Trucking Invoice Factoring Blog Posts

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Factoring Funding

What Every Freight Broker Should Know About Factoring

Invoice factoring has been around for thousands of years and can be traced to the 18th century B.C. Babylonian king, Hammurabi. Over the past 10 years, transportation intermediaries are directing more and more of their carrier payments to factoring companies ‐ anecdotally, we hear as much as 80%. At Triumph Business Capital, we’ve processed carrier payments for over 500 freight brokers, and our experience is consistent with those reports.

Why Now?

It starts with economics. Lots of new capital has flooded the commercial finance sector, and many new factoring companies have entered the transportation space. And, why not? The collectability of a freight bill is terrific. As a result of increasing competition, carriers are solicited daily with factoring offers of high advance rates (the percentage of the freight bill advanced at time the invoice is sold or “factored”) coupled with factoring fees that are a fraction of what they were 10 years ago. In fact, factoring fees are typically at or below the same pricing which many brokers charge for quick pay.

The quality of factoring services has improved as well. Many of the top factoring companies offer online credit services, fuel purchase programs, equipment and insurance financing and mobile technology applications. The factoring industry has come a long way, too.

Frequently Asked Questions

Q. What is the difference between recourse and non‐recourse factoring? And, how does it affect me?

A. Recourse means the factoring client is ultimately responsibility for the payment of the invoice. Non‐recourse factoring allows companies to sell their invoices in a style in which the factoring company assumes the credit risks. Often misunderstood, non‐payment for legitimate disputes (such as shortages, claims, late delivery, etc.) remain the responsibility of the client regardless of contract form. The style of a carrier’s factoring contract should have no impact on the freight broker.

 

Q. What is a Notice of Assignment and do Freight Brokers need to acknowledge them?

A. The Uniform Commercial Code (§ 9‐406) outlines the business and law underlying the invoice factoring industry. The ability to assign payment obligations (accounts) from the
broker (account debtor) to a factor (assignee) was a purposeful and intentional provision that the UCC drafters identified to provide businesses with opportunity to raise working
capital. Remember, the assignment of pay proceeds is separate and distinct from the assignment of services or other responsibilities in a legal contract (i.e., Broker‐Carrier
agreements). Payors cannot restrict the assignment of proceeds and are subject to double‐payment liability if they choose to ignore proper notification. Notice of
Assignments (NOA’s) can be presented by an invoice “stamp”, separate communication (letter) or both. Once you have been “effectively noticed” all payments must go to the
factoring company, whether the invoice has a stamp or not, and regardless of any claims by the carrier whether or not a particular invoice was factored. Never stop sending
payments to the factor until you receive a release letter, which the factoring company should be willing to provide

 

Q. What makes a Notice of Assignment binding? Is a signature required?

A. The effectiveness of an NOA is a question answered by case law, but the practical guidelines are simply and widely accepted. The account debtor is not required to
acknowledge the NOA with a signature and, even if there was a signature, it might not be clear as to whether the person signing the NOA had the proper authority to do so.
So, you don’t have to sign them – but that doesn’t really matter. Once an account debtor sends payment to the factoring company, it’s broadly understood that they did so based
upon receiving notice. (Why else would you send money to someone other than the carrier who hauled the freight?) If you pay a factoring company one time, then the NOA
is probably effective and you’re most likely bound by its terms. Now, you can refuse to use carriers that work with factoring companies, or even certain factoring companies,
but you can’t ignore a valid NOA once received.

 

Q. Am I obligated to pay a carrier’s factoring company if we haven’t received a Notice of Assignment.

A. Short answer is No. With more and more “online” or “cash advance” lenders entering the space, this question is more likely to come up than you may realize. A business may
grant a factor or lender a security interest in its accounts receivable, and perfect that security interest by filing a UCC financing statement. Security interests establish priority
among secured creditors, but do not impact payment remittance. It’s all about assignment and your receipt of effective notification of that assignment.

 

Q. Does the presence of a factoring company restrict our ability to offset future payments for claims?

A. Frankly, there’s a lot of “urban myth” surrounding this subject, but it ultimately depends on the broker‐carrier agreement. UCC § 9‐404 provides the factor (assignee) with certain
protections against claims and defenses – but only to the extent that the contract was silent on those provisions. Generally speaking, the broker’s obligation to the pay the
factor are identical to the contractual obligations for paying the carrier. As a practical (and ethical) matter, the factor is entitled to the same level of communication regarding
claims and setoffs that you would reasonably provide the carrier.

 

Q. What can be done about factoring companies which report slow payments and delinquencies to credit reporting agencies, regardless of how timely those payments are sent?

A. There are two primary reasons for unfair credit reporting: the U.S. Postal Service and bad factoring companies. Mail times are continuing to deteriorate, and payors using mail
service providers are likely experiencing additional delays. If you’re committed to mailing your payments, utilizing the “Intelligent Bar Code” will reduce USPS time and
processing errors. Alternatively, most reputable factoring companies will accept payment by ACH or wire, particularly if your TMS or accounting system can provide
reasonable instructions for correctly applying those payments.

 

Q. What about the “bad actors” in the factoring community, who are unreasonable, annoying and difficult to deal with?

A. The International Factoring Association (IFA) is an engaged trade organization which is elevating its constituency through education, best practices and advocacy. Over 450 IFA
members ascribe to a Code of Ethics and the organization actively responds to inquiries and disputes. You can contact the IFA at (800) 563‐1895 or info@factoring.org.


Let’s talk about how we help

Whether you’re a broker needing to make payments or a carrier looking to get paid, Triumph Business Capital can help you.

 

Invoice Funding

Making Sense Out of Carrier Payments

Freight brokers pay carriers – that’s what you do.  You do it for fuel advances and again when the load’s settled and billed. You pay when it’s due and sometimes you pay quick.  You pay by fuel card, by express check, by bank draft, by paper check.  And mostly you pay factoring companies – after they call to verify the load, again to check for advances and yet again to collect.  You’re ready to pay the trucks who’ve been with you forever, the one that showed last week and the one which may still call back.  You pay carriers – but is that what you do best?

New Technology, More Options

Large industrial firms have been outsourcing vendor payments for decades. It’s become a standard practice in medical, hospitality and government contracting.  The consistent premise is to operate your business within your business systems, and to have your systems feed payment instructions to payment processors – seamlessly, safely and cost effectively.  That’s the goal.

The evolution of technology integrations has also resulted in a proliferation of financial solutions.  Some of these solution structures make particular sense in certain industries, not so much in others.  Some providers offer credit capacity, others focus only on technology solutions.  Just to make things more confusing, the terminology isn’t consistent.  But overlooking the labels just a bit, we can identify three general categories of payment processing solutions.  For purposes of this road map, let’s call them Dynamic Discounting, Supply Chain Finance and Virtual Card Payments.  And, of course, there are combinations of the three, but let’s get started anyway – paying particular attention to what makes sense in for-hire transportation.

Dynamic Discounting

The simplest form of payment processing involves an arrangement between a buyer (such as a freight broker) and vendor (carrier) whereby payment for goods or services is made early in return for a reduced price or discount.  Dynamic Discounting has been primarily a technology service offer with the following characteristics:

  • Transaction unchanged between buyer and vendor
  • Servicer may or may not provide credit or liquidity
  • When credit is provided, it’s most typically in the form of a loan structure (to buyer)
  • Often combined with other tech-based services, such as freight bill auditing

We haven’t seen huge impact of Dynamic Discounting in the trucking space, largely because of the complexity.  Most truckers are happy with two payment terms: standard and quick.  The market saturation of factoring companies has probably simplified quick pay requirements as well.

Supply Chain Finance

Often called “Reverse Factoring”, the basic premise is that buyers (freight brokers) can become more attractive to their vendors (carriers) by incorporating working capital options from the onset. Unlike traditional factoring, where carriers sell their accounts receivable, reverse factoring is a financing solution initiated by the broker to help its carriers to finance their open accounts more easily and at a lower cost than what would normally or otherwise be available.  In Europe, where factoring is more prominent than in the U.S., Supply Chain Finance has become more prevalently adopted than traditional factoring.  Characteristics include:

  • Cost benefits to both buyer and vendor
  • Proactive alternative to “Factor Fatigue”
  • Optimal in markets where buyers deal with a large number of small vendors and can rely upon the payment processor to minimize onboarding costs

Our company’s payment processing platform, which we call TriumphPay, is a form of Reverse Factoring or Supply Chain Finance.  There are a few other very good products coming to the transportation intermediary market in this style as well.  From a broker’s perspective, the quality of the carrier experience, and consequently their rate of adoption, will largely drive the cost saving benefits to be realized.

Virtual Card Payments

Despite several transaction models, this is a style of B2B payment processing that uses a single-use credit card number. Virtual card payments have become extremely popular in certain industries and offer distinctive advantages to buyer, including fraud deterrence and revenue opportunities.  However, processing costs are transferred to vendors which has resulted in limited adoption in other industries.

  • Highly controlled, buyer-centric process
  • High adoption rates in stable and/or contractual vendor communities (i.e., hospitals/medical providers)
  • Low adoption rates in markets with high factoring penetration

To be fair, Virtual Cards are a valuable tool to have in your payment processing toolbox.  You’ll need to determine whether it’s a platform you lead with or use to supplement other transaction models.

Outlook

Payment processing options are coming.  If the U.S. trucking industry is similar to other markets around the world, it will be coming quickly. But please understand, these are customized solutions that can be tailored to fit your business like a glove.  The more time you invest in learning about the various structures, including their relative strengths and weaknesses, the better equipped you’ll be to make these financial products works for you.

 

 

Increase Cash Flow

3 Quick Ways to Increase Cash Flow

Cash is king. You know this as well as anyone else. Without cash, you can find yourself in some pretty uncomfortable situations, like not having enough money for payroll, or making late payments to vendors and bill collectors.

So what can you do to manage your cash flow effectively? Let’s take a look at three quick and easy ways to increase your cash flow—and help you sleep at night.

1. Sell or lease unused assets

You paid good money for your assets and, even if you’re no longer using some of them, it’s time to put that investment to work again. Take an inventory of the assets you’re not currently using and consider selling or leasing them.

How do you shed the assets? Use your industry contacts, such as suppliers, to find buyers or lessees. Also search for websites that specialize in auctions for your industry. For assets with significant value, contact a business broker.

2. Deposit additional cash into interest-earning accounts

This one’s a bit of a no-brainer. Let the banks work for you for a change. Deposit any cash you won’t need for a while into an interest-bearing account so it can grow. Look for an insured account with the highest interest your financial institution offers and let your money sit there.

Here’s a tip: If you’re concerned about locking your funds away in a long-term account like a certificate of deposit, consider a money market account instead. Money market accounts offer greater interest than regular savings accounts, while still giving you access to your funds. After all, cash flow is what you’re after—not more restrictions.

3. Factor your receivables

Invoice factoring is perhaps one of the smartest cash flow solutions out there. In fact, this is how many other small to mid-size businesses manage cash flow effectively.

You may be asking yourself: How does invoice factoring work? Here’s how. Simply send your invoices to a factoring company like Triumph Business Capital and we’ll fund the money straight to your bank account—usually within 24 hours.

Keep in mind that we verify the creditworthiness of your customer. If the customer has a history of missed or late payments, the invoice may not be approved for the financing.

Get paid today

We believe that getting paid shouldn’t be the hardest part of your job.

When you factor your invoices with Triumph, you’ll also gain access to a host of back office solutions. Solutions like free credit checks to make sure your clients have the ability to pay; and collection services to get your money from those who won’t pay.

Ready to get started? Factor your invoices with Triumph Business Capital and get paid today.

 

Invoice Factoring

Debt Collection vs. Invoice Factoring: What’s The Difference?

It’s not only been days, but weeks—or even months—since you performed work for your client, and you still haven’t received payment. Sound familiar?

As a professional, you need to be paid on time. You’ve got people to support and bills to pay. You may be considering using a debt collector to secure payment from your customer. Or, you may have considered proactively factoring your invoices with a trusted, credible factor. But which one is the smarter option. Are there any hidden implications you should be considering before making your decision?

The answer is yes. There’s actually a huge chasm between debt collection and invoice factoring. Think through these three key differences before reaching out to either one.

1. Purpose

The primary purpose behind using a debt collector is very different from the reason you’d use an invoice factor. While invoice factoring involves current unpaid invoices—no more than 30 days old—debt collection deals with invoices that are at least 60 days past due.

Debt collection

If you’re still trying to get paid months after you’ve completed the work, it might be time to check in with a debt collection agency.

Invoice factoring

If you prefer timely payment for your work instead of relegating your receivables to the bad debt file, you’ll want to connect with a reputable invoice factor like Triumph Business Capital.

One of the benefits of working with an established and reputable factor like Triumph is that we’ll not only factor your invoices; we’ll also provide a host of back office solutions—including debt collection—to ensure that you get paid on time for the work you perform. Welcome to the best of both worlds.

2. Funding timeline

How much longer are you willing to wait to be paid? The difference between how long it takes a debt collector to get funds to you and how quickly an invoice factor sends you funds can be a game changer.

Debt collection

You’ll be paid, but only after the collection agency receives payment from your customer. That can take time—if it happens at all. Add an aggressive process that can alienate customers, and you may decide that engaging a debt collection agency just isn’t worth it.

Invoice factoring

With factoring, you simply sell your invoices at a small discount and get immediate cash for your business. How fast? You get paid before the factor receives any money from your customer—usually within 24 hours.

3. Fees

How much are you willing to pay to be paid? In an ideal world, the payment conflict wouldn’t exist. But in today’s environment, unfortunately, you often end up either arm wrestling your customers or throwing up your hands—a sure sign of giving up altogether.

Debt collection

When you hire a debt collector, you’ll likely pay a hefty 25% to 30% collection fee—which still beats giving up 100% of an unpaid invoice! But there’s an even better option.

Invoice factoring

Getting paid shouldn’t be the hardest part of your job. Invoice factoring isn’t free, but weigh its small price against its great advantages: you’ll receive an immediate payment from the factor—usually 70% to 100% of the invoice—followed by any remaining balance (minus a fee) as soon as the factor collects full payment from your customer.

Get paid today

Factor your invoices with Triumph Business Capital to get paid today.

When you factor your invoices with our team, you’ll also get access to a host of back office services like credit checks to make sure your clients can pay, and collection services to get your money from those who won’t.

Ready to get started? Factor your invoices with Triumph Business Capital today.

Invoice Factoring Service

Get Paid On Time While Maintaining Business Relationships

Let’s face it, money can get in the way of any relationship, whether business or personal. And small or mid-size business owners like you never want to compromise relationships with customers or vendors.

But without the funds to pay your bills on time, how can you avoid damaging your relationship with your vendors? And how can you demand timely payment of your invoices without jeopardizing your relationship with your customers? What’s a small to mid-size business owner to do?

Managing cash flow takes diplomacy—and these three industry secrets.

1. Set up mutually beneficial payment terms

If, for example, a customer refuses to pay an initial deposit, but wants you to work on a large project that won’t be completed for months, you can negotiate progress payments. As you reach the agreed-upon benchmarks, you’ll receive partial payments, at least enough to cover your overhead and project costs. This will keep your contractors and vendors happy.

Your customer will benefit, too, by making smaller periodic payments instead of paying a huge lump sum upon completion, or even a hefty deposit with a large final payment.  

2. Pay your bills on time

Another key point is to pay your bills on time—always. Set up automatic payments so you never miss a bill payment. Timely payments go a long way toward improving your credit and your credibility. Vendors and contractors appreciate on-time payments and may even give your account preference over other businesses.

On the other hand, late payments can be a black mark against your business—vendors may not be as willing to work with you, and may stop extending credit or services.

3. Offer discounts for quick payment

Everyone likes to save money! Offer a discount off the top of your invoices if your customers pay within a specified period instead of waiting 30, 60, or 90 days to submit payment. Many will jump at this chance, and your offer will generate good will with them. It’s a win-win for everyone.

Get paid, today

Still struggling to get paid by your customers so you can pay your vendors? Invoice factoring can be an easy and effective way to manage cash flow while maintaining—and even improving—business relationships.

Simply send your invoices to a reputable factor like Triumph Business Capital so you can get paid today. When you factor your invoices with Triumph, you’ll get 70% to 100% of your funds upfront. And as we collect full payment from your customers, we’ll then pay you the remaining balance on your invoices, minus a small fee. In the end, you’ll get the cash you need to pay vendors and creditors quickly.

Since 2004, Triumph Business Capital has helped thousands of small and mid-size businesses manage their cash flow effectively. When you factor your invoices with our team, you’ll also get access to a host of back office services like credit checks and collections: We’ll make sure your customers can pay you, and we’ll get your money from those who won’t.

Ready to get started? Factor your invoices with Triumph Business Capital today.

About Invoice Factoring

Cash Flow Gaps? Boost Your Bottom Line with Invoice Factoring

You’re running a small or mid-size business and that takes money—lots of it. But coming up with the capital you need, when you need it, can often pose significant challenges—like how to meet payroll, pay vendors, upgrade equipment . . . the list goes on and on.

So how do you manage cash flow effectively? Let’s explore some common business cash flow problems and what you can do to turn those problems into productivity and profit.

4 common small business cash flow problems

1. Meeting payroll demands

As a small business owner, you know that payroll can take a large chunk of your budget each and every month, if not every week. At best, many small business owners lose sleep over payroll; at worst, some lose their business entirely.

Bankruptcies in the U.S. increased to 25,227 companies in the second quarter of 2016, from 24,797 companies in the first quarter of 2016. That’s a staggering number of businesses that closed shop in just this year alone.

Perhaps you can still keep your doors open, but just by a crack. You’re struggling every payday to meet the financial demand. You’re bound by the Fair Labor Standards Act (FLSA)—laws that set the minimum wage and establish guidelines regarding overtime—as well as state payday laws outlining when employees must be paid. No matter how much you want to treat your employees fairly, if you can’t meet those requirements, you could be in for it.

An employee who has a payroll grievance, whether about regular pay, overtime, or vacation pay, can submit a complaint against your company to the appropriate state or federal agency.

The result? An investigation by the agency, which may, in turn, lead to financial penalties, the loss of your business license, or a lawsuit against your company. Your business could be liable for back pay, fines, or other financial judgments—not to mention the collateral costs and work disruption associated with such investigations.

2. Maintaining a flawless credit score

Since your credit score plays a key role in the viability of your business, it’s important to keep a watchful eye on this number. At the very least, get a free credit report each year and make sure the information is both correct and current. You can request removal of any negative information after seven years, but don’t forget that you’ll have to wait up to 10 years for a bankruptcy to drop off your report.

If your credit score is less than a perfect, get back on track with these simple steps.

  • Pay your bills on time—always. Arrange automatic payments on every debt so you never miss a payment. Timely payments determine up to 35% of your score.
  • Keep open all accounts that are in good standing. These older accounts positively influence your length of credit history—about 15% of your score.
  • Apply for a credit card—but read the fine print for interest and fee information. Most importantly, only use the card for small charges you can afford to pay back every month.
  • Keep a low debt load—carrying more than 25% of your limit will increase your debt-to-income ratio and damage your score. Pay the bill on time and in full each month.
  • Don’t apply for more credit accounts than you need. If you must open new lines of credit, don’t try to open them all at once. Prospective lenders will check your credit, which lowers your score, and these pings stay on your record for two years, accounting for 10% of your score.
  • If you have a dispute about a debt, be proactive to communicate with the lender.  If all else fails, take the issue to small claims court before the debt gets into collections. Avoid lawsuits and judgments, too.
  • Review your credit report often, disputing incorrect information. You can get one free report each year, but monitoring its accuracy more often may be worth the cost as you’re rebuilding your credit.

3. Surviving slow-paying customers

You know the drill—you deliver your end of the bargain; you invoice; and then you wait . . . and wait . . . and wait to be paid. All the while, you have overhead costs to cover, vendors clamoring for their money, and employees who need to be paid on time.

Maybe your payment terms are net 15, but your customers insist on their terms—net 30, 60, or even 120. You don’t want to lose their business so you reluctantly agree. Fair? Not at all. And, as you well know, waiting to get paid can have serious financial consequences, like not having enough money to run your day-to-day operations, much less expand your business.

You could, of course, apply for a line of credit or get a loan to help carry you through the month, but will you get approved? And with the piles of paperwork and myriad backup documents required—not to mention the back and forth with the bank—you could be practically out of business before the bank makes a decision, much less actually gives you the funds your business needs. And let’s face it: you simply cannot afford to wait all that time only to be turned down.

4. Avoiding unnecessary debt

“Debt” is a nasty four-letter word to a small or mid-size business. According to the U.S. Small Business Administration (SBA), roughly 50 percent of small businesses fail within their first five years, mostly because of insufficient capital, poor credit arrangements, and—you guessed it—too much debt.

Unfortunately, debt can be accumulated rather quickly when trying to boost cash flow or finance growth. Perhaps a business loan could help, but loans must be repaid—and with interest, which can add up significantly.

Fact is, unnecessary or additional debt can be the first step on the slippery slope toward Chapter 11 bankruptcy or even “Closed!”

Fortunately, you can utilize financing solutions other than bank loans—options such as invoice factoring—that won’t incur that four-letter “D” word or burden your business with additional cash flow hardship.

How to overcome cash flow gaps

With potential hazards lurking around every financial corner, how can a small or mid-sized business overcome cash flow gaps and boost its bottom line in this economy—or any economy?

Alternative lending

You could opt for cash flow solutions like alternative lending, but that can prove costly. If your loan is a payday loan, your payment will be withdrawn from your checking account every single day. If the money isn’t in your checking account, you’ll accrue additional fees, increasing the payoff amount and delaying the payoff date—damaging your bottom line by keeping your business in debt and paying exorbitant interest longer than expected.

Merchant cash advance

You could also consider a Merchant Cash Advance, which charges you based on your projected sales. But this, too, can be costly—and risky. If your future sales don’t meet your projections, you could end up repaying more than you actually sell, and at a high interest rate. While invoice factoring offers a genuine cash flow solution by purchasing your existing invoices, a merchant cash advance can actually add to your stress.

Invoice factoring

Invoice factoring answers each of these financial challenges. Here’s how it works.

You simply sell your invoices, minus a small discount, to a factoring company like Triumph Business Capital. After checking out the creditworthiness of your invoiced customer, the factor advances 70% to 100% of the invoice amount to you as immediate cash for your business.

In a recourse factoring agreement, you’re likely to see 100% advanced, while a transportation company with a non-recourse factoring agreement would likely see a 90% to 97% advanced, and a small business with a general factoring agreement would likely see 70% to 95% advanced. And when you customer pays the invoice, the factor remits the balance, minus a fee, to your business.

