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Estimated reading time: 3 minutes
Running a trucking company comes with challenges, including the ever-rising costs of doing business. Although owners bring deep industry experience to their companies, they often don’t have deep cash reserves to match. And because shippers typically take 30, 60, or even 90 days to pay, gaps in cash flow can lead to budget pressures, increasing debt, or even company closures. In fact, hundreds of trucking companies faced cash flow issues in 2019 and went out of business as a result.
Threats to Carrier Cash Flow
Fast carrier payments are more important than ever to maintaining healthy cash flow since trucking costs of all kinds are on the rise:
- Operating Costs. From 2017 to 2018, operating costs in trucking increased 7.7% year-over-year, and all signs indicate that the trend will continue. According to a 2019 report from the American Transportation Institute, oil embargoes and trade restrictions could continue to inflate fuel prices, which already represents a top expense for trucking companies. Equipment and new truck purchases, increased repair and maintenance costs, greater truck usage, and labor costs during a diesel technician shortage compound the issue (ATRI).
- Insurance Rates. Large accidents and multi-million-dollar lawsuits caused insurance rates to rise by 12 percent on average and as much as 30 percent for some trucking companies, even those with no accidents. Federal law requires minimum coverage limits of $750,000 per accident, but many trucking companies carry excess liability coverage to protect themselves from skyrocketing lawsuit verdicts. Adding to costs, shippers are demanding higher limits to mitigate their own risks. Currently the second highest operating expense behind fuel, high insurance premiums are prompting some carriers to lease their trucks to larger carriers so they can leverage their insurance and operating authority. According to The Wall Street Journal, double digit insurance premium increases are expected to continue in 2020.
- Fuel Costs. The International Maritime Organization (IMO) will reduce allowable sulfur emissions by 80 percent in 2020, increasing demand for low-sulfur diesel fuel along with global prices. Known as IMO 2020, this new regulation promises to keep diesel costs elevated for several years (Wood Mackenzie).
Cash Flow is King for Carriers
When operational costs rise and freight rates drop, uneven cash flow can create problems for carriers of all sizes. Weeks or months can pass before you receive full payment, which means you may not have the cash you need to pay your bills or grow your business.
To provide some relief and strengthen carrier relationships, LoadDelivered launched QuickPay+. With QuickPay+, you get paid in one day and pay zero fees, putting your cash back into your business when you need it most.
Below is an example of how QuickPay+ ensures steady cash flow:
Want to get paid in 24 hours for free? Discover the QuickPay+ program at LoadDelivered.