So instead of waiting 30 to 120 days—or even longer—to receive your customer’s payment, you get cash in hand within 24 to 48 hours.

Triumph offers both recourse and non-recourse invoice factoring for approved clients. With non-recourse factoring, you’re not liable if your customer doesn’t pay your invoice for credit reasons. Since the factor assumes all risk with non-recourse invoice factoring, your business reduces bad debt while increasing cash flow, even if your customer never pays the invoice.

Here’s why invoice factoring might be right for your business.

Get more cash for immediate needs

Invoice factoring helps relieve payroll pain, giving you ready cash to meet weekly, bi-weekly, or monthly payroll. Need to stock up on supplies? No more waiting for your customers’ payments so you can purchase supplies or pay vendors. How about the rent or mortgage payment? Invoice factoring can take the stress out of meeting all your first-of-the-month commitments.

Get more cash for growth opportunities

With invoice factoring, you can expand operations, hire more staff, or develop a new product line. Your customers’ unpaid invoices no longer hold your business hostage, stifling your progress. And unlike a conventional loan, there’s no limit to the amount of financing with Triumph. The cash you receive for your invoices is unrestricted—you don’t need Triumph’s approval to use it for whatever your business needs.

Get more cash without more debt

Sure, bank loans or lines of credit could shore up your finances. But would your business be approved? How long would that take? And at what cost? Invoice factoring gives your business the cash you need quickly and easily. It doesn’t show up on your balance sheet as debt and your business won’t have to make onerous interest payments. Invoice factoring doesn’t negatively impact your credit score either.

Let Triumph help you boost your bottom line today

We believe that getting paid shouldn’t be the hardest part about your job. Since 2004, Triumph Business Capital has helped over 7,000 small and mid-size businesses in the U.S. manage their cash flow.

As your partner, we’ll factor your invoices so you can get paid today—and make your financial challenges a thing of the past. And in addition to helping you manage cash flow through invoice factoring, we offer a host of other business services through our parent company Triumph Bancorp to help you do what you do best.

Asset-based lending

Does your business need $1 million or more? Triumph Commercial Finance Business Capital offers asset-based lending (ABL) solutions for small and mid-size businesses. As your company steps up to this next level, Triumph Commercial Finance may be your best option for continued growth.

Defined as a loan or line of credit secured by balance-sheet assets (“collateral”) such as accounts receivable, inventory, etc., ABL typically costs less than invoice factoring. However, its loan underwriting process also has more requirements, including CPA-reviewed or -audited financial statements that reflect favorable earnings and tangible net worth. Additionally, ABL can be more restrictive than invoice factoring.

Equipment financing

Triumph Commercial Finance also specializes in equipment financing for the construction, refuse, and transportation industries—so you can upgrade your operations to grow your business or expand your footprint. Loans for purchasing new or used equipment range from $250,000 to $6 million, and loan terms are typically two to five years.

Back office solutions

Invoice factoring at Triumph Business Capital includes a slew of helpful back office solutions like free credit checks, collection services, data storage, and more. It’s our goal to help you reduce overhead costs and simplify your operations.

Take the guesswork out of taking on new clients. Triumph Business Capital offers free credit checks to help you make informed decisions before signing a new contract. And our online portal gives our trucking clients access to freight broker credits that we monitor daily.

After you’ve provided the contracted goods or services, our Account Resolution team will ensure that you receive timely payment. What’s more, Triumph Business Capital provides account management reports online—conveniently available to review at any time—so you can make smart business decisions based on your actual data (ageing reports, collection reports, etc.).

Insurance services

Need insurance at competitive rates? Triumph Insurance Group Business Capital offers a wide range of insurance options for the transportation industry, as well as damage protection for new and used equipment. Get the property and casualty insurance coverage that’s right for you—and at the best price, with affordable payment options.

 


Let’s get you paid today

Triumph Business Capital is committed to helping small and mid-size businesses manage cash flow and so much more. End late payment worries and slow cash flow problems. Factor your invoices and get paid today with Triumph Business Capital.

Small Business Factoring

How Much Does Invoice Factoring Cost?

Don’t you love that feeling—you know, the one you get when an invoice pays? With invoice factoring, you don’t even have to think about processing invoices, and you can forget about having to wait 30, 60, or 90 days to receive your client’s payment. You can actually get paid today. When calculating the cost of invoice factoring, it’s important to remember the benefits it can provide to small businesses and to always consider your own business situation and goals. 

The many benefits of invoice factoring

No more invoices to process, no waiting for clients to pay, and immediate cash in hand—invoice factoring services simplifies your bookkeeping experience and helps you get paid on time every time.

According to the Wall Street Journal, “The factor advances most of the invoice amount—usually 70% to 90%—after checking out the credit-worthiness of the billed customer. When the bill is paid, the factor remits the balance, minus a transaction (or factoring) fee.”

The benefits of invoice factoring are many, but how much does it actually cost? In this article, we’ll explain everything you always wanted to know about invoice factoring (but were afraid to ask).

Non-recourse factoring vs. recourse factoring

With non-recourse factoring, the factor assumes all the risk of collecting the debt. That’s a lower-risk option for small companies that can’t absorb the cost of unpaid invoices, but it does cost slightly more than recourse factoring.

Larger corporations often favor recourse factoring because, if a customer fails to pay, they can afford to return the funds they received from selling the uncollectible invoice to the factoring company.

Aside from the cost differential between the two, there are times when the cost differential is not justified by the credit risk being taken.

For example, if you’re selling to WalMart or the Federal Government, the chances of either one not paying because of credit reasons are quite small. Thus, paying a premium for non-recourse starts to look a little less attractive. If you do elect for non-recourse factoring, pay special attention to the Security Agreement that you’ll be required to sign and make sure you ask the factor to specifically go over when you will be covered and when you will not be covered from credit risk.

Whether you opt for a non-recourse or recourse factoring agreement, if your customer pays the invoice in 45 days or less, your total factoring cost with Triumph Business Capital would average approximately 3.9% of the invoice. However, different factoring companies determine what fees they’ll include, and these fees can drive up the cost of their services.

So how much does invoice factoring cost? 

Fees vary from factor to factor, so check with your factor before getting started.

Application/Due Diligence Fee

Some factors charge this fee some do not. Those that do not may recover this upfront expense by increasing the initial financing fees. This fee varies highly from factor to factor and can cost anywhere from zero to thousands of dollars.

Closing Fee

The factor retains a percentage of each invoice, typically 1–3%.

Monthly and Termination Fees

Some factors may require that you sell a certain amount of your invoice each month and sign a long-term contract. If the monthly target isn’t met, a minimum monthly fee will be charged. Terminating the contract early can trigger a cancellation fee—typically a percentage of your line of credit.

Discount Fee

The cost of paying for your invoices in advance can vary anywhere from 1.5–5% of the invoice value each month. This wide disparity is yet another reason to check with your factor before jumping into a relationship.

Factoring Fee

If your invoices go beyond the 30–45 days covered by the advance discount fee, you can expect an additional charge of 2–3% or more for every 30 days that the receivable is outstanding beyond the original 30 days. Some factors may prorate the fee daily, while others may charge on a 10-day basis.

Triumph’s Factoring Fee depends on your unique factoring agreement. Our factoring experts considering whether you’ve chosen recourse or non-recourse factoring, the credit quality of your customers, and more. But in general, let’s say you decided to factor a maximum of $3,000 with a 95% advance rate over a 90-day repurchase period. Meaning, you’d get paid $2,850 within 24 hours of signing your factoring agreement, and the final 5%—minus standard factoring fees—after 90 days. In this scenario, you’re likely to see an initial 0.40% factoring fee totaling $12.

While the scenario we just presented is common, it’s important to remember that your factoring fee will vary depending on the terms of your factoring agreement.

How does Triumph Business Capital compare to other factoring companies?

Now that we’ve broken down the fees, let’s get into specifics. While not all factors are entirely transparent with their pricing, we’re an open book. The last thing we want to do is surprise you with a fee. Here’s how our pricing structure compares to other popular factors you may have heard of.

Other companies charge flat advance rates of 10–15% and $15 per wire, but offers free ACH transactions. Some don’t include a setup fee, but they charge a fee based on the advanced amount.

Triumph Business Capital, on the other hand, works with your business to fit your budget and requirements. Triumph takes into consideration the credit risk associated with your customers, the time it takes them to pay their invoices, and the monthly funding volume we forecast for your business.

Can invoice factoring save you money?

Consider this simple illustration. You decide that invoice factoring is the best option for your business, so you convert your invoices into cash instead of waiting a month or more to get paid.

With immediate cash in hand, you can stop worrying about how you’re going to pay your bills and get on with the growing your business. And when you pay vendors more quickly, you can take advantage of their discount offers, which saves you money. You’ve not only gotten invoice collection off your plate, you’ve paid your bills and saved money in the process—and that’s good business.

Calculate The Cost To You...

Let's take a look. Pricing for both options will vary considerably based on business size and other criteria - so feel free to enter the information most appropriate to you.

Cash Advance Loan
$97,000
125
$1,000
$125,000
109%
Invoice Factoring
$114,000
21%
Your Effective Annual Interest Rate
Cash Advance Loans
109%
Invoice Factoring
21%

Cash Available For Operations
DISCLAIMER

The above calculations incorporate estimated values and are intended for comparative illustration purposes only. Terms and conditions of specific cash advance loan and/or factoring agreements may result in additional margin of error. If, for any reason, you suspect the results are not representative - please contact us directly so that we may address those concerns. Alternatively, the most accurate way to calculate the Annual Percentage Rate for a loan or competitive factoring facility may be to contact the financial service provider directly and request that they perform or confirm the calculations. Thank you.

Get paid today

The hardest part about your job shouldn’t be getting paid. Let Triumph Business Capital help you factor your invoices and get paid today.

 

Let’s Talk About How to Get You Paid

Take five minutes to learn more about how we help owner/operators increasing their cash flow.

Invoice Factoring Companies

Invoice Factoring vs. Traditional Bank Loan: What’s The Difference?

Invoice factoring and a bank loan have very little in common—other than the fact that both provide cash to small businesses. Here’s a simple factoring vs. bank loan comparison to help you decide which can work for your business.

Invoice factoring

With invoice factoring, you simply convert your invoices into immediate cash to cover operating costs without taking on debt. You sell your invoices at a small discount to a factoring company like Triumph Business Capital and get immediate cash for your business.

Worried about your credit? No problem! Invoice factoring is primarily based on the quality of your customers’ credit, not your own credit or business history. While most banking institutions look at the same documentation we do, our focus primarily on the quality of your customers. Don’t let the successes and failures of your business journey stop you from getting paid.

Plus, invoice factoring works fast. You’ll typically receive approval in about 24 hours. Better yet, there’s no debt to repay, and you have unlimited funding potential.

As long as you have invoices, you have the opportunity to convert them into cash. Even startups are eligible for factoring.

Traditional bank loan

Compare that to a bank loan. You pay principal and interest over time, and the funding potential is capped by the bank. After completing all necessary paperwork, the approval process can take months—and it’s based on your company’s operational and credit history. If you’re a startup, chances are you won’t be approved for bank funding.

Additionally, bank loans and lines of credit often carry what’s called a loan covenant. Essentially they’re conditions in a commercial loan that require you to fulfill certain financial performance requirements. If you don’t meet the covenant requirements, you can default on your loan or line of credit. If your bank representative is nice, they may waive the default and charge an additional waiver fee. In the end, it’ll likely cost you more than you bargained for.

 

Bank loans or lines of credit also come with restrictions that forbid you from taking certain actions like purchasing or selling assets for your business, incurring additional debt for any reason, and more. Because of restrictions, you’ll often find yourself with the financial resources you need without the freedom to use them to solve your biggest business problems.

 

While a “line of credit” implies that you’ll be financed for whatever you need up to a certain amount, more often than not, that’s not actually what happens. Your credit line often comes with so many restrictions that it’s often easier to look for the next best option.

 

Which is best for your business?

If you own a business that has a long history of favorable cash flow and profits, or is well-capitalized, then a bank line of credit might be the right choice. But if you’re a new business—or one that may have had a significant hiccup somewhere along the road—then there’s no comparison.

Invoice factoring gives you immediate cash flow without creating debt on your balance sheet, and it’s virtually an unlimited source of working capital.

While banks require a wide range of collateral and financial statements, often refusing businesses that need additional funding but can’t meet the stringent borrowing requirements to qualify for a new bank loan.

Why Triumph Business Capital?

When considering factoring, it’s important to work with a reputable factor with a strong track record. Triumph Business Capital has provided factoring for over 7,000 small to mid-sized businesses since 2004. We have a long history with the transportation industry—and staffing agencies, government contractors, and small businesses are increasingly seeking us out to help solve their cash flow challenges. Triumph also offers smart Asset Based Lending and Equipment Financing options as well as a discount fuel card program.

Triumph is a proud member of the International Factoring Association (IFA) and strictly adheres to the IFA’s code of ethics. Originally called Advance Business Capital, the company joined Triumph Bancorp Group in 2012. As a financial holding company, Triumph Bancorp, Inc. maintains a diversified line of community banking, commercial finance, and asset management activities. Since day one, our vision has been centered on four core business priorities—delivering value, developing people, demonstrating expertise, and displaying a commitment to enterprise success.

Factor your invoices today

Ready to get started? Let Triumph Business Capital help you factor your invoices—and get you the cash you need when you need it.

Accounts Receivable Financing

4 Funding Options for Your Small Business in 2018

What are some of the popular types of short-term funding available to small businesses? How can you fund your business? You’ve got questions; we’ve got answers!

 

1. Bootstrapping

Bootstrapping is a funny word for a smart financial concept. The term comes from the phrase “pulling oneself up by one’s bootstraps.” An individual is said to be bootstrapping when he attempts to found and build a company from personal finances or from the operating revenues of the new company. According to Investopedia, more than 80% of new startup operations receive their funding from the founder’s personal finances.

 

So where exactly does the bootstrapper get startup funds? A bootstrapper may pull from a savings account, use zero interest credit cards, or leverage personal assets like selling a house or car and cashing in on a 401(k). With bootstrapping, the business is your own—no answering to investors like venture capitalists.

What are the benefits and drawbacks of bootstrapping?

Business owners who utilize bootstrap funding don’t have to worry about diluting ownership between investors. They don’t need to issue equity, and they can focus debt on personal sources. The downside? Unnecessary financial risk is all on the entrepreneur. And bootstrapping may not provide enough investment for the company to become successful at a reasonable rate.

What other companies have used bootstrapping?

If you decide to bootstrap, however, you’ll be in good company. Dell Computers, FaceBook, Apple, The Clorox Company, and The Coca-Cola Company each catapulted to greatness from humble beginnings as a bootstrapped enterprise. To learn more about bootstrapping, Fast Company offers 10 tips for bootstrapping your startup.

 

2. Friends and family

Of course, you can always tap into friends and family. With business plan in hand, pitch your idea to those closest to you, explaining what you’re selling, what you plan to charge, and how they’ll make money by backing your business.

What are the benefits and drawbacks of tapping into this method?

Be upfront about the risks and put the rules behind the investment in writing. Whether you’re asking for a loan, an investment, or even a gift, remember that each one comes with strings attached.  In the case of loans and investments, you will have to pay the money back: you cannot file bankruptcy if the business fails.

 

Entrepreneur.com offers tips and tactics in Five Tips for Asking Friends and Family for Funding.

 

3. Loan or Line of Credit

You can also apply for a loan or line of credit. What’s the difference? A loan is a specific amount disbursed to you at once in a lump sum. It has a fixed or variable interest rate, and a fixed repayment term. On the other hand, a line of credit functions much like a credit card. You’re given a maximum amount that you can use over a period of time, and you can borrow against that amount as you need money.

What are the benefits and drawbacks?

Once you’re approved for a line of credit, you can tap into it at any time to access the amount your business needs. You can also use a line of credit as an alternate overdraft protection option on a checking account. Keep in mind, though, that excessive borrowing against a line of credit could get you into financial trouble as surely as continuing to rack up credit card debt.

 

Want to know more about the benefits and drawbacks of traditional bank loans? We just wrote an article to compare and contrast traditional bank loans and invoice factoring. Read the full article here.

 

4. Invoice Factoring

Invoice factoring can be a small business owner’s best friend. It’s been around for over 4,000 years, dating back to the time of King Hammurabi of Mesopotamia. In the 1900s, the most popular industries for invoice factoring were the garment and textile industries. Today, the transportation industry, staffing agencies, government contractors, and small businesses are taking full advantage of invoice factoring. The reason? It helps relieve the stress of cash flow and slow-paying clients without adding debt.

How does invoice factoring work?

Here’s how: you sell your invoices at a small discount to a factoring company like Triumph Business Capital and get immediate cash for your business. Since 2004, Triumph Business Capital has provided factoring services for 7,000 small to mid-sized businesses throughout the U.S.—so you can be sure you’re working with a reputable company that has your best interests in mind.

Are there any drawbacks?

Invoice factoring can have higher fees than traditional financing, with fees based on sales volume and factoring agreement. But it’s a small price to pay for welcome relief and cash in hand. Learn more about the Common Risks Involved with Invoice Factoring.

 

What are the best options for short-term business funding?

Triumph Business Capital offers more than just invoice factoring. If your business has grown to the next level and you’re looking for a larger loan to pay for new equipment or provide additional working capital, Triumph offers smart Asset Based Lending and Equipment Financing options as well as a discount fuel card program.

 

Let’s Talk About Your Cash Flow

Take five minutes to learn more about how we help owner/operators increasing their cash flow.

Accounts Receivable Financing

The Ultimate List of Funding Options Every Small-Business Owner Should Know About

It’s a big world out there. We’re talking the world of funding for small- to medium-sized businesses. That’s why we’re giving you a bird’s-eye view of the available options—everything you need to know about funding your business.

Invoice Factoring

You may have heard of it; maybe you know a company or two that use it. But what exactly is invoice factoring?

 

Invoice factoring can be a welcome relief for a small business or government contractor—or any business owner tired of waiting for their invoices to be paid. You simply sell your invoices at a small discount to a factoring company and get immediate cash for your business. According to the Wall Street Journal, “Now billions of dollars in accounts receivable flow through factors each year.”

 

Should you consider invoice factoring for your small business?

Here’s what you should know about invoice factoring before diving in. Invoice factoring virtually eliminates cash flow problems. There’s no need to process invoices and wait—and wait—to get paid by your clients. No more putting plans on hold because there’s just not enough money to put them into effect. Or worrying about meeting payroll because you haven’t been paid yet. Non-recourse factoring even reduces bad debt since the factor assumes all risk if the invoice isn’t paid.

 

Got bad credit? Bank loan application already declined? No worries. Invoice factoring companies look at your credit and business history differently than a bank would. They base the majority of their decision on the quality of your customers’ credit and business history, not your own. The downside? Invoice factoring can have higher fees than traditional financing, but it can be well worth it when you consider its many advantages, including being able to sleep at night.

 

Whom should you trust?

It’s important, of course, to work with a reputable factoring company like Triumph Business Capital. Since 2004, Triumph has provided factoring for over 7,000 small to mid-sized businesses like yours—from the transportation industry to staffing agencies, government contractors, and other small businesses.

 

If your business has grown to the next level and you’re looking for a larger loan to pay for new equipment or provide additional working capital, Triumph also offers smart Asset Based Lending, Equipment Financing, and a discount fuel card program.

 

SBA Loan

The U.S. Small Business Administration (SBA) can also help finance your business with a guaranteed loan issued through participating banks and other lenders.

 

The most popular type of SBA financing is a General Business Loan, otherwise known as a 7(a) Loan. You can use the funds to establish a new business or assist in the acquisition, operation, or expansion of an existing business. The SBA guarantees loans up to $5 million to help small business owners with major investments, like building new facilities or buying land, machinery, and equipment. The SBA also offers loans that help small business owners affected by natural disasters and other kinds of emergencies.

 

Should you consider an SBA loan for your small business?
If you don’t qualify for a traditional bank loan, the government can help—although you’ll still need to work primarily with a bank. Aside from a low annual percentage rate (APR), you’ll receive funding in less than a month. Also, you’ll have more time to repay an SBA loan. If you use the loan for working capital or daily operations, you’ll have seven years to pay it back. Buying new equipment? You’ll have up to 10 years. If you use the funds for a real estate purchase, the terms go up to 25 years. A longer loan term means a lower interest rate and lower regular payments.

 

The application process, however, can be daunting. An SBA loan requires good credit and may call for collateral—and the paperwork can be both lengthy and cumbersome. The best way to navigate the process is to work with a bank that has extensive experience with SBA loans. The advantage? Lenders offer flexible terms and low rates since the federal agency guarantees the loans.

 

Alternative Lending

You’ve probably seen advertisements for alternative lenders like Kabbage, OnDeck, Lending Club, Prosper, Street Shares, and Deal Struck. Even PayPal has become a major player in the alternative lending space.

 

Alternative lending is a saving grace for some small businesses—especially if they need cash fast, or if bad credit disqualifies them for traditional lending. Sometimes referred to as “direct lending,” alternative lending provides cash in hand within two to three days on average, with a 12- to 36-month repayment period. And there’s no restriction on how to use the money.

 

Merchant Cash Advance (MCA)

MCA is an alternative financing source that provides businesses with a lump sum of cash by purchasing a set amount of their future sales. MCA companies debit your business account on a daily basis until the loan is paid in full.

 

Sound like invoice factoring? Not quite. Merchant cash advances and invoice factoring are both alternatives to traditional financing. Each involves a simple, quick application process with minimum credit requirements, making it easier and faster for small businesses to get approval—but while merchant card advances may seem like an equal option to invoice factoring, there are several catches.

 

Primarily, if your receivables are inconsistent, you may not have enough cash in the bank everyday that a withdrawal is made. At that point, you’ll overdraft on your account and experience the fees and penalties that follow.

 

Should you consider merchant cash advance for your small business?

Merchant cash advancements typically involve more risk than invoice factoring. A merchant card advance charges you based on your projected sales, while invoice factoring companies purchase your existing invoices. Since merchant cash advance payments are solely based on a prediction, rather than an actual dollar amount, this means that if your future sales don’t meet your projections, you could end up making large payments, with a much higher interest rate—usually significantly more than invoice factoring.

 

The larger problem could be that the payments continue for a period beyond your revenue generation. This form of cash advance is typically associated with incredibly high interest rates and should be avoided if at all possible.

 

Should you consider an alternative lending source for your small business?

The process for applying for alternative lending is fast and often easy. The loan application can be completed entirely online and approved in just a few minutes. Approval rates for alternative lending are much higher (64 percent, as opposed to about 20 percent for big banks, according to Inc.), and you could have your money in a matter of days, rather than weeks or months. Typical lending ranges from $10,000 to $100,000.

 

But alternative lending can be costly. In fact, the cost of these loans can be significantly more than the annualized rates associated with conventional financing. If your loan is a payday loan, beware. Your payment will be withdrawn from your checking account every single day. If the money isn’t in your checking account, you’ll accrue additional fees, increasing the payoff amount and delaying the payoff date. Another thing to keep in mind—be sure you’re working with the lending company that actually provides the financing, versus dealing with a broker, which leads to substantially more costs.

 

Microloans

Heard of microfinancing? It’s the new buzzword in funding circles, yet its concept dates back over 200 years. The first case of microlending, attributed to the Irish Loan Fund system introduced by Jonathan Swift, sought to improve conditions for impoverished Irish citizens.

 

So what is microfinancing? According to Investopedia, “Microfinancing provides options to customers with limited resources to promote participation in productive activities or to support a small business.” Simply put, it’s a type of banking service for unemployed or low-income individuals or groups who have no other access to financial services. Some microlenders even provide information in the areas of financial literacy, such as understanding interest rates and managing financial risks. Several organizations, including the Small Business Administration, offer microloans to help emerging businesses and underserved individuals get solid financial footing to start and grow their businesses.

 

The SBA offers microloans of up to $50,000 with a maximum term of six years. Administered through community nonprofits, the loans can be used for working capital or for the purchase of inventory, supplies, furniture, fixtures, machinery, or equipment. You can’t use the funds to pay an existing debt or to buy real estate.

 

Here’s how SBA microloans work: The SBA makes funds available to specially designated intermediary lenders—nonprofit organizations with experience in lending and technical assistance—including Justine Petersen, Grameen America, and Access to Capital for Entrepreneurs, to name but a few. These intermediaries then make loans to eligible borrowers. But before these lenders consider an application, qualifying for SBA microloan financing may require borrowers to complete specific training or planning—requirements designed to help you launch or expand your business successfully.

 

Other independent organizations—such as Bentley Microfinance Group, Association for Enterprise Opportunity, Business Center for New Americans, and Opportunity Fund—also provide microloans to the underserved community outside of the SBA model.

Should you consider a microloan for your small business?

A microloan is easier to get than a traditional loan, especially if your credit report is less than perfect or you don’t have a long credit history. If you don’t have a credit score, you can opt for a credit-building loan that lets you establish credit. On the other hand, a microloan usually costs more than a traditional bank loan.

 

Additional Government Funding Options

The federal government isn’t the only agency that can help your small business get off the ground and grow. Every state and many local governments have economic development agencies dedicated to helping both new and established businesses to grow and succeed. These agencies offer such services as start-up advice; training and resources; financial assistance through loans, grants, and tax-exempt bonds; business location and site selection assistance; and employee recruitment and training assistance.

 

Some states also provide grants for expanding childcare centers, creating energy-efficient technology, and developing marketing campaigns for tourism. These grants usually require the recipient to match funds or combine the grant with other forms of financing, such as a loan. The amount of available grant money varies, depending on each grantor and the type of business to be funded.

 

In addition to loans, the SBA also offers grants to nonprofit and educational organizations in many of its counseling and training programs. However, the SBA does not provide grants for starting or expanding a business.  

 

Here’s another way the government can help put dollars into your business. The Small Business Lending Fund (SBLF), enacted into law as part of the Small Business Jobs Act of 2010, provides capital to qualified community banks and community development loan funds (CDLFs) to encourage small business lending.

 

What does that mean to the small-business owner? Your community bank can be a resource for commercial and industrial loans; owner-occupied nonfarm, nonresidential real estate loans; loans to finance agricultural production and other loans to farmers; and loans secured by farmland.

 

If you’re in the biomedical space, the National Institutes of Health (NIH) can be another resource for your business. The NIH is the largest public funder of biomedical research in the world, offering funding for many types of grants, contracts, and even programs that help repay loans for researchers.

 

Should you consider government funding for your small business?

Government funding may come with free technical assistance, including workshops, seminars, or onsite consultations. Sometimes government agencies bring together all the recipients of a particular grant, facilitating peer-to-peer learning. These gatherings often provide grantees with their first introduction to others delivering similar services in the same city—which, in turn, can lead to more potential funding or resource-sharing opportunities.

 

However, as you’d expect, a great deal of red tape goes hand-in-hand with government funding. We’re talking time-consuming paperwork, meticulous recordkeeping, and demanding reports. And you can anticipate that the agency providing government funds for your program will closely monitor the use of those funds. It’s also possible that the receipt of government dollars will discourage donations from private sources.

 

Crowdfunding

It all started in 1997, when a British rock band funded their reunion tour through online donations from fans. Since then, crowdfunding has become a smart option for entrepreneurs and others to raise money, awareness, and support for a business or a project, especially when turned down by traditional lenders.

 

Through online platforms like Kickstarter, Indiegogo, Fundly, RocketHub, and Fundable, your small business can receive needed funding, with donations ranging from as little as $5 up to $5,000 and more. In exchange, your business offers rewards like T-shirts, tickets to shows, or perhaps a personal call from the founder of the company. The better the reward, the better the chance of donations.

In addition to soliciting donations, you can use the crowdfunding concept to get a loan. The site LendingClub, for example, allows members to directly invest in and borrow from each other, essentially eliminating the banking middleman.

 

Should you consider crowdfunding for your small business?

According to the research firm Massolution, the estimated fundraising volume for global crowdfunding is a whopping $34 billion. But while there’s money to be had, crowdfunding has its drawbacks as well. If you don’t have a great story to tell or a terrific product to sell, then your crowdfunding bid could fail. Some crowdfunding sites don’t collect money until a fundraiser reaches the goal. If your efforts fall short, you’ve wasted a lot of time, energy, and other resources. And then there’s the risk of getting sued if you fail to deliver your rewards.

 

Venture Capital

VC—venture capital—spells big bucks to some companies. An entrepreneur will seek this type of equity financing when the company’s size, assets, or stage of development precludes more traditional funding sources, such as public markets and banks. Venture capitalists generally invest cash in exchange for shares as well as an active role in the invested company.

 

Should you consider venture capital for your small business?

Venture capitalists typically focus on young, high-growth companies, invest equity capital rather than debt, offer a longer investment horizon than traditional financing, and actively monitor the companies in their investment portfolios. Lenders like EarlyShares and MicroVentures generally require some equity cushion or security (collateral) before they will lend to a small business.

 

Venture capital provides businesses a financial cushion, but at what cost? Equity providers have the last call against the company’s assets and require a higher rate of return or return on investment (ROI) than lenders receive. So it’s vitally important to weigh the pros and cons before engaging in a venture capital relationship.

 

Angel Investment

Many startups opt for an angel on their shoulder. Angel investors provide funding for early-stage or startup companies in exchange for an equity ownership interest. Often referred to as a business angel, informal investor, angel funder, private investor, or seed investor, the typical angel invests anywhere from $25,000 to $1.5 million.

 

How do you find an angel investor? Forbes lists a variety of ways—through other entrepreneurs, lawyers, and accountants; AngelList; crowdfunding sites like Kickstarter and Indiegogo; or through a colleague or friend of an angel.

 

Check out organizations like CircleUp or Gust that provide online platforms to connect entrepreneurs with angel investors. CircleUp offers the largest online marketplace for investing in innovative consumer and retail companies. Gust connects startups with over 1000 investment groups around the world, resulting in more than $1.8 billion invested in startups to date.

 

Should you consider angel investment for your small business?

Angels can be a Godsend for a startup and the investment usually comes in the form of a lump sum. However, angel investors expect a high rate of return, often 25 percent or more. And as a major investor, your angel may also feel entitled to some control over your company’s future.

 

The Bottom Line

At the end of the day, when you’re considering how to fund your business idea, the best option is one that helps you achieve your business objectives with minimal risk or high rates. That often turns out to be invoice factoring with Triumph Business Capital. Triumph believes the hardest part about your job shouldn’t be getting paid. Get paid today.

 

Have questions about invoice factoring or the options listed above? Please leave us a comment below.

Factoring Funding

Is Invoice Factoring Right For You?

Invoice factoring is a saving grace for many industries, from transportation and staffing to small and mid-size businesses as well as government contractors. In fact, invoice factoring can offer welcome financial relief if you’re just starting a business, have bad credit, can’t get funding from banks, or are at risk of losing your business.

A simple process

Invoice factoring lets you convert your invoices into immediate cash to cover operating costs without taking on debt. You simply perform a service for your customer or deliver a product, and send your invoice to a factoring company like Triumph Business Capital to get paid. You immediately receive payment upon completion of the load or job being invoiced.

The process is simple and virtually seamless. Triumph purchases the invoice. If you’re a recourse client, Triumph takes the factoring fee out, then a small portion of that invoice goes into a reserve account, usually 5 or 10 percent. This “advance rate” of 90 or 95% is released once the invoice is paid.

If you’re in a non-recourse agreement, you receive 100% of invoice minus the factoring fee. Since the factor assumes all risk in this type of agreement, there is no reserve held in the event that an invoice does not pay.

The pros

You get money when you need it.

Invoice factoring is fast cash in the bank to help cover day-to-day expenses, restock materials, pay staff—or just about anything you need. The alternative? Wait . . . wait . . . wait . . . and then wait even longer—30 days, 60 days, or more—to get paid by clients. But with fast cash in hand, you can keep loyal customers on longer payment terms.

Your invoice factoring company grows with you.

Compare invoice factoring to a traditional bank loan and there’s no competition. Bad credit? Limited operating history? Loan declined? No problem. Invoice factoring companies base their decision on the quality of your customers’ credit, not your own credit or business history. You get cash based on your invoices, not your company’s net worth.

The cons

You might pay higher fees than traditional financing.

Invoice factoring can have higher fees than traditional financing—but it’s a small price to pay for peace of mind. Triumph’s fee takes into account the credit risk associated with your customers and the time it takes them to pay their invoices. In fact, invoice factoring provides cash flow that meets your business where it is today and can grow as your business grows because it’s based on your actual account receivables.

Always transparent, always fair, Triumph Business Capital offers options that match each client’s financing needs without incurring debt.

Your factor may work directly with your customer.

Invoice factoring companies work directly with your customers to collect payments on your invoices. You’ll need to ensure that the factoring company you choose is ethical, fair, and respectful. Triumph Business Capital is a proud member of the International Factoring Association (IFA), and strictly adheres to the IFA’s code of ethics. We ensure a smooth transition for both you and your customers.

Your financing depends on your customer’s credit.

Lastly, recognize that your customer’s bad credit may derail your financing. The factoring company may reject your invoices to any customer that isn’t creditworthy.

Three questions to consider

How do you know if invoice factoring is right for you? Ask yourself these three simple questions.

  1. Can my problem be fixed by factoring?
  2. Can I cover the cost of factoring and still make a profit?
  3. Are my customers creditworthy?

Ready to get started? Learn how Triumph Business Capital can help you factor your invoices—because the hardest part about your job shouldn’t be getting paid.

Business Factoring

4 Common Risks Associated with Factoring Your Invoices

Many businesses turn to Triumph business capital to get their invoices factored for relief from today’s financial pressures. Faster and easier than a bank loan, getting an invoice factored doesn’t rely on your credit or your years in operation. You simply convert your invoices into immediate cash to cover operating costs without taking on debt.

In some cases, factoring an invoice is the only way a business can get cash quickly. In others, it’s simply the smartest way to get cash today. But what risks are involved when it comes to factoring your invoicesinvoice factoring involve?

1. Can you trust the factor?

In its infancy, a few unprofessional factoring companies charged excessive fees and used deceptive business practices, giving the entire industry a black eye. Now, however, factoring is not only widely accepted; it’s a trusted funding source for businesses across many industries.

Of course, before entering into any business relationship, you should always exercise due diligence. Investigate how long the factor has been in business and find out where its headquarters are located. Check into the background of its management team. Go a step further and ask for referrals from current clients, and then research complaints or lawsuits using web searches, the Better Business Bureau, and your state’s Attorney General’s Office. Remember to trust your gut: if you feel you can’t build trust with the factor, walk away.

As a respected industry leader and a proud member of the International Factoring Association (IFA), Triumph Business Capital strictly adheres to the IFA’s code of ethics. Providing invoice factoring for over 7,000 small to mid-sized businesses since 2004, Triumph Business Capital is backed by the extensive assets of Triumph Bancorp, Inc., a financial holding company that maintains a diversified line of community banking, commercial finance, and asset management activities.

2. What about uncollectible invoices?

Triumph Business Capital offers two kinds of factoring arrangements to handle invoices—recourse and non-recourse. Both eliminate the hassles and headaches of collecting invoices, so you can spend more time growing your business, gaining more opportunities to find new shippers, or taking the next load because you’ve already been paid.

With recourse factoring, you ultimately take the responsibility for the payment of the invoice. If the customer doesn’t pay the debt, then the seller is liable to repay the factoring company. With non-recourse factoring, your company pays slightly higher fees, but takes on a lower risk. The factoring company assumes all the responsibility for collecting the debt. This lower-risk option is better for many small companies that can’t absorb the cost of unpaid invoices.

3. How will the factor communicate with your customers?

Triumph has designed a seamless process for our clients to transition to factor their invoices. To start, we create a lockbox to accept payments in care of your company. Either you create your invoices or we create them for you. In either case, all invoices are stamped by Triumph with a “Notice of Assignment.” Your debtor will know that the invoice has been assigned to Triumph Business Capital as a third-party partner to help you manage your Accounts Receivable financing.

4. Is your customer creditworthy?

Savvy business owners like you know that perfect customers are rare, and even your best customers may be slow to pay your invoices. At some point, your current or future customers may not be able to pay you at all.

That’s why it’s crucial to confirm your customer’s creditworthiness before conducting business with them. But routine credit checks can be a hefty expense for your business. Triumph Business Capital runs customer credit reports all day long—for free. It’s the Triumph advantage.

When you factor your invoices with Triumph Business Capital, we monitor the creditworthiness of your customers at every transaction. By doing so, we reduce the amount of risk you take, directly reducing the amount of invoices that get kicked back after 90 days. Invoice factoring is about reducing your financial risk, after all. Let’s get you paid.

The benefits outweigh the risks

Bottom line—the hardest part about your job shouldn’t be getting paid.

Factoring your invoice provides you with the immediate cash you need to run and expand your business. No more need to process invoices. Worried about your balance sheet? This financing doesn’t show up as debt. Factoring your invoices is easy, fast, and flexible.

Ready to get started? Factor your invoices with Triumph Business Capital today.

Factoring Invoices

How to Avoid the Net-30 Trap and Actually Get Paid

It’s a headache and a hassle, and it causes complete confusion—It’s the Net-30 Trap. Does it mean you get paid 30 days from the date on the invoice, 30 days after the client bills their client, or within 30 days of what exactly? Do you get paid at all? What is net 30 anyway?

It’s a power play—and you lose

Fact is, “Payment Terms Net 30” can mean different things to different people—but in most cases, the client wins. In essence, net 30 means you’re extending credit to your client long after you’ve delivered as promised. Fair? I think not.

Chances are, you’ve seen or heard about large companies using their purchasing power to force a supplier to agree to terms that are more favorable to the large company—like a longer period of time to pay or relaxed rules for returning goods. How about the promise of future work to keep you at arm’s length when it’s time to get paid?

If you’re like most trucking or staffing companies, small to mid-size businesses (SMB), or government contractors, you don’t have great cash flow or a big cushion to fall back on. That forces you to finance your customers and accept their net-30 terms, or worse—net 60, or even net 90—leaving you looking like less than a good risk for banks or anyone else checking into your creditworthiness. And with few assets to balance such cash flow challenges, you’re not likely to have leverage to increase credibility and trust.

Three courses of action—and you win

1. Charge interest

One tried-and-true method to help ensure you’re paid—on your terms—is to charge interest if payment isn’t received on time. After all, the threat of interest for late payments is part of our everyday life, from credit cards to loans and even utility bills. In some cases, charging interest may be enough incentive for clients to pay on time.

2. Factor your invoices

Invoice factoring helps take the 30, 60, 90—or never—financial burden off your shoulders, allowing you to pay your bills and staff, stock up on materials, and sleep at night. You simply sell your invoices at a small discount to a factoring company such as Triumph Business Capital, and get immediate cash for your business. Learn more about how invoice factoring works in Invoice Factoring: The Antidote for Net-30, 60, 90, or Never .

3. Walk away

Your last course of action is to be willing to walk away. If the deal looks bad, or too good to be true; if you’re worried about a prospective client’s ability or willingness to pay—walk away before it’s too late. In the short term, taking the job gets you the work; but in the long term, you’d be taking on trouble—big time trouble.

Already stuck in a situation where you’re doing work and still not getting paid? Stop the work; your client will see this and make paying you a priority.

It’s time to get paid

Let’s face it: the hardest part about your job shouldn’t be getting paid. Free your business from the Net-30 Trap and factor your invoices with Triumph Business Capital to get paid, today.

Invoice Factoring

Invoice Factoring: The Antidote for Net 30, 60, 90, or Never

You do the work, deliver the product or service, and wait. And wait. And wonder—will you get paid on time or have to make countless calls to get your money?

Let’s face it. One of the biggest challenges facing small and mid-size businesses (SMB) is getting paid—especially since many companies are increasingly stretching invoice payment from 30 days to 90 days or even longer.

In the meantime, you have employee salaries, vendor payments, and taxes to pay—regardless of whether or not your customer pays you. How, then, do you cover your day-to-day expenses, much less expand your business? You could, of course, apply for a bank loan and cope with its cumbersome paperwork, lengthy process, and restrictive funds limit—not to mention possible rejection. Or your can opt for a more business-friendly way to go—invoice factoring.

What is invoice factoring?

To understand invoice factoring, you have to understand what it is not. Invoice factoring is not debt collection—running after businesses to pay their bills. Nor is it a business loan or line of credit.

You simply convert your invoices into immediate cash to cover operating costs without taking on debt. Invoice factoring helps take the 30, 60, 90—or never—financial burden off your shoulders and, frankly, lets you sleep at night.

Invoice factoring goes by several names—accounts receivable financing, AR factoring, and invoice financing. No matter what you call it, the process is the same: you sell your invoices at a small discount to a factoring company and receive immediate cash for your business. No more need to process invoices. Depending on your agreement, bad debt is also reduced as the factor may assume financial risk if the invoice is not paid. The bottom line—invoice factoring gives you fast access to funds with greater flexibility, minus the bad debt.

Less stress, more cash

You could say that invoice factoring is a stress reliever. It takes the billing and collecting off your plate and transfers it onto the factor’s. It also gives you greater control of your company’s finances by providing the necessary capital when your company needs it. Say goodbye to your customers’ accounts payable procedures or terms, or a traditional bank’s underwriting processes or delays—and your own cash flow problems. How’s that for control?

Another benefit? With fast cash in hand, you can pay vendors more quickly and take advantage of their discount offers, saving you money.

How does invoice factoring work?

Unlike conventional lending methods, invoice factoring is based on the quality of your customers’ credit, not your own credit or business history. You receive cash based on your invoices, not your company’s net worth. That’s welcome relief for start-ups with minimal capital or for businesses experiencing financial challenges or bad credit. Worried about your balance sheet? This financing doesn’t show up as debt.

 

The factoring process works quickly and easily: you deliver a product or perform a service for your customer and send your invoice to a factoring company like Triumph Business Capital. You immediately receive a cash advance on your invoice from the factor, who then collects full payment from your customer, and pays you the balance of your invoice, minus a fee. After verifying the creditworthiness of your customer, the factor may not accept invoices for a customer that has a history of late or missed payments.

Invoice factoring vs. traditional loan

Still not sold on invoice factoring?

Consider this: bank loan processing can take weeks or longer. In that case, you might as well wait for the customer to pay you. Invoice factoring, on the other hand, is fast. You can be paid within 24 hours. You decide which invoices to factor and when.

Invoice factoring is also more flexible than a bank loan. You aren’t locked into a long repayment period. And the cash you receive for invoices is unrestricted—you can use the funds however you want. Compare that to a business loan that requires the money to be used for specific purposes.

Who factors?

Invoice factoring has been around for over 4,000 years, dating back to the time of King Hammurabi of Mesopotamia.

In the 1900s, the most popular industries for invoice factoring were the garment and textile industries. There was simply no better way to continue to buy raw materials to produce clothing and textiles.

In the 1940s, transportation industries were added to the roster of factoring participants. From the 1960s through the ’80s, rising interest rates and bank regulations made invoice factoring more popular because it didn’t require the same sort of credit checks. Today, small to mid-size businesses finance their working capital by factoring over $1 billion annually.

“Companies of all sizes, with annual revenues from $10,000 to $10 million, continually approach us for invoice factoring,” says Steven Hausman, President of Triumph Business Capital, an industry leader headquartered in Dallas, Texas. “We have provided factoring for over 7,000 small to mid-size businesses since 2004. We have a long track record with the transportation industry. Staffing agencies, government contractors, and small businesses are increasingly seeking us out to help solve their cash flow challenges.”

The difference between recourse and non-recourse factoring

Just as there are varying client needs, there are various types of factoring arrangements. With recourse factoring, the client ultimately takes the responsibility for the payment of the invoice. Larger companies often use lower-cost recourse factoring. If the customer doesn’t pay the debt, then the seller is liable to repay the factoring company.

Non-recourse factoring allows companies to sell their invoices to the factoring company, which then assumes all of the credit risks for the collection of the invoice. Triumph Business Capital employs non-recourse factoring and assumes all the risk of collecting the debt. That’s a lower risk option for small companies that can’t absorb the cost of unpaid invoices, but it does cost slightly more than recourse factoring.

A small price to pay for substantial relief

What will all this convenience cost you? Invoice factoring can have higher fees than traditional financing, with non-recourse factoring fees based on a variety of considerations.

During the application process, Triumph analyzes the credit risk associated with your customers, the time it takes them to pay their invoices, and the monthly funding volume forecast for your business.

Triumph then offers pricing options that match each client’s budget and risk tolerance. As an added benefit, factoring fees are deductible as a business expense.

Why Triumph Business Capital?

Triumph Business Capital is a proud member of the International Factoring Association (IFA), and strictly adheres to the IFA’s code of ethics.

Originally called Advance Business Capital, the company changed its name when it joined Triumph Bancorp, Inc. in 2012. As a financial holding company, Triumph Bancorp, Inc. maintains a diversified line of community banking, commercial finance, and asset management activities. Since day one, the company’s vision has focused on four core business priorities.

  • Delivering value
  • Developing people
  • Demonstrating expertise
  • Displaying a commitment to enterprise success

“Many clients have been with us since our early days—testament to the integrity of our service and dedication to their business,” says Hausman. “Our team is professional and courteous. We’re a partner with our clients to help them find success with their customers.”

Triumph customers couldn’t agree more. A senior executive at JP Transport, LLC spoke about Triumph: “I have been beyond impressed with the service from Triumph Business Capital. My payments are processed on time every time. The online submission process is fast and easy. Reports on various payment statistics are helpful. I’ve been contacted by Triumph staff just to check on how things are going. Couldn’t be more satisfied.”

Is invoice factoring right for you?

If you’re often caught in the net-30, -60, -90—or never—battle with customers, let us help you determine if invoice factoring is right for your business. Our answers to the following frequently asked questions may get you one step closer to the cash flow relief and improved client relationships that invoice factoring provides.

Q. How much do I have to factor?

A. You have total control over which invoices you want to factor and when. Keep in mind, though, that once you decide to factor one of your accounts, it’s generally required that you factor all the invoices for that customer in order to reduce payment confusion.

Q. What are the costs?

A. The fees for invoice factoring depend on several items, including your customer’s credit risk, how long they take to pay your invoices, and your monthly funding volume. Always transparent, always fair. In any case, your factoring fees will stay the same throughout your entire contract and are contract determined before we purchase your first invoice.

Q. What if I’ve been rejected for a bank loan? Will a factor reject me?

A. Unlike traditional lending, invoice factoring does not rely solely on your credit. Invoice factoring is based on the quality of your customers’ credit, not your own credit or business history.

Q. Can invoice factoring improve relationships with my customers?

A. Absolutely! First, invoice factoring can help increase your credibility. Here’s how: invoice factoring is a recognized, established method for a company to optimize cash flow. Since banks have tightened credit policies for small businesses and startups, many companies now use factoring instead. A factoring company’s willingness to finance your invoices serves as an endorsement of your business as a solid company and a good risk.

Invoice factoring also allows you to give more attention to your customer’s needs—instead of worrying about their payments. Triumph has a decade of experience and dedicated teams that work closely with you to handle the invoicing and collecting of payments. These courteous professionals partner with you to enhance the relationship you’ve built with your customers.

Transitioning to invoice factoring is seamless. Triumph stamps each invoice with payment instructions known as a Notice of Assignment. It’s a very smooth transition for both you and your customers.

Lastly, invoice factoring helps you keep better track of your invoices. Triumph’s online account management, for instance, provides a full array of client reporting and real-time information. The goal is to keep you totally informed on the status of your customers and accounts—and give you the cash you need, when you need it.

Trucking? Staffing? SMB? Government Contractor? Get paid today!

Any business owner or consultant would readily agree that getting paid shouldn’t be the hardest part of the job. Thanks to factors like Triumph Business Capital, it doesn’t have to be.

Freight factoring lets trucking companies get the show on the road. They can pay drivers, insurance, fuel, and other expenses on time, and never have to turn down another job due to lack of cash in hand.

Staffing companies can relax, knowing that they’ll make payroll on time, every time. Small and mid-size businesses can easily replenish their operating capital and get back in business. Government contractors can have the working capital they need to keep the company going strong, without monthly minimums, long-term requirements, or “risk” contracts.

If large invoices or slow payments are standing in the way of your company’s production and expansion, it’s time to learn how invoice factoring can work for your industry—and how Triumph Business Capital can help you get paid today. Get started now, and leave the net 30, 60, 90—or never—far behind.

Truck Parking Problem

The Parking Problem

In 2009, a trucker named Jason Rivenburg was shot and killed by a man who stole $7 in cash from him. Forced to park in an abandoned gas station when he became tired, Jason became the victim of a brutal crime. Sadly there are other stories similar to this one; it’s not the first time this has happened nor was it the last. It’s been 7 years since the murder of Jason Rivenburg, and even after a law has been passed, can we say that much has been done to address this problem?

According to a recent report from the Federal Highway Administration, 72% of states reported having problems with truck parking. What is causing the problem for the lack of parking? There are a couple of factors that could be playing into this:

• HOS Rules

With the hours of service rules in place, truckers may not be able to find parking when the clock runs out. In an article by Fleet Owner, one trucker said that the closest safe parking to his intended destination was 15 miles away. In traffic, that distance could be up to 45 minutes. Because of HOS rules, this 45 minutes could cause a trucker to go over his or her allotted time. The impact of hours of service rules on truck parking is causing many truckers to park in unsafe areas, like along highways, interstates, exit ramps and abandoned lots.

• Lack of truck stops

The United States went through a recession in 2008. During this time, trucks on the road decreased and many truck stops had more spaces than trucks. A couple of years after, the economy picked back up as well as the number of trucks on the road. However, truck stops haven’t caught up to the demand, creating a lack of safe parking at truck stops.

So what’s the solution?

After the tragedy involving Jason Rivenburg in 2009, legislation occurred to increase available, safe parking for truckers through Jason’s Law. The law was passed in 2012 providing more than $6 million to put toward the construction of safe truck parking.

In 2015, the National Coalition on Truck Parking was created through the Federal Highway Administration to address this shortage. The coalition met in the fall of 2015 after the survey results of Jason’s Law confirmed the lack of safe parking available. During this meeting, the coalition defined some obstacles and opportunities to reaching the ultimate goal.
The United States Department of Transportation conducted a Beyond Traffic study and concluded that by 2040 the amount of freight moving in this country will increase by 45 percent. Therefore, the truck parking issue needs to be addressed way before we get to that point.

Many truck stops are expanding their spaces and giving truckers the option of “reserving” spots. However, this can cost money, and should a trucker have to pay for his or her safety? Another option for truckers is the big box stores that sometimes let truckers park in their parking lots. Many of their parking lots have the ability to hold that amount of weight, because freight is coming in and out constantly, However, not all big box stores have the same policies. While some are welcoming to big rigs, others turn them away. This is not always a viable option, so it can’t be the only solution.

In addition to the coalition formed, Truckers Had Enough has created a video creating more awareness of the truck parking problem.

Ultimately, we can create laws and coalitions, but in the end, we need to prevent more Jason Rivenburg situations; we need a solution.

Freight Broker, Owner Operator

Look for the Green Check Mark and Kiss the Lost Loads Goodbye

Since 1978, DAT Solutions has been a trusted source of information for transportation professionals, providing valuable data on important topics like supply and demand trends, forecasting, benchmarking and capacity planning, which is vital for achieving operational efficiency. As part of our commitment to serve the trucking industry and our valued clients, Triumph Business Capital has had an exclusive factoring partnership with DAT since 2013.

Through this partnership, our clients can enjoy free trials on two different DAT freight matching services – 30 days free on TruckersEdge and 15 days free on DAT Express. All DAT load matching services offer full technology integration with our own proprietary Online Broker Credit program. This provides valuable insight into which loads are factorable while searching for your next load to haul.

In the past, truckers struggled with mustering up the time and resources it took to identify which loads are factorable through their factoring company. By the time you received credit approval, the load could be gone. That’s why this partnership between Triumph and DAT is so beneficial. With the seamless interface, you can search for loads and see which ones are credit-approved – all at the same time. The green check on the DAT Load Boards indicates a factorable load through Triumph Business Capital. It’s that simple!

Freight factoring provides a number of benefits to those in the trucking industry, the most obvious of which is improved cash flow. By selling your outstanding accounts receivable balances, you can gain quick and easy access to much-needed capital without having to rely on loans or other complicated financing options. And because invoice factoring doesn’t involve ongoing debt payments or interest charges, your company will experience reduced risk. Freight factoring is built to last through the various seasons of your business’ life.

What could your trucking company do with better cash flow? Pay your drivers on time, stay up to date on insurance, pay for fuel and much more. Truck factoring can even help you work toward an aggressive growth strategy. Whatever your unique business needs, freight factoring can provide the funding you need to achieve your goals and objectives. And with this exclusive DAT partnership, doing so has never been easier.

To learn more about our DAT partnership and how you can take advantage of this and other great benefits that our factoring company has to offer, click here or visit our Trucking Blog.

Trucker Health

The Drive for Better Health

Truck Factoring

Choosing Your Big Rig: Buying vs. Leasing Your Truck

Purchasing a truck can be a significant expense, even for the most established trucking companies. As with most vehicles, acquiring a truck typically requires either a lease or a purchase. Which is the wisest investment? Let’s take a look at some of the pros and cons associated with each option to help you make a more informed decision for your business.

Leasing

Leasing is essentially financing the use (or deprecation) of your truck, as opposed to a loan, which finances the actual vehicle. There are various types of leasing agreements to choose from, but generally speaking, a truck lease covers the difference between the purchase price of the vehicle (excluding sales tax) and the projected value of the vehicle at the end of the lease terms.

One of the biggest differences between a lease and a purchase is what happens when all the required payments have been made. Unlike a purchase, with a lease, you will not automatically own the vehicle at the end of the terms. Some leases will allow you to purchase the truck when the lease ends for an additional amount of money, while others will allow you to trade the vehicle in, either for another truck or for the remaining cash value.

Depending on the type of lease you choose, you could end up paying more for a “closed end” lease. You could also be paying for mileage or wear and tear before you walk away as well. Furthermore, leases often include other expenses, such as security deposits, non-refundable acquisition fees and other miscellaneous fees.

In short, leasing provides flexible options, but sometimes that flexibility can come back to hurt you, as having an outstanding lease on a vehicle directly impacts your company’s cash flow, taxes and ability to replace or increase fleet.

Buying

Unless you can afford to pay in full, buying a truck typically involves taking out a loan for the purchase amount, less any cash down payment you can come up with. The loan will be for a set term, with incremental payments due that include whatever interest rate your business was assessed. Unlike leasing, purchasing a vehicle doesn’t involve nearly as many fees or expenses. It also provides the distinct advantage of allowing your business to establish and grow equity over time. When that last loan payment is made, ownership of the vehicle is transferred over to your company.

When purchasing a truck, there are a number of available equipment financing options from which to choose. Most importantly, as you make payments on the truck, unlike with a lease, you will continue to increase your equity in that vehicle. Once your financing obligation is met, you will be free to do whatever you’d like with the vehicle, including selling it to raise more capital for newer, better or additional truck purchases.

Ultimately, the choice of whether to lease or purchase will depend on your company’s unique situation. It will also depend on cash flow. If you’re looking to increase your fleet, trucking factoring can help provide an additional avenue of income to help make lease or loan payments more manageable.

Factoring Invoices

Freight Factoring Can Keep You Rolling

Cash flow problems can cause you to put the brakes on your trucking business. Before you find yourself running on empty, take a look at freight factoring; it’s cash flow without debt.

You may have heard of this type of financing before around the truck stop or at trade shows under different names like truck factoring, accounts receivable financing or even transportation factoring. Despite the name, the purpose is the same: to get you cash when you need it.

What is Freight Factoring?

Factoring companies like Triumph Business Capital can purchase your outstanding invoices for a small fee, so you don’t have to wait 30, 60 or even 90 days to get paid.

With that extra cash in hand, you now can pay your drivers (or your salary), insurance costs, fuel and other expenses eating at you. If you’ve been thinking about growing your trucking business, freight factoring can help you buy more trucks and hire more drivers.

With truck factoring, slow paying customers don’t have to slow you down.

Freight bill factoring isn’t one size fits all. It grows with your business. Through recourse and non-recourse factoring, you can tailor factoring to fit your business.

What to Look for with a Factoring Company

Your transportation factoring company will be dealing a lot with your money, so the first thing you want to look for is a team you can trust. Make sure you have the ability to see the status of your funding whenever and wherever you need to.

Yes, a rate is important, but a freight factoring company you can trust is of greater importance. That low rate isn’t going to do you any good when your factoring company won’t communicate with you about when you will get your money.

You should also look for a trucking factoring company that partners with others who offer helpful services to truckers. For example, Triumph Business Capital is exclusively partnered with DAT Solutions, allowing load board users to see which loads are factorable directly on the load board.

Stability is another important aspect to look for in your freight factoring company. Because your factoring company deals with your cash, you want to make sure it is financially stable. Along with Triumph’s financial stability in Triumph Bancorp, it also has the ability to offer your business various financial services- insurance, equipment financing and even asset based lending.

Freight factoring could be the answer to your inconsistent cash flow. Feel free to give an expert at Triumph a call at 866-368-2482.

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Freight Broker

We Ranked the Top Critical Truck Driver Safety Tips

Driving a truck may seem pretty simple and straightforward, but given the size and power of these vehicles, safety is critical. That’s why a significant portion of all truck driver training programs is devoted to teaching future drivers how to keep themselves and other operators safe on the road, while also protecting their precious cargo. If you’re planning a career in trucking, below are critical truck driver safety tips to keep in mind when getting behind the wheel.

Load Cargo Carefully

If you are responsible for loading your own truck, be careful about how you do so to avoid potential issues once you hit the road. Remember that the higher you stack your cargo, the more drag you will have on your truck. By stacking lower and distributing cargo throughout the full space of the truck, your vehicle will be easier to control and maneuver, making it safer. As an added bonus, you’ll also improve your fuel economy. Want to see how to best load your cargo? Use this simple load calculator.

Understand Blind Spots

All vehicles have certain areas known as blind spots from which the driver is unable to adequately see what’s around him or her. For larger vehicles, common blind spots include the area off to the side, just in front of the cab; directly behind the side mirrors; and directly behind the truck itself. It’s important to take extra precaution when conducting certain maneuvers, such as backing up or changing lanes. Also, keep in mind that four wheelers may be unaware of these blind spots. In fact, most four wheelers don’t know about the four no zones. You could think about placing warning signs with pictures of your blind spots on the back of your truck to inform four wheelers of the dangers.

Reduce Speed on Curves

Posted speed limits, particularly on roadways that feature lots of curves, are meant more for four wheel drivers. Larger trucks aren’t meant to hit these higher limits, especially around corners and bends. Driving too fast in such an area can increase the risk of your truck tipping over. Whenever you’re navigating around curves you should always reduce speed below the posted limit.

Drive Defensively

There are plenty of things you can do to ensure that your driving is safe, but since you’ll inevitably be sharing the road, it’s also important that you take into consideration the other drivers around you. Always be alert and prepared for any situation, like avoiding a collision with a vehicle that unexpectedly cuts you off.

Adjust for Bad Weather

About one quarter of all speed-related accidents involving trucks are caused by inclement weather. It’s critical that you reduce your driving speed accordingly when traveling in poor weather. A good rule of thumb is to reduce your speed by one-third when roads are wet and reduce half your speed when snow or ice is present. Allow ample time for other drivers to see your signals before changing lanes, and if you notice other truck drivers pulling over, it might be wise for you to do the same. For more information on winter weather driving tips, check out our blog post.

Drive with Caution in Construction Zones

Believe it or not, incidents involving large trucks account for approximately one-third of all construction-zone accidents. This is why truck driver training includes detailed instruction on how to watch for and avoid such situations. Pay careful attention to all road signs and always err on the side of caution by reducing your speed any time you are driving through a construction area.

Maintain Your Vehicle

Prior to leaving for any type of road trip, you are responsible for conducting a thorough inspection of your truck. Any potential problems should be reported and/or corrected immediately. The act of properly maintaining your vehicle can dramatically reduce the number of safety incidents that occur on the road. Test your knowledge about a pre-trip inspection with these free tests!

Stay Calm

Another important lesson, though one that isn’t usually covered in truck driver training, is that of remaining calm in any situation. For some, this is easier said than done, especially in stressful situations such as heavy traffic or other delays. If you are to remain safe and prevent potentially dangerous accidents, however, keeping a cool head is essential.

Take Care of Yourself

Driving a truck can be an exhausting job, but given the inherent risk associated with the profession, taking proper care of yourself is of the utmost importance. For instance, making sure you always get the proper amount of sleep prior to getting behind the wheel. It’s also good practice to eat well, exercise regularly and enjoy some much-needed time off every so often. Doing so will keep you refreshed and rejuvenated, which will lead to safer driving all around. Trucking companies and drivers are making big changes for a healthier lifestyle; learn more in “The Push to Help You ‘Keep On Trucking.’”

One of the most important goals any truck driver strives for on a daily basis is that of safety. It takes a concerted effort and well-planned execution to avoid accidents and other potentially dangerous situations while behind the wheel. The truck driver safety tips listed above should provide a good foundation for keeping yourself, your vehicle and your fellow motorists out of harm’s way.

Freight Broker

Electronic Logging Devices: What this Mandate Means for You

The clock has started ticking.

On December 16, 2015, the Federal Motor Carrier Safety Administration (FMCSA) published the official Electronic Logging Device (ELD) mandate, enforcing the adoption of ELDs by all truck drivers before December 18, 2017. Not only did the FMSCA publish this rule by Congressional mandate, but they also believe that this rule will eliminate 1,844 crashes, prevent 562 injuries and save 26 lives.

What does an ELD do?

An ELD tracks the hours a trucker is on the road and location of the truck and will replace the paper logs that truckers have been required to keep. The device can’t allow any deletion of driving time and must be tamperproof. This allows the FMCSA to use electronic data to track compliance for HOS rules. Drivers will still need to keep supporting documents to verify HOS compliance (bills of lading, dispatch and trip reports, mobile communications, etc).

Who Does and Doesn’t Need an ELD?

Drivers who fill out paper logs will be required to abide by the ELD mandate. However, this rule doesn’t apply to some drivers. Drivers that are exceptions to the rule are:

Timecard or “shorthaul” drivers
Drivers in the driveaway-towaway business
Drivers that drive a vehicle manufactured before model year 2000

Why does the model year matter? Before 2000, commercial vehicles have different aspects to their engine control monitors that wouldn’t allow the ELD to capture the information it needs.

Grandfathering of the ELD Mandate

As with any rule, there are exceptions. Because there is equipment similar to ELDs already in use by many carriers, the FMCSA has allowed a “grandfathering” of some equipment. If they follow the standards put in place for Automatic On-Board Recording Devices, then they can be used until December 2019. Such equipment can also be modified to meet the ELD specifications to be used after December 2019.

Two Sides of the Fence

Industry experts can agree that December 16th was a historic day in the transportation industry. However, major industry leaders have different feelings about the mandate. A day after the FMSCA made the final ruling on ELDs, the Owner-Operator Independent Drivers Association (OOIDA) sued the FMCSA.

OOIDA also has some issues with the privacy of the mandate. In a recent Transport Topic article, OOIDA President, Jim Johnson says, “This regulation is absolutely the most outrageous intrusion into the rights of professional truckers imaginable and will do nothing at all to improve highway safety. In fact, we firmly believe it will do exactly the opposite by placing even more pressure and stress on drivers than they already deal with.”

While OOIDA strongly opposes the FMCSA’s decision, the American Trucking Association (ATA) believes this ruling will make a positive impact on the trucking industry. According to a recent article published by the CCJ (Commercial Carrier Journal), this mandate has been a priority of the ATA for about 5 years now.

Other transportation groups have differing feelings surrounding the mandate. Regardless of outlooks, currently the ELD mandate is still in place.

So What’s Next?

Carriers should start the process of finding the right ELD for their business. Manufacturers of the equipment will be required to have it tested and certified with the FMCSA to verify it meets the mandate’s standards. It will keep a public registry of approved devices for carriers to reference, starting on February 16. Before choosing an ELD system, ask the provider the following questions:

How was the certification earned?
Was testing involved? If so, what tests were done?
What state rules were considered in manufacturing?

Due diligence is especially important when choosing your ELD, because if an ELD becomes de-certified, you will need to find a new ELD, which requires more time and money.

Many carriers have been using fleet management software or equipment that functions similar to an ELD for some time, and many should be able to continue using them under the new ruling.

To see what the ELD mandate means for you and your trucking company, please visit the ATA’s summary of the ELD mandate.

The FMCSA posted the full mandate that you can read by clicking here.

For up to date information on the trucking industry, follow us on Facebook, Twitter and Google+.

Taxes, Trucking

Paying Back Uncle Sam: Tax Tips for Truckers

It’s almost that time of year again – tax season. For truck drivers, there are many unique deductions available that can help reduce monies owed and maximize returns. Before sitting down with your accountant or tax advisor, here are some of the things to take into consideration that will help you get the most out of your 2015 tax filing.

Preparing Ahead

Part of your truck driver training should have included the importance of keeping detailed records of all the expenses you incurred over the course of the year. By keeping track of how your money is being spent, you’ll be able to more accurately determine exactly what and how much you can deduct. Keeping receipts and other documentation in one place, such as in a folder or on a spreadsheet is recommended.

What’s New for 2015?

In some instances, new tax laws are implemented that specifically impact truck driving professionals. For 2015, Section 179 of the tax law has been expanded to include a few major deductions that were not previously available. For instance, starting with this year’s tax filing, you can now depreciate any truck you own over a three year period for tax savings purposes.

Additionally, if you purchased your truck in 2015, you can now deduct the actual amount you paid during the year, even if was financed.

What Else Can You Deduct?

Beyond equipment, there are also a number of other deductions that are available to trucking professionals. If you are an owner operator, many of the supplies necessary to run your business can be counted as deductions on your taxes. Some examples of these types of deductions include, but are not limited to:

  • Internet and cell phone costs
  • DOT required physical exam
  • Drug tests
  • Load board subscriber fees
  • Postage fees (mailing invoices, bills of lading, etc.)
  • Subscriptions to trucking publications
  • Cleaning products for your truck

For a full list of available deductions, click here.

What Can’t You Deduct?

Just as it’s important to understand what deductions are available to you, it’s equally important to avoid taking deductions on things that are not allowed. If you’re not careful, your return could be flagged for a costly and time consuming audit. For instance, if you are a company truck driver and your company reimburses you for any of the things listed above, you are not allowed to deduct them on your own taxes.

Additional expenses that are not considered tax deductible include:

  • Home phone
  • Personal vacations
  • Tolls
  • Everyday clothing (not your uniform)

As with anything else relating to finance and taxes, it is always advisable to consult with a professional such as an accountant or tax advisor. It’s particularly beneficial to work with someone who has experience filing taxes for clients in the trucking industry.

For more trucker tips or to find out how trucking factoring could work for your business, contact us today. Or, connect with us socially on Twitter, Facebook and Instagram!

Winter Weather, Road, Mountains

Winter Trucking Tips You Need to Know

The weather outside is frightful, but these winter trucking tips should make your drive a little more delightful.

First, preparing for your drive starts before you even get on the road with a pre-trip inspection. You should already be completing a pre-trip inspection, but with winter road conditions, it’s recommended that you check your vehicle more often. Remember that this inspection includes tires, wiper blades, fluids and lights. If one of these parts doesn’t work properly, it is a bigger problem in winter weather.

Imagine a tire going out in the snow or your lights not being seen because of all the grime from the road covering them. Also, keeping at least half a tank of fuel in your truck is important. The more fuel you have in your tank, the less condensation builds in your fuel tank.

After your pre inspection you will want to have items packed in case of the worst:

• Proper clothing (layers, gloves, rain gear, and a coat)
• Flashlight
• Blanket
• Extra food and water
• Bag of sand
• Windshield washer fluid
• Windshield scraper
• Jumper cables
• Tire chains and/or traction mats
• Reflective vest
• Bungees
• Cam Lock T-handles
• Kneeling pad
• Anti-gel
• Emergency flares

Now it’s time to plan your trip. When determining your route, take note of truck stops and weather patterns, so you take the safest route possible. If you typically drive the same lane, start taking note of these stops in the spring and summer before winter weather appears. To get up to date information on the weather through your phone, you can download the Weather Bug app. It has a radar that can keep you updated on winter weather ahead.

When you head out on the road, watch your speed. Wherever you are going isn’t as important as your life or others. You will have more time to react if something happens, which also means you need to watch your spacing. Keep a good following distance so you can respond to whatever may happen on the road.

Brake and accelerate lightly. Whatever is out on the road can become an even bigger issue if you are stopping and accelerating at high speeds. This is especially important because black ice can exist out on the road. One clue to black ice is noticing that the spray from tires on vehicles in front of you has stopped.

Be extra careful in the mountains, because weather can change rapidly. Obey all signs, especially in the mountains so you can be as safe as possible.

As truckers, you know how to drive in this weather, but one thing to be concerned about that you can’t control is the other drivers out on the road. Even though you can’t control how they drive, you can control how you drive around them. Drive defensively. Keep your distance in case you need to react quickly and have a heightened sense of awareness.

Lastly, if you find yourself stranded on the road, stay in your truck. Grab the blanket and coat you packed and stay moving to keep warm. Keep your exhaust pipe clear of snow and crack a downwind window for ventilation. Also, you should run your engine for about 10-15 minutes per hour.

If you find yourself on the road in bad weather conditions, don’t be afraid to get off the road. Use your best judgment, because your life is the most precious cargo you are carrying.

 

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Trucking, Trucks Lined Up

Is Your MC Number Going Away?

MC numbers. MX numbers. FF numbers. Soon, they’ll all be gone. In the near future, all interstate motor carriers will need just one number to complete the Federal Motor Carrier Safety Administration’s (FMCSA) registration process. Read on to find out why the change is happening, who is affected, how to maintain compliance, and when to take action.

Why the change?

The current carrier registration process is complex, involving different numbers and processes for different carrier types — and many carriers still submit paper forms. It can be time-consuming to track individual carriers using disparate systems, and the government wants to phase out inefficient paper processes.

The FMCSA’S new Unified Registration System (URS) will streamline and simplify things, merging multiple systems, numbers and forms into a single, electronic online process. Once it launches, all carriers will be identified solely by their USDOT (Department of Transportation) number. This simple approach will make it easier to obtain operation authority and maintain compliance. It will also save an estimated $9 million for the FMCSA and the trucking industry, over the next decade.

Who is affected?

All interstate motor carriers, freight forwarders, brokers, IEPs, HMSP applicants/holders, and cargo tank manufacturing and repair facilities under FMCSA jurisdiction will need to comply.

What action must I take — and when?

  • Carriers Currently Registered with the FMCSA:
    If you already have an MC USDOT, or FF number, you don’t have to do anything yet. The change is so big and sweeping, the FMCSA is rolling it out in phases — and currently registered entities are not required to make any changes until September 30, 2016. Continue using the current agency forms and processes to apply for additional registration authority, make administrative filings, and update your registration.
  • Special Entity Requirements:
    If you’re a private HAZMAT or exempt for-hire carrier, you must provide proof of financial responsibility beginning December 31, 2016. In addition, you must have BOC-3 filings in place beginning December 31, 2016. New applicants will begin providing this information September 30, 2016.
  • New Carriers:
    New registration applicants will be required to use the URS online registration application sooner — beginning December 12, 2015. Because it will take some time to transition from the old system to the new one, only new applicants will be able to use the online URS at this time.

Where do I go to get my number?

Online. Once the URS is in effect, paper forms will no longer be accepted. However, we can’t give you the url yet — it’s not ready. The FMCSA recently published an extension to their original deadline for the website launch, citing the need to implement multiple provisions.

Dates to remember: Biennial updates

Once you begin using the URS, you will be required to update your information biennially (every other year). So, how do you know which year and month to do so? The answer lies in your USDOT number itself. Here are the guidelines:

  • If the next-to-last digit in your USDOT number is odd, you must update your information in the odd-numbered calendar year.
  • If the next-to-last digit in your USDOT number is even, update your information in the even-
    numbered calendar year.
  • To determine the month in which you must update, look at the last digit of your USDOT number.
    “1” means January, “2” means February, “3” means March, and so on. Oh, and “0” means October. We know what you’re thinking. What about November and December? Those are double-digit months. Well, don’t worry — there will be no updates in those months.
  • Special exclusions: If you change your name, address, or form of business, you must update your information within 30 days of the change.

We know — it’s a pain in the bumper. But if you don’t complete the biennial update, your USDOT number will be deactivated.

The URS may seem confusing, but once it launches, we’ll be on the road to a more efficient, simpler process (To learn more, visit the FMCSA website.) At Triumph Business Capital, we’re committed to serving truckers. Follow us on Twitter and Facebook to stay up-to-date with the latest in the industry!

Trucker Health

The Push to Help You “Keep On Trucking”

The average life expectancy in the U.S. is 78.7 years — but for truckers, it’s only around 60. While job risks like traffic accidents are partly to blame, the trucking lifestyle may be the bigger culprit. Here’s what truckers are doing to change the statistics, and create longer, healthier lives.

Why is it so hard for truckers to stay healthy?

Long hours sitting behind the wheel. Lack of access to healthy food choices. Limited time for exercise. It’s easy to see why staying healthy is a challenge for truck drivers. According to the Centers for Disease Control and Prevention, truckers have the highest obesity prevalence of any occupation. They also have a 50% higher risk of developing diabetes compared to the general population, according to a 2009 study. However, an industry-wide shift toward healthier lifestyles is beginning to change all that.

Who’s driving the push for better health?

Rising healthcare and insurance costs, an aging workforce, and the desire to improve one’s own health are all contributing factors to the growing concern — and as the industry rallies around the problem, we’re seeing a lot of promising new solutions. Transportation companies, health insurance providers, healthcare companies, and individual truckers are all doing their part to create a healthier future for truckers. Here’s how:

  • Employers and Transportation Companies
    In the corporate world, “workplace wellness” has been a growing trend — but it’s been slower to reach the trucking industry. Drivers travel across the country daily, making it difficult to access workout facilities, participate in fitness classes, or assemble for office meetings about healthcare. Instead, employers are trying new methods to reach a mobile workforce, including online fitness programs, conference calls with health coaches, and mobile applications to track diet and exercise. For example, Prime Inc., a trucking operation with thousands of drivers, hired a trucker-turned-fitness guru to create and implement a health program for its fleet.
  • Healthcare Providers and Insurance Companies
    Keeping truckers healthy is good for everyone on the road. A driver with more energy is less likely to become drowsy — which may prevent accidents. Healthcare providers and insurance companies are reaching out to truckers with websites, online video channels, and other resources aimed at improving health. For example, The Healthy Trucking Association dispenses health advice, articles, and recipes on its website, along with insurance information.
  • Transportation Industry
    Financial providers and others in the industry are also chipping in to improve trucker health. The online video network CFF Nation hosts fitness-themed shows for truckers, including cooking shows and exercise programs with moves you can do inside or outside of your truck.

Individual Truckers

Of course, the only way to truly improve truckers’ health is if truckers themselves get involved — and not surprisingly, truckers are the biggest drivers in the trend. Here are some of the ways they’re incorporating health into life on the road:

  • 15-minute “exercise breaks”
    Truckers are using breaks to get in quick, high-intensity exercise. A workout can be as simple as
    jogging around the truck stop, lifting weights, or doing jumping jacks. If you can work in two or three short exercise sessions a day, you’ll boost your metabolism.
  • Healthy choices on the road
    Fast food options are limited, but with a little education, drivers can make better choices. For example, a six-inch sub with double meat provides more protein and fewer carbs than a foot-long. Drivers can skip buns on burgers, sub salads for fries, and go easy on the dressing.
  • Kitchen-in-the-cab
    Some drivers are creating kitchens in their cabs, with portable mini-fridges and basic cooking facilities designed for the road. They’re stocking up on healthy ingredients and produce at grocery stores, and making their own nutritious meals instead of settling for fast food.

Truckers are fighting the statistics — and it may result in longer and happier lives. For more Trucking Tips, give us a follow on Facebook and Twitter for daily updates.

Owner Operator

How to Make it Through Your First Year as an Owner-Operator

So you’ve decided to leap from employed trucker to becoming an owner-operator.

There are definite advantages to having your own authority and being your own boss: setting your own schedule; choosing loads and lanes that suit you; leaving company politics, rules and dispatcher favoritism in your rearview mirror. But where much freedom is given, much responsibility is required. Following these tips from others’ been-there-hauled-that experience will improve your chances for success in your first year on your own.

Set realistic expectations.

Even though becoming an owner-operator offers the opportunity to make more money, take off the rose-colored sunglasses. In your first year, expect to lay out a lot of cash for working capital, out-of-pocket expenses, insurance, meals, oil changes, repairs and many other expenses. Do a lot of research to get an accurate handle on both expected income and expenses.

Live within your means.

Your spending habits and money management will drive your success as an owner-operator. It’s good to set ambitious goals, but you can’t spend anticipating future growth. Budget based on yearlong averages, not the best of times. Buy or lease a truck you can afford, and set aside money for insurance, repairs and maintenance – even for a brand-spanking new one with a warranty.

Choose your truck wisely.

Spec it to squeeze out every penny of profit. Align the engine with the loads you expect to haul. Whether buying new or used, do your homework. Consider the truck’s fuel economy and its age (including mileage, warranty and amenities) for the money. Research fuel economy with the diesel engine manufacturers. Get real-world input from other owner-operators with similar trucks and engines. Also focus on reliability and longevity as well as maintenance requirements and overall performance.

Credit matters.

Avoid the common mistake of becoming an independent trucker with bad credit or excessive personal debts. Minimize your credit-card debt. Maintaining good credit supports your ability to keep rolling and access necessary capital for equipment, fuel cards, and investment in your business.

Set aside money for downtime and emergencies.

Plan for a rainy day by setting aside a little bit each week “just in case.” Work can dry up. You could get sick. Costs and revenue fluctuate. Build up your emergency fund – a good 3-6 months of living expenses – to tide you over in case you experience a real financial emergency, you can’t work, or you need ready access to cash. Even new rigs break, and downtime can be devastating.

Pay for professional expertise.

Consult with professionals on accounting and legal issues to set up the most appropriate business structure for your trucking business, keep proper records, plan for taxes and address various legal issues. You’ll also need a responsive and knowledgeable business banking contact. Seek out reputable professionals who can advise you properly for your specific circumstances.

Keep yourself healthy.

If you’re going to be on the road for long periods of time, your body and mind need to be in good health. If you have downtime because of health issues, you aren’t making money. If you’ve got health issues, plan for getting medical attention even while on the road. Also keep in mind that being a long-haul trucker is tough on relationships and family, stresses that can affect your physical health. Make sure you’ve got a decent health insurance policy and be prepared to pay for travel coverage.

Continue to learn.

You may be new to the industry or you may have been leased on to a company for years, but to stay one step ahead of your competition, continue to learn. Connect with industry leaders and learn from them. Those connections can help grow your business in the future, too. Don’t ever become complacent with your knowledge. You’ll also need to continue your professional training. If you plan properly, you can do this while on the road without taking hours away from your home time.

Think like a business owner.

Trucking is a business and your truck is your tool. It takes an intense work ethic and hard, smart work to be successful. In the beginning, after becoming an owner-operator, you’ll need to drive 70 hours a week and spend extra hours behind the scenes to keep the business running. You have to be prepared if something happens to your truck or you need more money for fuel. Those are now your responsibilities, not someone else’s. And, when evaluating loads, strike the right balance between home time and having enough cash coming in.

Go into carrier relationships with eyes wide open.

Know what you’re getting into before you sign – from the business sector you’re getting into to specific carriers. Rates, costs, customers, safety records, internal relationships all affect your operation. Focus on building long-term relationships with good customers.

Be prepared.

Even if you weren’t a Boy Scout or Girl Scout, you need to be prepared for whatever happens in your business. If your brokers or shippers pay slowly, you may want to consider factoring through Triumph Business Capital. Freight bill factoring helps you manage your cash flow so you get paid fast without incurring debt. Also look to Triumph for a free trial of DAT Load Boards to search for credit-approved loads.

Let’s Talk About How to Get You Paid

Take five minutes to learn more about how we help owner/operators increasing their cash flow.

DAT Solutions

How to Choose the Right Fuel Card

What could you do with $1,080 extra per year, per truck in your fleet? You could be saving this much or more just by using the right discount fuel card. With so many fuel card options available, it can be hard to know how to choose the right one. In this blog, we’ll explain the difference between a discount fuel card and a credit card, and share the top features to compare when you’re shopping for savings.

Choosing the Right Card Type

Credit Cards

Many fleet owners buy fuel with credit cards because they’re quick, convenient, and they’re accepted everywhere. But no matter where your drivers are fueling up, if they’re using a credit card, you’re overpaying. The diesel price posted at truck stops is actually the cash price. When you pay by credit card, the cost is usually five cents more per gallon, or higher. Multiply that by 1,500 gallons per month (a typical amount of fuel consumed by an average tractor-trailer), and it comes out to $90.00 per month, or $1,080 per year. Even worse, if you don’t pay off your credit card each month, you’ll pay interest fees, too.

Discount Fuel Cards

Unlike credit cards, discount fuel cards are cash-based, so they qualify for the lower cash price posted at the pump. But that’s not the only way discount fuel cards help you save money. You’ll also get discounted pricing negotiated by the card provider, beyond the cash price. When multiplied by the gallon, and by the truck, these discounts add up to huge savings.

Comparing Fuel Card Benefits:

Discount fuel cards offer much more than savings, and not all cards are created equal. Here are some of the top benefits (and drawbacks) to look for when comparing providers:

Rebates
Fuel is one of biggest expenses in operating a fleet, accounting for up to a third of business costs. Ask your card provider how many cents per gallon you’ll save when you use their card, and find out whether you must meet a certain fuel threshold to qualify.

Reporting Features
Many fuel discount cards provide detailed reporting tools to analyze spending and assist with fuel tax reporting. The level of detail provided depends on the card, so be sure to ask what you’re getting. For example, can you track mileage and expenses per vehicle, and per driver?

Control Features
If you want to ensure your team is using cards appropriately, ask about control features. You may wish to limit purchase types, amounts, or the number of times a card is used daily.

Card Acceptance
Some fuel cards are limited to certain geographic areas, or specific fuel providers. Be sure the card you choose will be convenient for you and your fleet to use.

Cash Advance Capabilities
Can you use the card to withdraw cash from an ATM, transfer money, and make balance inquiries? Cash advance capabilities can be an attractive feature in fuel cards, but not all providers offer them. If yours does you should beware, most of the capabilities come with a transaction fee that can also add up overtime.

Service
The people behind the card can be as important as the benefits provided. Find out if there is a 24-hour line for customer support, and try calling. It can be helpful to know whether a live person answers, and how long it takes to get through.

Trust
This is your money we’re talking about, so make sure you’re dealing with a provider you trust.
How is the company rated by the BBB? Are they financially sound? Do they have a good reputation? Do you trust them? Interview each card provider, and ask for referrals.

It pays to shop around, so be sure to do your homework. If you decide a fuel card is right for your fleet, you may want to consider Triumph Business Capital’s discount fuel card program, which is accepted at over 11,000 locations nationwide. Contact our sales team, for more information.

Fun Facts about US Trucking

15 Fun Facts About the U.S. Trucking Industry

You can probably recite a slew of metrics about your own operations, but you may not be aware of the role trucking plays in the U.S. economy or the extent of its reach. Here are 15 interesting tidbits about the industry you live and breathe:

  • Charles Freuhauf invented the first tractor-trailer over one hundred years ago in 1914 when a customer wanted a vehicle that could haul a boat.
  • The trucking industry is expected to generate $1.3 trillion in revenue in 2015.
  • One out of every 14 jobs in the United States is created or directly affected by the trucking industry.
  • A typical U.S. commercial truck driver logs 105,000 miles per year.
  • The combined mileage of all trucks making deliveries in the country is nearly 5 billion miles per year.
  • Approximately 15.7 million trucks are currently in use in the U.S. If you lined up all of those trucks end-to-end, they would reach the moon!
  • About two-thirds of all domestic freight transported in the United States is carried by truck.
  • Over-the-road truck engines are designed to travel more than one million miles before being retired, whereas car engines are expected to go just 200,000 miles.
  • The average big rig carries 80,000 pounds of freight at one time. That’s 40 tons of goods and products.
  • The U.S. trucking industry consumes about 50 billion gallons of gasoline every year. This equates to nearly 13 percent of the country’s total fuel consumption.
  • In 2009, the average over-the-road truck driver made $35,000. In 2013, that figure was $55,000, a $20,000 jump in income in just seven years.
  • Trucks need 40 percent more time to stop than cars.
  • The types of goods most commonly transported via truck are food, clothing, furniture and electrical machinery.
  • Over the last 19 years, the exhaust emissions of heavy trucks and off-road equipment have plummeted more than 95 percent.
  • It would take 60 of today’s clean-diesel trucks to generate the exhaust emissions of one truck from 1988.

While these facts are fun to know, it pays to know about the many resources available to help your business thrive. For starters, look to Triumph for invoice factoring. By purchasing your outstanding invoices, you can get your cash faster without sweating slow payments or taking on debt. In addition to helping you manage your cash flow, Triumph also supports your business with services such as online credit checks, fuel discounts and advances, insurance, free trial on DAT load boards, which includes an automatic credit check on shippers and brokers, and other benefits previously reserved for larger companies. Rely on Triumph to minimize the headaches and risks of operating your fleet.

And, keep up with our latest trucking tips and tools on your favorite social platforms:

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Get the latest scoop on Google Plus

Freight Broker

Six Questions You Should Ask Your Freight Broker

Even though a freight broker is entrusting your trucks and drivers with their customers’ shipments, you’re on the hook if they’re not trustworthy, financially strong or a performance-focused operator. Here are the top six questions to ask before you take on a job with a new freight brokerage.

Is the freight broker financially stable and able to pay its carriers?

Perform a credit check to find out if they are profitable and how quickly they pay vendors. Are there any liens, lawsuits or legal judgments against them? If you turn up financial problems, keep your distance. Better to build an ongoing relationship with a brokerage that has been growing steadily in revenues, staff, technology and capabilities over the years. In a 2014 survey by Penske Logistics, chief executives of third-party logistics companies predicted the 3PL industry would grow 6.5% per year over the next three years and that their own businesses would grow by more than 10% at the same time. If their results are underperforming industry expectations, that’s a red flag.

Is the broker properly licensed and bonded?

Do they have a federal property broker license issued by the Federal Motor Carrier Safety Administration (FMCSA) and broker authority? Do they have a freight broker bond? A $75,000 surety bond is required by law for all brokers, providing protection for carriers in the event that a broker fails to pay freight charges. Check out the FMCSA’s searchable database to see if a freight broker is properly licensed and bonded.

How does it treat its carriers?

Do they establish and maintain mutually beneficial, long-term relationships with their carriers? How quickly do they pay trucking companies after a load is delivered? Do they pay on time and strive to eliminate costly deadhead miles? Partnerships built on trust and over time, where brokers and truckers work closely together, are most valuable. They help anticipate customer freight needs and boost shipper satisfaction, leading to more profitable, ongoing business.

Do they carry contingent cargo insurance?

Even though your trucks physically would be handling the freight, not the broker, contingent cargo insurance protects the shipper if a shipment is lost, stolen or damaged in transit. If you cannot or do not fully pay the claim loss, the broker’s insurance kicks in, providing backup. It is preferable to work with freight brokers who have this insurance.

How long has the brokerage been operating?

For the first one or two years, companies focus on survival. If it’s been around for a decade or longer, that’s a strong indicator that the business is solid. If it’s a startup with hardly any history, or a lot of customer complaints, steer clear. A good track record and thriving business are good signs that they execute well, and consequently are stable and successful. Unfortunately, the freight industry has seen its share of fly-by-night operators who pay their carriers late – or not at all. Save yourself the heartburn and research the brokerage online to learn about the company’s longevity, a measure of its experience and expertise.

Are communications clear, comprehensive and in writing?

Good communication on the front end and throughout the process avoids surprises and problems later on. You should get instructions in writing, as well as document details on loads you pick up and deliver. Relying on phone calls to get instructions, match loads to your capacity and prove that loads were picked up and delivered is not enough. And, before you do business, make sure you have a written contract with the broker.

Factor in ready cash with freight bill factoring

With Triumph’s freight factoring, see your cash faster to take care of business needs without taking on debt or making loan payments. We take the stress and work out of getting paid by freight brokers and shippers by purchasing your outstanding invoices and getting you paid faster. Put our team of savvy credit and collection professionals to work for you. Benefit from added resources and experience in operations and technology. Avoid bad debt and slow-pay headaches – be ready to take on new opportunities.

Truck Driver Shortage

How to Hire Drivers– and Keep Them During the Truck Driver Shortage

For today’s generation, trucking doesn’t seem to hold much appeal. Long hours on the road, time spent away from family, and mediocre pay is leading to increasingly high turnover rates and driver shortages. In fact, according to the American Trucking Association, the industry needs 30,000 more drivers to meet current demands. If you’re a fleet owner, you’re probably well aware of the truck driver shortage. And, you may even be looking for truck driver resources to attract new talent. Fortunately, you’ve come to the right place. We’ve compiled some of the best tips for finding truck drivers and reducing driver turnover. Read on to learn how to improve recruitment, training and retention for your fleet.

1. Accelerate recruitment.

With so much competition for drivers, it can be challenging to recruit high quality candidates. However, by rethinking recruitment and appealing to new pools of talent, you can be on the road to hiring new truckers a lot faster. Here’s how:

  • Use social media.
    The trucking industry has historically recruited through TV and print ads, but today’s drivers are online. Make sure your company has a presence on social media sites like Facebook, Twitter, and Instagram, and use these sites to post positions and interact with drivers. Most are free to use, but offer paid advertising that can help with finding truck drivers more efficiently.
  • Make your website work harder.
    Search engine optimization can go a long way toward attracting long-haul drivers. Create a “Careers” page on your website for posting jobs and accepting resumes, and be sure to include keywords that drivers might search — such as “trucking jobs,” “truck driver resources,” etc. You may also want to add a blog to your site, and post articles with keywords, to keep content fresh.
  • Use driver job boards, lead boards and aggregator sites.
    Websites like DAT Solutions cater to the trucking industry, and can make finding truck drivers easier. Post your job in more than one spot for maximum visibility.
  • Recruit military drivers.
    Military truck drivers can bring a high level of integrity to your organization — and their training is second to none. The U.S. Chamber of Commerce Foundation’s Hiring Our Heroes program helps veterans and military spouses find worthwhile employment, and offers a nationwide hiring fair as well as online resources.

2. Drive Quality with Better Onboarding and Training.

Despite the truck driver shortage, you shouldn’t have to accept an employee that doesn’t meet your quality requirements. A strong onboarding process for qualifying and training new employees can lead to better performance on the job, and improved satisfaction. It can also reduce driver turnover, which can be costly.

  • Conduct background checks and screenings.
    Head off turnover early by conducting thorough background check and screenings, including moving violations, driving while under the influence, and Compliance Safety Accountability records. Ask for recommendations from previous employers, too — and take the extra time to call them. A little due diligence now could save you time and money later.
  • Create a formal orientation program.
    If your company doesn’t have a formal orientation and training program, create one. Include training in all the skills needed to complete the job, and discuss your expectations and any special job requirements.
  • Ask for employees’ input.
    Conduct a post-training interview to ask new hires how they feel about the job so far, and answer any questions that may have.

3. Create an environment where drivers feel respected and valued.

Build a retention program to ensure truckers know what is expected of them, show them that their opinions are valued, and prove that management is willing to do what it takes to keep them there. Here’s what some of the most successful fleet owners are doing to attract and retain the best talent.

  • Raise pay and benefits.
    Higher salaries and benefits are big draws in any industry — and trucking is no exception. Check industry standards to see what competitors are offering, and make sure your salaries are in line. Also, consider adding health and wellness benefits.
  • Create a better work/life balance.
    Spending days and weeks away from home causes stress for truckers and their families. Consider altering schedules to allow drivers to return home more often.
  • Make the job easier with new technology.
    Automated logs make record keeping less taxing. Rear-facing cameras help truckers navigate blind spots. Automatic transmissions can make trucks easier to drive. Ask your fleet what features they would like to see, and consider investing in technology to improve job satisfaction.
  • Create a career path.
    Truckers don’t just want jobs — they want meaningful careers. If you can provide carriers with opportunities for advancement, transitioning from on-the-road to behind-the-desk, you may see your driver turnover problem turn around.
  • Conduct employee surveys.
    The best way to know what employees want is to ask them. Distribute surveys to ask employees if they are satisfied with their jobs, and find out what you can do to make the work experience better.

In the end, truckers want the same things every employee wants: a promising career, good pay and benefits, and a positive work environment. Even in a truck driver shortage, offering these benefits can help you attract better quality candidates. While you’re growing your work force, Triumph Business Capital can help you access working capital to grow your business — and ensure your new employees are paid on time. Ask Blaine Waugh for more information.

Truckers Insurance

Why Is My Insurance So Expensive?

When most people go to buy trucking insurance, they expect the obvious questions:

How many trucks do you own? Where is your company domiciled? What commodities do you haul?  What is your travel radius?  Insurance companies use this information to formulate your premium.  But, what else goes into rating a commercial trucking policy?  What other factors are driving your rates?

The answer is….there are several other factors companies use when considering a risk.  Some examples are:

  • Loss Frequency and Severity
  • Safety Management Scores
  • Out-of-Service Percentages
  • Growth Plans
  • Coverages or lack there of
  • Multiple MC Numbers
  • Sharing of Units

Who knew so much went into formulating your insurance premium?  Now you are wondering how to keep your cost down.  Here are some hints that may help you do just that:

  1. Know who you are hiring.  We suggest that part of your hiring process should include obtaining a motor vehicle report on all drivers prior to making an offer of employment.    Drivers can obtain a copy of their MVR from the local Department of Motor Vehicles.  There are also many services out there that will run MVRs for you as well.
  2. Electronic Logs. These logs not only keep drivers within DOT guidelines, they also alert you when the device has been disconnected.
  3. Safety Management Meetings. Regular safety meetings will promote safe driving habits, the importance of vehicle maintenance, and most importantly open communication.  The benefit will be less accidents and violations to contend with and lower insurance premiums.
  4. Growth Plans. While growth is exciting, rapid growth could harm your business.  Rapid growth is sometimes frowned upon by the insurance companies.  Plan to grow methodically, be selective in who you hire, what commodities you will haul and even the age of the equipment you purchase or lease on.
  5. Talk to Your Commercial Insurance Agent. An agent who focuses on the trucking insurance industry is more likely to understand your needs.  Tell them about your operation and ask questions.  You are your own best source of information.  Your licensed agent can help you to make the right decisions regarding you insurance needs.

We hope this information is helpful to you.   Maybe this information has raised some questions.  Our licensed agents at Triumph Insurance Group will be glad to help you with whatever questions you may have!  Check out the website at http://www.triumphinsurance.com or call at 800-411-7542 and our agents can get started on a quote for you!

Invoice Factoring

Trucking is the Fastest Growing Small Business Industry

As the economy grows, one industry is standing out as the fastest growing small business industry—trucking. According to a recent article from Triumph Bancorp, parent company to Triumph Business Capital, the trucking industry has seen a 25 percent uptick in sales over the last year, indicating large growth.

The American Trucking Association reported that the transportation industry has generated more than $700 billion in revenue for the first time since 2014. With this increase in sales and the current driver shortage, trucking companies will see more opportunities for their small business.

As a trucking company owner, are you taking advantage of the opportunities out there?

If your business is growing faster than your ability to cover expenses, you can convert your accounts receivable into cash with Triumph Business Capital. Through our experienced team and partnerships, we can provide trucking business owners with the resources they need to keep their company growing.

Best Factoring Companies

Pick a Niche

 

Even if you already have your small trucking company up and rolling (pun intended), it’s not too late to further refine your business. One refinement you might consider is choosing a niche. You’ll often see that recommended in business articles for any industry, but it seems particularly necessary in trucking.

Read more

Factoring Companies

Who Knows You? By Timothy D. Brady

Recently I saw an idiom that said “Hustle until you no longer need to introduce yourself.” This got me to thinking on a couple of related thoughts.

Why would you stop hustling when everyone knows who you are?

Under what circumstances would it be no longer necessary to introduce yourself to others?

First let’s define the word ‘hustle’ in this particular context.

Most dictionaries have the following definitions:
1. to quickly move or push (someone), often in a rough way.
2. to move or work in a quick and energetic way.
3. to play a sport with a lot of energy and effort.

For the purposes of this article, I’ll use number 2. to move or work in a quick and energetic way.

Now to provide my thoughts on the two previous questions.

Why would you stop hustling when everyone knows who you are?

In my opinion, even if you walk into a room full of people where everyone knows you, (the ‘Cheers’ syndrome), wouldn’t it be a little presumptuous and a bit egoistical to assume there isn’t at least one person who doesn’t know who you are and what you do? I think your focus when doing business with others, no matter whether you’re Bill Gates, Warren Buffet or the new guy on the block, a bit of humbleness goes a long way with customers and people who have the potential of someone with whom you’d like to do business. The idea for success in marketing, maintaining current and creating future customers, is through the respect you show each and every person you come in contact with, regardless whether they know who you are or not.

Under what circumstances would it be no longer necessary to introduce yourself to others?
I recall a scene in the movie The Devil Wears Prada where the character Amanda Priestly is flanked by her two assistants who’ve spent hours studying photos of all the guests and personal details of their lives before Ms. Priestly’s huge event. That way she had names, nicknames, marital status and so on at her disposal while greeting all. The purpose of this, while she no longer needed to be introduced, as everyone knew her, was for her to show respect to every guest who was important or potentially important to her or her business’s future. Just remember it’s not who knows you, it’s who you know (and do they respect you) that determines your success.

A couple of other thoughts concerning how much someone should hustle even after they’re well known within their industry. In trucking, the industry is always evolving; i.e., regulations, HOS, technology and logistics in general, so you never know when the person with whom you do business today may not be in a decision-making position tomorrow – and someone new,  who doesn’t know you, is the person with whom you’ll be working.

So never assume you’re so well-known that you’ll never need to introduce yourself in the future.

Contact Tim Brady at 731-749-8567 or at www.timothybrady.com

Looking for Direct Shipper Freight – What’s the Solution? By Timothy D. Brady

Nearly every small and micro-trucking company owner has asked this question several times. The smaller your operation, the more difficult it is to find the answer. So, many of us relegate ourselves to hauling wholesale (broker and load board) freight and leave the direct shipper freight to the bigger carriers. After all, the fewer trucks you own, the less you have to offer a shipper, right?

Well, maybe not. It depends on how you approach those shippers. One good thing, with fewer trucks you don’t need 20 or 30 shippers to fill your trailers. Just a few shippers, or maybe even one or two is all you need to add that retail freight revenue to your cash flow.

So honestly, finding those two or three shippers isn’t as big a task as you might think. It’s all about how you approach the process.

It’s not about selling your services to the highest bidder; it’s more about making your services available, so shippers know your trucks are running in the lanes and areas where their freight needs to be hauled.  To sell your hauling services, you have to convince a shipper to purchase that service. But what if all that’s required is for you to locate the companies needing freight hauled, and then be available to provide them with freight rates upon request? Not near as involved as cold calling or knocking on doors just to be told ‘they’re not buying freight services today.’ You need to stop selling your freight hauling services and start freight prospecting.

To explain: freight prospecting is a lot like panning for gold. You start with a pan full of rocks, sand and water, and shake it back and forth allowing the lighter rocks and sand to spill over the edge while the heaver gold falls to the bottom of the pan. Freight prospecting is very similar in that you begin with a large list of shippers. Narrow the list down to specific areas and lanes in which you need your trucks operating. Then start the shaking to find the shippers worth their weight in gold.

The gold shippers are the ones with freight that works with your regular brokered and load board freight, going the direction you need your trucks to travel, to create the greatest amount of revenue over the shortest time and distance. Once you’ve narrowed the list down to these shippers, the plan is to contact them and become an Approved Carrier for them.

What’s an Approved Carrier? This is a trucking company they’ll contact every time they have a load that fits the criteria you’ve established with them. When they have a load that’s a match, they will email or fax you an RFP (Request for Proposal). All you have to do is write the best rate for which you’re willing to haul the load on the RFP and return it to them. If the rate is in line with the range they’re willing to pay, bingo!  the load is yours. Do this enough times for regularly-scheduled shipments and you can then request the load be placed on your trucks every time it becomes available.

This is how you build a carrier customer relationship with a direct shipper:
1. Become an approved carrier in their data base

2. Provide rates that work with their needs

3. Be on time and on schedule with all the loads you haul for them

4. No damage and no unexpected events with their loads

And the next thing you know, you’re hauling good, retail paying freight.

The trick is to have a large enough database of potential shippers from which to pan for gold and spend one to two hours per week working down the list of qualified shippers. It’s a numbers game that, when played correctly, has a really nice pay back.

For information on where to find such a shipper database, please fell free to contact me.

Timothy Brady © 2014

To contact Brady:

www.timothybrady.com

731-749-8567

Moving to the Next Level- Growing Your Trucking Company Part 1 by Timothy D. Brady

The most common question I’m asked by owners/managers of small motor carriers is:

“How do I grow my trucking company?”

Moving your business to the next level isn’t based on luck. Growing a trucking company requires dedication and leaps of faith, but most of all it requires a solid business plan. This plan looks at the company’s potential, projects its revenue needs (over the next 5 and 10 years), and then determines where growth plateaus will occur, thus being prepared with both cash and assets as each plateau is reached.

One of the biggest mistakes many companies make is trying to grow too fast. The first rule of growth is being prepared with the capital investment needed, yet at the same time ready for the drain of cash while new equipment starts producing enough revenue to support itself.  As any successful businessperson will tell you, growth initially drains assets both in cash and in personnel, so you must plan growth very carefully.

Try these pointers:

  1. Have a complete business plan. Know the numbers (expenses versus income). Be sure your growth has a real opportunity for success.
  2. Evaluate your market and know it will support your growth.
  3. Have a vision of how you’ll reach each plateau in your growth plan.
  4. Set revenue goals. Have the facts and figures of what you’re doing based on your plan at hand. If it’s working, stay the course; if it’s not working, adjust or scrap the portion which isn’t achieving its goals.
  5. Know your break-even point, the figure which changes every time any expense increases or decreases. It’s the point where losing money stops and profit begins.
  6. Be sure you’ve included in your break-even costs a salary for yourself, and anyone else working for your company. Any company owner waiting for profits to pay his salary is doomed to working for someone else. Your profits are where your funds for growth will accumulate and where performance bonuses come from; it’s not your salary.
  7. Determine a profit margin, which will retain your competitive position while growing your capitalization fund.

A trucking company owner who thinks he’s going to strike it rich in the first five years had better think twice. That’s not to say this isn’t possible, but you have a better chance of selecting next week’s winning lottery numbers. If you want to grow your company, reinvest your profits back into your trucking company.

In the next blog article, I’ll provide an example with numbers on how to establish the needed funds to sustain and grow your trucking company.

Drive long and prosper, and remember: Sustainability is the first step towards growth.

Timothy Brady ©2013

To contact Brady go to www.timothybrady.com

For more information on Trucking Business Courses go to: www.truckersu.com

 

Daylight Saving Time and Trucker Fatigue

Maybe that hour ‘saved’ isn’t worth it

There’s a joke going around the internet as a quote attributed to an old Indian chief concerning his opinion of Daylight Saving time. It says, “Only the government would come up with a plan where it is believed that if you cut of the bottom of a blanket and then sew it to the top, you’d have a longer blanket.”

With that non-time addition in mind, is it possible Daylight Saving Time is a large contributor to truck driver fatigue?

Isaac Edery, Rutgers University professor of Molecular Biology and Biochemistry has been doing research on the circadian clock and the effects of losing that hour every March. Edery is a researcher at the Center for Advanced Biotechnology and Medicine, a joint venture of Rutgers and the University of Medicine and Dentistry of New Jersey.

In a recent article in the Asbury Park Press, Edery was quoted, “Studies indicate that when we transition to daylight-saving time in March, we lose 20 to 30 minutes of sleep each day just trying to adjust to the time change.”

Question: How does this loss of sleep affect truckers who have to deal with the transition both impacting their sleep habits and how they log the transition? According to Professor Edery “This loss can go on for days, weeks or even months. For some people, it can take quite a toll.” Is it possible this is true for many truckers?

It’s been estimated 1.9 million crashes a year, and one in six fatalities, involve a fatigued driver. The National Transportation Safety Board (NTSB) chairman Deborah A.P. Hersman has repeatedly said, “Tired drivers pose a safety risk because fatigue can degrade every aspect of human performance. Fatigue slows reaction time, impairs judgment and degrades memory.”

In an October 4, 2011, article for The Beverage Industry newsletter at bevindustry.com, David Kolman, former trucker now trucking journalist, made the point: “The end of daylight saving time throws off our internal clocks. Studies find that it can take as long as two weeks for people to fully readjust their sleep schedule after the time change.”

Many studies support Kolman’s statement.

In April of 2004, an Australian study, “The Interaction Of Mild Obstructive Sleep Apnea, Sleep Deprivation, Circadian Factors and Alcohol In Driving Fatigue Risk,” prepared for NSW Motor Accidents Authority in Australia, refers to multiple studies spanning several decades about Daylight Saving Time and fatigue in relation to truckers. The report stated the following:

“Following on from an article published in the Journal Science in the 1970’s … showed that measurable changes in sleep pattern persist for up to five days after each time shift associated with Daylight Saving.” (Monk T., Folkard S. Adjusting to the changes to and from daylight saving time, Science, 1976). Stanley Coren, Ph.D., published a very interesting article in The New England Journal of Medicine titled Daylight Saving Time and Traffic Accidents. (New England Journal of Medicine, 1996); looking at the effects of daylight saving time zone changes on Canadian road accident rates.

Coren, using road accident data from the Canadian Ministry of Transport for 1991 and 1992 (approximately 20,000 reported accidents), showed that the spring shift to Daylight Saving Time, and the concomitant loss of one hour of sleep, resulted in an average increase in traffic accidents of approximately 8 percent, whereas the fall shift resulted in a decrease in accidents of approximately the same magnitude immediately after the time shift.

This suggested that even small changes in the amount of sleep people get can have major consequences in everyday activities, including the risk of traffic accidents. However, a similar recent study in Sweden did not show a measurable, immediate effect on crash incidence in Sweden associated with the shift to and from Daylight Saving Time. (Lambe M., Cummings P. The shift to and from Daylight Saving Time and motor vehicle crashes. Accident Analysis & Prevention 2000.).

In October of 1998, Alex Vincent, Ph.D., with Transport Canada, refuted Dr. Coren’s findings in a letter to The New England Journal of Medicine saying Dr. Coren’s hypothesis was flawed.

Dr. Vincent stated, “The results of a recent Canadian study call into question Coren’s findings that motor vehicle crashes increase by 8 percent following the change to Daylight Saving Time and decrease by 7 percent after the change to standard time. The study extended Coren’s analysis, using the same data source. First, data from the days between the Monday preceding the time change and the Monday one week afterward were analyzed. Second, Coren’s hypothesis was statistically tested with data from the years 1984 to 1993, to evaluate the significance of any differences obtained.

The mean motor vehicle crash rates for the Monday one week before the change to standard time were compared with those for the Monday immediately after the change and showed a significant increase. This result is inconsistent with Coren’s hypothesis. A paired t-test showed that the mean rate of 188.5 for the Monday immediately after the change was not significantly different from the mean rate of 186.5 for the Monday one week after the change.”

Dr. Coren responded, “In my study of the effects of Daylight Saving Time on traffic accidents, I found increased accident rates on the Monday after the spring shift in time and decreased rates in the fall. I interpreted this in terms of sleep time lost or gained. Vincent uses a larger data base than that available to me and fails to replicate these results. Unfortunately, Vincent’s analyses are based on t-tests of annual counts, rather than more sensitive, pooled relative-risk measures. More important, analysis of recent data from larger data banks gives me reason still to believe that the shift to Daylight Saving Time in the spring is associated with an increased risk of accidents, although the rebound reduction in accidents in the fall may be more problematic.”

“These data are consistent with the hypothesis that a small decrease in the duration of sleep can increase one’s susceptibility to accidents. Although work schedules accentuate the loss of sleep after the spring shift to Daylight Saving Time, the absence of a reduction in accidents in the fall may reflect the fact that many people do not take advantage of the hour gained to extend their sleep.”

In September of 2009, Christopher M. Barnes and David T. Wagner published “Changing to daylight saving time cuts into sleep and increases workplace injuries” in the Journal of Applied Psychology, Vol 94(5). Barnes and Wagner reported they examined the influence of time changes associated with Daylight Saving Time on sleep quantity and associated workplace injuries.

In Study 1, they used a National Institute for Occupational Safety and Health database of mining injuries for the years 1983–2006, and they found that in comparison with other days, on Mondays directly following the switch to Daylight Saving Time—in which 1 hour is lost—workers sustain more workplace injuries and injuries of greater severity.

In Study 2, Barnes and Wagner used a Bureau of Labor Statistics database of time use for the years 2003–2006. They found indirect evidence for the role of sleep in the Daylight Saving Time/injuries relationship. Data showed that on Mondays directly following the switch to Daylight Saving Time, workers sleep on average 40 minutes less than on other days. On Mondays directly following the switch back to Standard Time, in which 1 hour is gained, there are no significant differences in sleep, injury quantity, or injury severity.

In the Canarise Courier (Brooklyn, NY) March 18, 2010 newspaper, an article titled ‘Daylight Saving Time Could Mean More Drowsy Drivers,’ reported: “Commissioner David J. Swarts of the New York State Department of Motor Vehicles and Chair of the Governor’s Traffic Safety Committee (GTSC) used the occasion of the switch to Daylight Saving Time to remind motorists of the dangers of drowsy driving. Daylight Saving Time went into effect last Sunday. Swarts said, “Motorists should be aware of the warning signs of fatigue and how to avoid drowsy driving, particularly as we adjust to the loss of sleep that comes with the switch to Daylight Saving Tim.,”

Blogger Alan Bristol with Truck Driver News wrote in his March 11, 2011 post, (just preceding the ‘spring forward’ of clocks on March 14), “I don’t know about you but the last thing my circadian rhythm needs is this biannual cheap shot. By the way, have you ever thought how ludicrous the term “Time Change” is? I mean there are still 24 hours in a day, right? It’s not as if we are changing the rotational speed of the earth on its axis or anything.”

Fifteen years after Dr. Coren’s study was published in The New England Journal of Medicine, the American Automobile Association (AAA) made a statement in support of Dr. Corens’s findings. In a November 7, 2011, article in The Washington Post, ‘Seasonal time changes disrupt drivers’ body clocks, survey finds,’ John B. Townsend II of AAA was quoted, “Studies show that traffic accidents noticeably increase for a week following the time change in both the fall and the spring. Motorists have a tendency to misjudge the impact being tired has on their driving ability. That puts themselves and others at risk.”

It seems that with the preponderance of research and reports on Daylight Saving Time and the overwhelming evidence that it’s detrimental to one’s internal clock– causing fatigue–that the FMCSA or the National Highway Safety Administration would be taking a far more serious look at whether Daylight Saving Time should be repealed. After all, an 8% increase in vehicle crashes the week after the start of Daylight Savings Time is significant.

Timothy Brady © 2011 Contact Brady through www.timothybrady.com/contactus
For more information on Trucking Business Courses go to: www.truckersu.com

Resource Links used in this blog article.

http://www.bevindustry.com/articles/85004-enhance-driver-safety-after-falling-back

http://www.maa.nsw.gov.au/ http://www.nejm.org/doi/full/10.1056/NEJM199604043341416

http://www.nejm.org/doi/full/10.1056/NEJM199810153391617

http://psycnet.apa.org/journals/apl/94/5/1305/

http://www.app.com/article/BZ/20111105/NEWS01/311050054/RU-expert-Falling-back-easier-body-clocks

http://www.washingtonpost.com/local/seasonal-time-changes-disrupt-drivers-body-clocks-survey-finds/2011/11/07/gIQADU8pwM_story.html

http://www.canarsiecourier.com/news/2010-03-18/Other_News/Daylight_Savings_Time_Could_Mean_More_Drowsy_Drive.html

http://www.truckdriversnews.com/time-change-springing-forward-here-we-go-again/

A Threat to Mom & Pop Trucking Companies

Call out the troops – again

Here we go again; the idea that creating more government regulation is the solution to the woes of the trucking industry.

There’s currently a piece of legislation in front of Congress, H. R. 7, American Energy and Infrastructure Jobs Act of 2012. This Act addresses many of the concerns about our decaying highway infrastructure which need to be acted upon – and soon.

But – there are also an aggregate 12 pages in this 847-page bill, through lobbying pressure from the Transportation Intermediary Association (TIA), representing the larger freight brokers in this country and OOIDA, which will put many micro- and small carriers out of business.

Here is the exact wording of the area of greatest concern within the proposed legislation: “Minimum financial security.— Broker subject to the requirements of this section of H.R. 7 shall provide financial security of $100,000, regardless of the number of branch offices or sales agents of the broker.”

What this says is, regardless of the size of the freight broker, its bond will be $100,000. As an example, a small mom and pop trucking operation which has a freight brokerage to move excess freight from their customer base, will need to secure the same $100,000 Surety Bond as a company the size of C.H. Robinson Worldwide, Inc. (During the year ended December 31, 2010, CHR handled approximately 9.2 million shipments for more than 36,000 customers. It operates through a network of 231 offices. Public, NASDAQ:CHRW).

In other words, under the provisions of H.R. 7, C.H. Robinson with 231 offices will be required to secure a single bond in the amount of $100,000. A small mom & pop trucking company with one office inside their truck will be required to secure a bond for the same $100,000.

If this is going to be fair and equitable, shouldn’t C. H. Robinson (CHR) have to secure a bond for each one of their 231 offices separately? As we learned with the failure of Lehman Brothers (NYSE ticker symbol LEH), no company or enterprise is too big to fail. CHR should be minimally required to post a $23,100,000 bond to make the law fair and equitable.

Will increasing the bond to $100,000 per broker actually stop the withholding payment thievery from truckers who hauled the loads? No, it just creates the atmosphere for a larger amount to be absconded from unsuspecting carriers by unsavory freight brokers. It does nothing to fix the problem.

So what needs to be done to protect the trucker and not put honest, small mom & pop businesses out of business?

1. If it’s going to be fair and equitable, the bond should be based on 25% of the annual revenue of the broker, starting with a minimum bond of $25,000.

2. Every office of a broker should be required to have a bond. C.H. Robinson, as an example, would have a bond for all of their offices based on the overall revenue produced by the company divided by 231. Based on CHR’s 2011 annual truck brokerage operations revenue of $1,236,611,000, each office would post a bond of $1.3 million (rounded up). A mom & pop trucking operation with a brokerage operation annual revenue of $100,000 would post a $25,000 bond.

3. Just like real estate and other property brokers who act in fiduciary capacity, freight brokers should be required to maintain a fiduciary escrow trust account where all monies from a freight hauling transaction are deposited. All parties, including the freight broker, should be paid from the escrow, just like a Real Estate closing. There would be no commingling of carrier owed funds and the freight broker’s general account. It would be much easier to track any inconsistencies or brokers trying to steal from the carrier/shipper, plus everyone involved in the transaction would know what everyone was being paid in full disclosure.

(More information on Fiduciary Escrow Trust Accounts – http://www.irem.org/pdfs/publicpolicy/brokertrustaccounts.pdf)

Having been a yacht broker, a real estate broker and an insurance agent over the past 35 years, I have experience in the areas of fiduciary escrows and bonds. In the first two examples of being a broker, I was required to carry a fiduciary bond and maintain a Fiduciary Escrow Trust Account; in the last example, I wrote fiduciary bond policies. Insurance brokers, real estate brokers, yacht brokers and attorneys are all required to post a fiduciary bond and maintain a fiduciary trust escrow account. And it has been a successful means to ensure all parties in the transactions they handle are paid fairly and that there is no commingling of clients’ monies with the broker’s or attorney’s general business account.

Many small carriers rely on brokering excess freight to grow their operations. H.R. 7 will put every one of those small carriers out of business if they have to maintain a $100,000 freight brokers bond. This disastrous result has not been addressed in this legislation.

Many small carriers/brokers are grossing far less in their freight brokering operations than an amount that would justify the cost of a $100,000 bond. In many cases, what they net is less than what the premium would be. This is because they are focusing on hauling asset-based freight with their trucks and are brokering out the excess freight for which they haven’t the capacity. Being able to broker the excess freight of their direct ship customers gives them the extra revenue and ability to slowly grow the asset side as they build their customer base with the brokering side. It also helps them wean their trucking operation from brokers. The proposed legislation puts them out of business.

If you see the inequality in this legislation, I request you do two things:

1. Contact your Congressional Representative and let them know the changes that need to be made to SEC. 6206, FINANCIAL SECURITY OF BROKERS AND FREIGHT FORWARDERS of H. R. 7, American Energy and Infrastructure Jobs Act of 2012 (pages 525 through 530).

2. Go to http://www.petitiononline.com/100KBOND/petition.html and sign the online petition, Keep Property Broker Bonds Reasonable.

Feel free to copy and paste any portion of this blog article you think is needed to promote your position.

Drive long and prosper.

Timothy Brady ©2012 To contact Brady go to www.timothybrady.com
For more information on Trucking Business Courses go to: www.truckersu.com

Medical Certificates, CDLs and Self-Certification

At the end of this month, the FMCSA will require all states to include truck drivers’ medical certification status and information on each trucker’s medical examiner’s certificate in each driver’s Commercial Driver’s License Information System record. There’s also the requirement to self-certify whether he or she is an interstate or intrastate hauler. What do truckers need to know and do to obey this new regulation?

Disclaimer: The FMCSA regulations covering Self-Certifying and a Commercial Motor Vehicle Operator’s Medical Examiner’s Certificate for truckers who operate as a for-hire or private fleet motor carrier in Interstate Commerce are governed under FMCSA 49 CFR part 391 and require compliance through maintaining and providing a DOT Medical Examiner’s Certificate to the trucker’s state of residence’s Driver’s License Agency. These are federal regulations and are in effect nation-wide.

Each state has its own rules and regulations covering who is excepted (exempt) and who is non-excepted (non-exempted) from presenting and maintaining a DOT Medical Examiner’s Certificate when concerning the operation of other types of non-commercial, government, farm, and emergency CMV operations. In this article, I have used State of Tennessee examples, which are some of the most stringent state medical examiner certificate regulations in the country. Please check with your state of residence’s Driver’s License Agency for clarification.

What must truckers do to comply with the new requirements for making their medical certification part of their CDL driving record?

Starting on January 30, 2012, when a person:

Applies for a CDL;
Renews a CDL;
Applies for a higher class of CDL;
Applies for a new endorsement on a CDL;
Or transfers a CDL from another state

The driver will be required to Self-Certify to a single type of commercial operation on his driver’s license application form. Based on that Self-Certification, the trucker may need to provide his state of residence’s Driver’s License Agency with a current medical examiner’s certificate and show any FMCSA variance he may have to obtain or keep a CDL.

Self-Certification – what is the procedure for a CDL holder to determine whether he is an Intrastate or an Interstate commercial driver?

Step 1: First he must know in what capacity he’s operating a Commercial Motor Vehicle (CMV), Interstate or Intrastate commerce?

Interstate Commerce is when the trucker drives a CMV under the following conditions:

From one state to another state or to a foreign country;
Between two places within a state, but during part of the trip, the truck crosses into another state or foreign country;
Or between two places within a state, providing the cargo is onboard for part of a trip that began or will end in another state or foreign country.

It isn’t where the truck and driver travels that determines the self-certification type, it’s where the freight in the truck or trailer originates or is delivered that determines under which Self-Certification a trucker would be classified.

Example: A trucker picks up a trailer from a yard in Memphis, Tennessee and drives it to Nashville, Tennessee. If the freight in the trailer was loaded in Olive Branch, Mississippi and the trailer is taken to Nashville and unloaded, it’s an Interstate Commerce load. Or, if instead of delivering in Nashville, another trucker backs under the trailer and takes it to Bowling Green, Kentucky, then it’s an Interstate Commerce load. Both instances require the trucker to Self-Certify as an Interstate Commerce Driver.

To be Self-Certified as an Intrastate Commerce Driver the trucker must; one, do all commercial truck driving within the borders of a single state and two; not haul any freight which originated outside of that state or which will be delivered outside the state as its final destination.

If a trucker operates in both intrastate commerce and interstate commerce, he must choose interstate commerce as his Self-Certification selection.

Simple enough so far, but then this is the government, and it would be a rare FMCSA regulation without a couple of twists.

So to complete the Self-Certification process, here’s the second step.

Step 2: Once a trucker decides whether he’ll operate in interstate commerce or intrastate commerce, he must decide whether he expects to operate in a non-excepted or excepted status. This decision will tell him to which of the four types of commerce he must Self-Certify: excepted interstate commerce, non-excepted interstate commerce, excepted intrastate commerce, non-excepted intrastate commerce.

Interstate Commerce:

To operate in excepted interstate commerce when driving a CMV in interstate commerce only for the following excepted activities:

If the CDL holder answers “yes” to one or more of the activities listed below as the only operation in which he drives, he operates in excepted interstate commerce and does not need a federal medical examiner’s certificate.

As federal, state or local government employees. (The exceptions to this are CDL holders who need a hazardous materials, passenger, or school bus endorsement. They are not considered exempt.)
To transport human corpses or sick or injured persons.
Fire truck or rescue vehicle drivers during emergencies and other related activities.
Primarily in the transportation of propane (winter heating fuel) when responding to an emergency condition requiring immediate response such as damage to a propane gas system after a storm or flooding.
In response to a pipeline emergency condition requiring immediate response such as a pipeline leak or rupture.
In custom harvesting on a farm or to transport farm machinery and supplies used in the custom harvesting operation to and from a farm or to transport custom-harvested crops to storage or market.
Beekeeper in the seasonal transportation of bees.
The vehicle is controlled and operated by a farmer, but is not a combination vehicle (power unit and towed unit), and is used to transport agricultural products, farm machinery or farm supplies (no placardable hazardous materials) to and from a farm and within 150 air-miles of the farm.
To transport migrant workers.

If the CDL holder answered “no” to all of the above activities, he operates in non-excepted interstate commerce and is required to provide a current medical examiner’s certificate (49 CFR 391.45), commonly referred to as a medical certificate or DOT card, to the state Driver’s Licenses Agency.

NOTE: The majority of CDL holders who drive CMVs in interstate commerce are non-excepted interstate commerce drivers.

If a CDL holder operates in both excepted interstate commerce and non-excepted interstate commerce, he must choose non-excepted interstate commerce to be qualified to operate in both types of interstate commerce.

What about Intrastate Commerce?

He operates in excepted intrastate commerce when he drives a CMV only in intrastate commerce activities for which his state of licensure does not require him to meet the state’s medical certification requirements. In the State of Tennessee as an example, there is two ways a CDL holder can be excepted from having to meet medical certification requirements when driving intrastate commerce:

One: If the person driving the CMV is an employee of the government and doesn’t transport passengers or HazMat.

Two: Drivers granted a waiver for vision or insulin controlled diabetes. (Intrastate only)

All other CDL holders in intrastate commerce in the State of Tennessee are required to have a Medical Certificate on file with the state. This is known as non-excepted intrastate commerce certification.

If a CDL holder operates in both excepted intrastate commerce and non-excepted intrastate commerce, he must choose non-excepted intrastate commerce and present his medical certificate to the Tennessee Department of Safety and Homeland Security; in other words, a trucker drives for the government during the week and an intrastate motor carrier on the weekends.

NOTE: When it comes to Intrastate (or In-State) regulations covering medical certificates and the Self-Certification process for in-state driving positions, every state will have its own set of regulations. A driver should check with his state’s Driver’s License Agency’s CDL division for specific requirements for intrastate Self-Certification.

Step 3: Every CDL holder must provide the state Driver’s License Agency that issued his CDL with his Self-Certification of the driver’s operating status. If he Self-Certifies to non-excepted interstate on or after January 30, 2012, he must provide the state Driver’s License Agency with the original or copy of his current medical examiner’s certificate.

If the driver’s medical examiner’s certificate is only valid with a vision, diabetes or a skills performance evaluation variance granted by the FMCSA, he may also be asked by the Driver’s License Agency to provide a copy of that variance document.

What if the trucker is an existing CDL holder who does not have a license renewal, upgrade or transfer between January 30, 2012 and January 30, 2014?

He is responsible for following the three steps above and providing the state which issued his CDL with his Self-Certification of operating status by January 30, 2014. If required, he must also provide his current medical examiner’s certificate and any variance document by January 30, 2014. Most states will mail the trucker information on how to do this.

But he shouldn’t wait until the last minute, because if he doesn’t receive the notice or it’s lost in some other way, it doesn’t change the deadline of January 30th, 2014, and he could lose his privilege to drive a CMV until he presents the correct documents to his state’s Drivers License Agency.

After the trucker provides his state’s Drivers License Agency with his unexpired medical examiner’s certificate, does he still have to carry an original or copy of his medical examiner’s certificate?

Yes. Until the program is fully implemented on January 30, 2014, every trucker will still have to carry an original or copy of the medical examiner’s certificate and provide a copy to his employer for his driver qualification file.

What should a CDL Holder do with the medical examiner’s certificate beginning on January 30, 2014?

After the trucker provides his state’s Drivers License Agency and employer with the medical examiner’s certificate, the medical examiner’s certificate will only be valid for the first 15 days after it was issued. The trucker’s medical examiner’s certificate will be recorded on his driving record and will become the valid version of his medical certification. Again this is AFTER January 30, 2014. Until then, drivers must keep their medical certification cards with them at all times when operating a CMV.

What if the trucker doesn’t provide his state’s Drivers License Agency with his self-certification and if required, his medical examiner’s certificate and any required variance document by January 30, 2014?

The trucker’s state Drivers License Agency will notify him that he’s no longer medically certified to operate a CMV in non-excepted interstate commerce. That state’s Drivers License Agency will then remove all the trucker’s CDL privileges from his license.

What should a driver do when his medical certificate and/or variance is about to expire?

The driver must have a new medical examination and obtain a new medical certificate. He must then provide his state’s Drivers License Agency with the new medical examiner’s certificate. Each trucker is also responsible for applying to the FMCSA for a renewal of any variance.

What happens if the truck driver’s medical examiner’s certificate or variance expires before he provides his state’s Drivers License Agency with a new one?

The truck driver’s state Drivers License Agency will notify him that he’s no longer medically certified to operate a CMV in non-excepted interstate commerce. The truck driver’s state Drivers License Agency will then remove all his CDL privileges from his driver’s license.

How can a trucker get back his CDL privileges?

If the medical examiner’s certificate has expired, he must obtain a new one and provide it to his state’s Driver’s License Agency. If the variance has expired, he must renew it with the FMCSA. Some states may require retesting and additional fees to get back his CDL privileges. If allowed by his state’s Driver’s License Agency, he may also change his Self-Certification to an operating category that does not require a medical certificate.

Bottom line is, if you move freight, chances are you’ll need to Self-Certify as non-excepted Interstate Commerce and provide your state’s Driver’s License Agency, bureau, or department with your current medical certificate.

Truckers and motor carriers need to stay on top of getting this done to avoid being shut down because a state pulled a driver’s CDL privileges.

Here’s to great loads and good roads.

Timothy Brady © 2012 Contact Brady through www.timothybrady.com/contactus
For more information on Trucking Business Courses, go to: www.truckersu.com

Covering the Cost of Fuel

I was recently tapped in an on-line conversation concerning the relevance of the fuel surcharge as a means of covering fuel costs.

One poster stated: “Not to side with Timothy Brady, but the fuel surcharge is largely irrelevant. I could be saying that because I get one. What the FS really does is provide a mechanism for longer term contracts. If you get $1 per mile (for math purposes) what difference does it really make what you call it? 60¢ for reg rate and 40¢ per FS or just $1. What higher fuel costs do is encourage efficiency.”

Another poster responded: “I wouldn’t say it’s irrelevant, — definitely related to the problem of fuel-price volatility and allows truckers to pass along the volatility in contracts. Ultimately, yes, truly beating fuel prices is a matter of increasing efficiency.”

Here’s my response:

Current Fuel Surcharge methods of the vast majority of trucking companies promotes inefficiency, which is why it makes today’s FS irrelevant. The fact that it’s only loosely connected to the real time price of fuel is the reason for its irrelevancy. The concept goes back to pre-deregulation and the ICC, when the government actually set and adjusted the FS. When the FS is only adjusted once a month, it’s not a fuel surcharge, but something totally unrelated to fuel cost. It becomes more a means of rate price control for the shipper, broker and the carrier to their lease operators and company drivers. Since the methods and formulas for fuel surcharges are set by each individual shipper, broker or carrier and no longer by the government, the FS becomes a tool of manipulation, not reimbursement of actual fuel costs.

With technology providing instant access to real time fuel prices, it makes sense to have a Fuel CAP™ (Fuel Cost Adjustment Policy): a carrier has a per-day truck use rate plus a mileage rate that encompasses the operational cost and fuel cost.

Example: for a truck getting 6 miles per gallon, for every nickel increase or decrease in the price of fuel, the Fuel CAP is adjusted by a penny per mile. If your fuel cost per mile is 67 cents per mile at $4.01 per gallon, and the price for fuel goes to $4.06, the rate per mile for fuel would increase to 68 cents. If it went to $3.96 per gallon, it would decrease to 65 cents. Place the trucker’s pay and carrier’s profit in the per Day Truck Use Rate and have the real time fuel and operational costs as add-ons to the per Day Truck Use Rate for actual miles driven. This takes care of two things in one move:

One: the trucker and carrier are being fully compensated for their fuel costs in real time.

Two: Because the Day Truck Use Rate is based on actual time involved with the load; from waiting, to loading, to driving, to waiting to unload, the trucker and carrier are compensated for all time involved in the load. This eliminates the need to add detention time as it’s already included in the per Day Truck Use Rate if the shipper delays loading or unloading the truck.

Some other benefits are:
Truck drivers could be paid a per-day rate plus a per-mile rate which would help close the gap of lost revenue or pay they experience under the current system.

It would create incentive to shippers to be more efficient in getting a load on or off a truck in order to avoid paying an extra per-day rate.

Finally, it would create a far safer environment for truckers and others using the nation’s highways, since a trucker wouldn’t be under the “gotta get the miles covered” dictum when a shipper has taken valuable drive time away from the trucker with loading/unloading delays.

Steps to Setting up a Profitable Freight Lane

Setting up a profitable freight lane takes more than just being in the right place at the right time. It’s more about understanding the dynamics of what freight is moving in what direction during certain periods of a month. A freight ‘lane’ can be any of a number of shapes and sizes. It can be a Point A to Point B and return to Point A. It can be in a triangle; square, an octagon. Or it can look like the six-pointed star we drew as kids, or a look all its own. In other words, the shape isn’t as important as the freight that’s available to haul at the times that it’s needed.

So what are the steps to designing a profitable freight lane?

Important Note: Before you begin the process of developing your freight lanes you need to have a Hauling Rate Range that encompasses a range from your break-even point to your highest profit level. Don’t expect shippers and brokers to know what you need in revenue; that’s your responsibility.

1. Determine your beginning point; this is usually the domicile or home base of your operation. As a small or micro-motor carrier, this will be where you find the best paying freight in your freight lane the vast majority of time. The reason is fairly simple – home is where you know the territory the best, where you’re more likely to know a principle owner or general manager of a manufacturer or distribution center and you can develop a direct-ship relationship (one that doesn’t require brokers’ involvement).

2. Make a list of all the local manufacturers and distribution centers within a 50 to 100 mile radius of your home base.

3. Call each one and ask to be placed on their preferred carrier list. Keep in mind not all will accommodate you, but several will. Those are the ones from which you’ll start working to develop your first leg of your freight lane.

4. The shippers who won’t put you on their preferred carrier list are usually using a freight broker or 3PL to handle their shipment scheduling, so find out the names and contacts for those companies. Then call the 3PLs and brokers and get on their preferred carrier list.

Note: No need to discuss hauling rates with any of these folks at this time. The idea here is to garner a sizeable list of available freight going out of your area.

5. Once on these manufacturers’, DCs’, freight brokers’ and 3PLs’ preferred carrier list, then contact them again and ask:

what areas do they currently have the most difficulty in getting the other carriers to haul to?
a list of available regular outbound destinations for the majority of their freight
what services they’re currently not getting from their other carriers that they’d like to be getting?

This provides you with three valuable pieces of information from which to begin building your freight lane.

6. Look at the areas into which they’re having difficulty getting carriers to haul. Find out what kind of freight is available from these areas and how frequently these loads occur. You might discover that it’s a dead freight area with very little outbound freight available, which usually equals very low backhaul freight rates. This is extremely valuable information when it comes time to provide a hauling rate to the shipper, in that you may need to quote a higher rate that covers your deadhead miles to the nearest location of decent-paying freight. In other words, a low truck-to-load ratio in an area means a higher rate going in.

7. Start looking in an ever-widening circle out from the low rate or no freight area until you find freight that fits into your carrier’s established hauling rate range. That will provide you with the distance and time requirements to establish your hauling rate from your home base to the low outbound freight destination.

8. Follow the same procedure looking at all available freight going to different destinations to find what will work in conjunction with the difficult outbound freight or as a stand-alone outbound load.

Note: It may require the development of one or more additional freight legs within your freight lane to generate the required revenue to make the lane profitable.

9. Next take a look at the services the other carriers are not providing to the shippers, brokers and 3PLs and see if you can develop a plan to provide those services. Determine whether it would require an increase in what you charge to haul the freight or if you could do it as a value-added service at no charge, making you a far more valuable carrier to the shipper, broker, or 3PL.

10. The final objective is to design a freight lane for each of your trucks that covers a full month of hauling. The combined revenue from all the legs of the lane needs to achieve the profit necessary. While you may have a few legs that are low revenue, it’s the grouping of all the legs of a freight lane and their associated revenue that determine its profitability.

Why Every Trucker Should Know His Break-even Point (BeP)

A trucking company’s Break-even Points are the basis from which its hauling rate range is calculated. If the company owner or manager doesn’t know what it costs to operate a business, then success is very elusive. Many small trucking businesspeople are unsuccessful because they fail to cover the company’s cost of doing business in the hauling rates they establish or accept. If they don’t know the least amount they can charge in order to pay all of the expenses required to keep the business open and operate their trucks, their success is doomed from the very start.

One of the biggest mistakes many small and micro-trucking company owners make is failing to calculate one very important expense as a fixed expense in their Break-even Point. This one expense is so important, if it isn’t paid constantly and continually, the company will fail. Now, as you continue to read this article, please think of all the costs you’re required to pay as a trucking company owner. See if you can pick out the one that’s more important than all the others. As you read the article, you’ll find my answer; compare it to yours and see if you agree with me.

The biggest mistake many trucking company owners make is thinking they just need to establish a firm rate per mile, adjust it with a Fuel Surcharge and they’ll generate the revenue to exceed their BeP.

Figuring a Break-even Point goes far beyond a per-mile rate. Some expenses can be figured by the mile, but other costs occur even while your trucks are sitting. It’s basic arithmetic, but figuring the correct formulas from the proper perspective is the real secret to success in trucking.

There are five components to a Break-even Point:

Operating Cost: Costs or expenses required to keep your trucks rolling: Maintenance, Repairs, and Tires. The most effective means of figuring this cost is per mile. However, minimally, it should be based on these costs from the previous month. Also, amortize the cost of tires and repairs based on the anticipated life of that repair; i.e., two steer tires costing $900 with an anticipated life of one year would be $75 per month. Take the total Operating Cost on each truck and divide it by the odometer miles for the month to arrive at a cost per mile figure.

Fuel Cost: The reason Fuel Cost is separated from Operating Cost is because it changes constantly and needs to be calculated on a price change to price change basis (also calculated per mile). Take a predetermined amount of miles and divide by the individual truck’s miles per gallon to arrive at the total gallons required for that distance. Multiply by the current cost per gallon of fuel for total cost of fuel for that distance and then divide by that distance.
3,000 miles ÷ 6 miles per gallon = 500 gallons X $4.00 per gallon = $2000 ÷ 3,000 miles = 66.6666 cents, rounded up to 67 cents per mile.

Driver Labor: How you pay your truckers determines how Driver Labor is calculated. If it’s per mile, remember to figure payroll costs (FICA, benefits, etc.) into the driver’s pay per mile. If it’s an hourly or salaried rate, the same thing needs to be calculated, but it becomes a per day figure rather than per mile.

Load-Specific Costs: Expenses exclusive to a particular load or run, including tolls, trip permits, escort fees, load/unload labor or any expense which may not appear on other loads or runs.

Fixed Cost: Any expense paid regardless of whether your company’s trucks are rolling or parked, including equipment loan/lease payments, insurance, office rent, utilities, staff salaries and phones, communications, etc. Think of it as expenses that keep on tickin’ even though the truck and driver are sittin’. This is where that one expense, that if it isn’t paid constantly and continually, the company will fail is included … (drum roll, please) … the most important expense that must be included in any trucking company’s fixed cost is the trucking company owner’s salary!

Think of your BeP (Break-even Point) as the point at which your doors stay open for one more day. Therefore, each time you meet or beat your BeP, you’re still in business and not relying on ‘profit’ which evades most companies in the first years of being in business. Warning: if you depend upon hard-won profit to pay yourself, two things will occur. One, in the early years, you’ll be working for free a lot of the time. Two, since profit is what a trucking company needs to sustain itself in difficult times and grow in good times, the owner who depends on it for his pay is stealing his success.

Know your Break-even Point for each truck and secure your well-deserved success.

Tim Brady (www.timothybrady.com/) is an industry expert on small motor carriers. He’s a business editor and columnist for leading trucking publications and a weekly guest expert on Sirius-XM Radio’s Road Dog Trucking’s Lockridge Report.

EOBRs: A Curse or a Benefit?

Technology can be used either way

By Timothy D. Brady

EOBR technology is awesome, as a potential tool. But like any tool, it’s how it benefits everyone who uses it. But I have the same apprehension and fear as when I tested the QUALCOMM system back in its beginnings in the early ’90s. If it’s used by carriers and the government to micromanage truckers, it diminishes the value of each trucker. When you remove responsibility and treat individuals (truckers) as if they don’t have the intellect to make safe and responsible decisions, you end up with a lower quality individual desiring to enter the truck driving profession.

I hope you heard about the recent judicial decision that may have far-reaching consequences. The Seventh U.S. Circuit Court of Appeals on Aug. 26 vacated and remanded the Federal Motor Carrier Safety Administration’s electronic onboard recorder 2010 final rule for motor carriers with significant hours-of-service violations back to the agency for further proceedings.

EOBRs have caused some very heated debates and have many carriers and truckers concerned over the real impact they will have on the industry. Let’s examine the different sides of the issue.

From two of the major organizations with opposing views:

Todd Spencer, executive vice president of OOIDA, said an analysis conducted by FMCSA had stated, “Companies use EOBRs to enforce company policies and monitor drivers’ behavior in other ways.”

“They can contact the driver and put on pressure to get back on the road to get the most of his or her on-duty time, regardless of how fatigued a driver may be,” Spencer said in a statement. “Such a mandate would be a step backward in the effort toward highway safety and is an overly burdensome regulation that simply runs up costs for the majority of trucking, which is small-business.”

American Trucking Associations CEO Bill Graves said in a statement, “The ATA is still reviewing the court’s decision, but supports FMCSA’s efforts to mandate the adoption and use of electronic logging devices for hours-of-service compliance.

“We hope FMCSA will work quickly to address the Court’s decision and the important device design and performance specifications being evaluated by the Administrator’s Motor Carrier Safety Advisory Committee.”

Vince Granowicz, a Supply Chain Sales Executive for an asset-based provider of comprehensive, worldwide shipping services, in a recent post on LinkedIn brought some very interesting points to the debate (used by permission of the author):

“Has anyone given thought to what the correlation might be between a reduction in the quality of drivers in the industry (old or new) and the overall reduction in personal interaction brought on by the technology?

It use to be that speaking with the driver daily gave operations some insight into the driver’s mindset/mood. Now a dispatcher can avoid all personal interaction in the name of LEAN practices. Perhaps this is the wrong direction to move forward with the “green” drivers that are confident of their skill set two months after graduating driving school. With everyone in agreement that safety is the most critical piece for any fleet, why do so many believe that mandating EOBR systems is a better way than increased standards and scrutiny for driving schools?

When you manage people, you CANNOT do so effectively by removing all human interaction, so why do so many think that it can work with drivers, drivers who make life and death decisions every moment of everyday?

With decades of government over reaching in the name of revenue generation, why would anyone believe that this is NOT a Pandora’s Box?”

Good question Mr. Granowicz; one that needs to be considered. OOIDA brought some important points into this debate such as: Will the use of EOBRs create an environment where carriers use a driver’s available  Hours of Service information to force a driver to roll down the highway even if they are fatigued? This fits right into the Pandora’s Box theory of Mr. Granowicz.

A good example is drivers who aren’t taught how to read a map. They blindly follow the GPS directions until they have struck a bridge with the trailer they are pulling. Their excuse is, “The GPS told me to turn there.” Are we going to begin hearing similar excuses from truckers who are told by a carrier’s dispatch, “The EOBR says your 10-hour rest break is up; now, get on the road.” When the driver has an accident, will his excuse be, “Even though I was sick three times last night and only got about three hours of sleep, the EOBR said I was OK to drive, and my dispatcher sent me a text message to get on the road or else, so I did.”

Taking the human interaction out of the process, removing the common-sense factor which allows an individual driver to decide when it’s safe and when it’s not, is a dangerous road to go down.

Technology is a good thing if it is used as a tool to augment one’s training and education, but when it is used to replace intelligence and common sense, it becomes dangerous. Stifling, non-yielding regulations won’t ever replace solid training and education. If EOBRs are used like baby monitors, they will dumb down the drivers, thus requiring carriers to overly depend on the technology as a short cut around training and micromanage their truckers, thus creating a downward spiral that will be difficult to reverse.

Technology can’t replace quality training and education when it comes to safety. Shouldn’t the trucking industry and the FMCSA put more emphasis on training and educating truckers, instead of relying on technology to compensate for its lack?  Something to think about.

And while you’re thinking, here’s a link to another, earlier opinion – read it here.  It’s written by safety consultant Dr. Ron Knipling, and was published in 2009 on Heavy Duty Trucking Magazine’s website, Truckinginfo.

Timothy Brady   ©2011   To contact Brady go to www.timothybrady.com

For more information on Trucking Business Courses go to: www.truckersu.com

An Argument Against Deadheading

(Even “cheap freight” pays something)

By Timothy D. Brady

 The pitfalls of driving a trucking route without paying freight should be avoided. 

Some points I find it interesting: first, that there are still truckers who think if they can make a static rate per mile they’ll earn enough to make it in this industry. Second, what constitutes cheap freight for one carrier may not be for another.

On a static rate per mile. This is so wrong in so many ways and is one of the reasons many truckers and carriers find themselves behind the hauling rate 8-ball. In simple terms, you have a consistent, fixed cost of truck payments, insurance, base plate, office rent etc. which all have to be paid whether a truck is hauling paying freight, running empty or just sitting in the yard. Because of this fixed cost, your required rate per mile will change based on both time and distance. A difference of 500 miles in a week can cause the cost per mile of a truck to go up or down as much as 20 cents per mile–the fewer miles you run, the higher your cost per mile. The more miles you run, the lower your cost per mile. Example: a truck running 3,000 miles a week might have a cost per mile of $1.40, but if that same truck runs only 2,500 miles in a week, it would cost $1.60 per mile. So it’s imperative you know your fixed cost per day and look at the number of days a load requires plusits total miles from destination to destination.

The formula goes like this:
(Days on Load X Daily Fixed Costs) + (Total destination to destination miles X fuel cost per mile) + (total destination to destination miles X operational cost per mile) + (Tolls, permits, lumper labor, etc) = Load’s break-even point.

Don’t assume because you made a profit at $1.75 per mile last time it will hold true this time. All these costs must be tracked. Fixed costs and operational costs should be tracked  monthly; fuel cost as it changes and load-specific costs on each load.

Deadheading or waiting an extra day for a “Good paying load” will increase the cost per mile you’ll need to cover. This must be factored into every load—Take/Decline load decision. Many times it’s more cost-effective to take the “cheap freight” load, but it requires diligent planning and effort.

Cheap freight is an over-used and misunderstood term. What is cheap freight for one may be the profit for another. Here’s something more to think about:

1. Truck-to-load ratio is the largest determining factor: more loads, fewer trucks, higher rates; or fewer loads, more truckers, lower rates. (The ratio is the major determining rate  factor for areas like Miami and Denver). So it is important to know those ratios when accepting a load to an area. It’s also important to know the market of the areas in which you operate.

2. Another problem with many truckers is they don’t establish definitive freight lanes. This is NOT hauling dedicated freight for one customer. This is establishing a series of hauling routes which have multiple shippers and brokers, with quality hauling rates that are consistently available. But in every freight lane, there’s usually one leg which has low-paying freight. If you plan your lane correctly and have the cost of the low-paying leg incorporated into the revenue from all the other legs in the lane which are profitable,   at the end of the month, then any load hauled in the low-pay lane becomes pure profit.

Example: I have a client who operates out of Denver with a 565-mile deadhead out of Denver to his first load in the lane. Because he incorporated the cost of the deadhead into the needed revenue and profit margin of the other three legs in the lane, he’s making a $1,035 profit per truck per month or around $4,140 for the four trucks he operates in that lane per month.

Now for the kicker. He hauls a 60-cent per mile load out of Denver that pays $339 per load per truck for the deadhead leg three weeks each month. This $339 goes straight to profit, adding an additional $1,017 profit per truck per month or an additional $4,068 profit per month for the 4 trucks operating in that lane. That cheap freight represents $48,816 additional profit per year, which has allowed him to add 4 more trucks and trailers to his operation in the last two years, (Yes, during the Recession), and his carrier is growing by leaps and bounds. If he had continued to deadhead those 565 miles because he doesn’t haul “Cheap Freight” he’d still own only 4 trucks. Something to think about.

Good loads and good roads, everyone.

Timothy Brady  ©2011
www.timothybrady.com

Between the Ditches: ‘Sleeper Test’

Trucking’s Shame

“Keep it between the ditches” is highway slang for “drive safe.” This series is provided as a public service by Advance Business Capital.

From Time Magazine:

“Adriesue (“Bitsy”) Gomez, 33, is a “gear-jamming gal with white-line fever.” A woman truck driver from Los Angeles, she is also a pain in the axle to a traditionally macho industry. … Bitsy is out to change the industry’s traditional attitude toward female truckers. Some docking areas still have MEN ONLY signs, and many truck stops routinely refuse to let women truckers use the showers. Worse, says Gomez: “When you lose your job to some 18-year-old punk boy after ten years, it makes you real mad.” … Bitsy has another major gripe. Women truckers, she says, often have to pass a “sleeper test”—having sex with a foreman or male driver—to get a job.”

That Was Then. This is Still Then.

This article was not published last week, or even last year. It appeared in Time’s April 26, 1976 issue. We stumbled on it during a Google search and realized only on a second reading that it was thirty-five years old!

So what does that say about the current status of women in trucking? They are no longer the rarity they were when Bitsy Gomez was driving, but how much discrimination and harassment still goes on?

Here’s a comment from Desiree Wood, better known as “Trucker Desiree,” a mother of two and grandmother of six. Although she has only been an OTR driver since 2009, she has become a well-known (and occasionally controversial) voice for drivers, beginning with the “expose” of the trucking school she attended, which was featured on the syndicated program Dan Rather Presents. This is a recent excerpt from her column on the blogzine, Life on the Road.

Trucker Desiree writes:  “While sexual misconduct on the job happens in all industries, in truck driver training programs it is a unique issue due to the isolated atmosphere and living conditions. The standard operating procedure is to withhold key components to the training such as learning to back the truck, forbidding the student to use the Qualcomm® and not giving them proper 24 [hour] emergency information contacts prior to leaving the terminal with the trainer.

“Recently I met a woman at a social event who turned out to have been a former driver. I will be posting the interview on my You Tube channel this week, but what she told me about her OTR experience was one of many stories that are carbon copies of one another. It goes like this… ‘Convince the female to get on the truck and that they are safe, get them far away from home, give them the ultimatum.’

“In this particular woman’s case she was close to a city and had enough cash to make it to an airport to fly home. Some are not so lucky. She also had enough experience and was fortunate to find another job where she went on to drive for another twenty-plus years and maintained an excellent record.

“Deb is another gal I have come to know from my writings on this topic. She was raised by her grandmother; her brother was a truck driver. She was a tomboy and eventually wanted to become a truck driver herself.  Deb says her grandmother taught her many things but never about what bad men will do to a young naive girl. When Deb was 20 years old, an older driver agreed to ‘take her under his wing.’ Nice guy, right?

“In minus 40 below temperatures, he stopped 10 miles outside of town and told Deb to perform oral sex on him or walk back to town. He then told everyone at the employer that Deb was a whore in order to discredit her before she had a chance to collect her thoughts about the incident. Deb went on to have an eight plus safety rating in Canada, which is where she is from. This was not the last incident she encountered but if you love your job then you keep your mouth shut about such things. That is the fact of life for some women, especially women known not to have any support system and no one to call for help.”

Outrageous, But How Common?

These examples are obviously outrageous, but they don’t necessarily make the case that there’s widespread harassment in the trucking industry, only that it exists, which no reasonable person doubts.

That’s the real issue. What has changed? Something, we hope. It would be too depressing to think that there have been no advances for women truckers in 35 years.

The CRST Case

A year ago, a federal court threw out a sexual harassment case filed on behalf of female truckers against CRST Van Expedited, a large carrier based in Cedar Rapids, Iowa. Chief U.S. Judge Linda Reade ruled that the Equal Opportunity Employment Commission had failed to prove harassment and ordered the government to pay CRST $4.4 million in legal fees.

Ellen Voie, President of the Women in Trucking Association, and a prominent advocate for female advancement, agreed to a video interview at GATS [2010], but when asked about the CRST decision, declined to condemn it, commenting that there was a lack of actual evidence and making a passing reference to people who have a “victim psychology.”

Ellen Voie Voices Her Opinion Voie’s comments, which in fairness were less than a minute out of a 45-minute interview, were put on YouTube™ and touched off a small firestorm of controversy. We’ll examine the implications of that in the second part of this two-part series in next month’s Between the Ditches.

Sources for this article include Time, Life on the Road, Women in Trucking, Ask the Trucker, Real Women in Trucking and Cedar Rapids Gazette.

Detention Time and the Law

Publish your Rules Circular and prosper

By Timothy Brady

 

Last week Rep. Peter DeFazio, D-Ore, introduced a bill requiring the DOT to study industry detention practices and establish a maximum number of hours that drivers may be detained without being paid.

The Government Accountability Office recently surveyed 300 truckers.

68% reported being detained within the last month.

The GAO discovered 80% of the detained drivers had difficulty complying with hours of service requirements, and 65% reported losing money in the process of being held by a receiver or shipper. In the words of Representative DeFazio, “Yep, it’s a problem.”

The legislation, H.R. 756, states: “To direct the Secretary of Transportation to prescribe standards for the maximum number of hours that an operator of a commercial motor vehicle may be reasonably detained by a shipper or receiver, and for other purposes.”

Limitations on Certain Detentions- Section 14103 of title 49, United States Code, is amended by adding at the end the following:

`(c) Limitations on Certain Detentions- A shipper or receiver may not detain a person who operates a commercial motor vehicle transporting property in interstate commerce before the loading or unloading of such vehicle without providing compensation for time detained beyond the maximum number of hours that the Secretary determines, by regulation, is reasonable.’

Many on the carrier side of the logistics industry are applauding the move, saying it has been a long time coming. But questions remain: With the current atmosphere in Congress, will a bill introduced by a Democrat ever see the light of day in the Republican House? Another question is, if it were attached as an amendment to a House bill assured to pass and moved to the Senate, would the Senate’s Democrat Majority allow it to make it through to the President’s desk? And finally, would the Fortune 500 lobby, i.e., Wal-Mart, Costco, large food manufacturers and distributors, lobby the bill out of existence? That, only time will tell.
Reviewing a reference on this subject, I found there are already regulations on the books which allow you to charge a shipper or receiver detention time. But the vast majority of carriers don’t have the proper documents to support assessing detention fees.

Have you published your carrier’s Service Conditions? As a motor carrier, you are entitled to establish the terms and conditions of doing business along with a Rules Circular which spells out: Governing Publications (mileage guides and tariffs), Scope of Operations and Statement of Services provided (territorial area serviced, Interstate vs. Intrastate,  Dry Van, Temperature Controlled,  Intermodal, Haz Mat, etc.) Accessorial Services and Charges (Detention, Lumpers,  Expedited or Exclusive Use services, etc.), Claims Liabilities and Limits, Claims Processing and Salvage, Credit and Collection Provisions, and Fuel Surcharges.

While it is no longer necessary to file rates or tariffs with any federal agency, a motor carrier of property is required to provide a shipper, upon request, a copy of  the rate, classification, rules and practices which apply to its shipment or agreed to between shipper and carrier (49U.S.C. 13710). However, if there is no written agreement to the contrary, the terms and conditions published in your Service Conditions and Rules Circular apply, if you have one.

Therefore, if a carrier were to properly publish in their Rules Circular under Accessorial Charges – Detention and Free Time (time a shipper or receiver has to begin loading or unloading a trailer before detention time begins), customers may be held accountable. Minimally, if written correctly, when a shipper/receiver doesn’t begin loading/unloading within the free time period specified, the carrier can demand full payment as a condition of delivery with a promissory lien, as long as there is not a bilateral agreement between the shipper and carrier to the contrary. (‘Bilateral’ meaning signed, agreed to and executed by both parties.)
However, specified Detention Time, Free Time and the Promissory Lien must be published as a part of the carrier’s Rules Circular and be available by request to the shipper. So what is your carrier doing?

That’s something to think about.

Reference:

Protecting Motor Carrier Interests in Contracts, 2nd edition; By Henry E. Seaton, Esq.

© 2003, Seaton & Husk, LP  http://www.transportationlaw.net/

Timothy Brady   ©2011

To contact Brady go to www.timothybrady.com

For more information on Trucking Business Courses go to: www.truckersu.com

How to Know If Your Hauling Rate Is Correct

By guess and by golly won’t work

By Timothy Brady

 

According to Logistics Management 2011 Rate Outlook (http://www.logisticsmgmt.com/article/2011_logistics_rate_outlook/)“Volatile oil and diesel prices, capacity shortages, another looming driver crisis, debilitating regulatory uncertainties, and an improving economy have led industry analysts across all modes to one conclusion: Shippers will have to shoulder some of the burden associated with escalating transportation costs this year.”

With all of this looming over the next several years, the best opportunity to increase hauling rates is upon us. But again, shippers are very smart when it comes to what they pay to haul their goods. In order to increase your rates, you’ll need to provide justification to your customers on why and have the supporting math to prove your point.

A common question I’m asked is: “How do I establish a profitable hauling rate?”  That’s a wide-ranging question. Its answer depends on the type of freight, area in which the carrier is domiciled, lanes in which you operate. I help carriers establish rate ranges as a part of my Business Coaching service. The first instruction for my client is that he/she must initially determine what it costs to provide their level of service.
An aside: I find it interesting in that some small carriers will quote a static, per-mile rate based on their costs over the last year. That is so wrong in so many ways in determining a rate range. The problem with a static, per mile Break-even Point (BEP) is that it will vary up or down depending on distance traveled; i.e., the shorter the distance, the higher the cost per mile; the longer the distance, the lower the cost per mile. This can vary as much as 20 to 30 cents per mile on a variance of just 500 miles per week.

There are four different cost areas one needs to address: Fixed Cost per day, Operational Cost per mile, Fuel cost per mile, and Load-Specific Costs.

Fixed Costs: any expense which occurs regardless of whether your truck(s) are rolling. This would include items like truck payments, insurance, 2290 FHUT, base plate, communications, office rent and utilities, salaried driver pay, etc. This is a number which is calculated by the day, week, month, quarter or annually.

Operational Cost: any expense which occurs each time your truck(s) are rolling. This would include items like truck and trailer maintenance, repairs, tires, other equipment repairs, and per-mile driver pay, etc. This figure is based on the expenses paid in the past 30 days with items such as tires and repairs amortized over their expected useful life. It’s figured on a per-mile basis.

Fuel Cost: this expense is always figured separately due to the volatility of its cost and because it is one of the largest expenses of any trucking operation. Simply put, by figuring fuel cost on what it will cost on a specific load or run rather than relying on a fuel surcharge to compensate the fuel purchaser, you’ll be sure you’ve covered this expense. Fuel Cost is also figured by the mile.

Load-Specific Costs: every load has specific costs which don’t occur on each load or may be different on each load. This can include percentage driver pay, tolls, lumper labor, pilot cars, special permits, or any expense that is unique to a particular load.
Finally, to determine your specific rate range you must establish two additional factors:

1. What’s the required capital to sustain your operation when revenue doesn’t meet costs?

2. How much money is required at what times to grow your company’s net worth and add additional hauling capacity?

From these numbers you are then able to establish a hauling rate range that will provide the revenue needed to attain these goals.

Good loads and good roads, everyone.

Timothy Brady  ©2011

To contact Brady go to

www.timothybrady.com

For more information on Trucking Business Courses go to:

http://www.truckersu.com/trucking-business-courses.php

What’s In Your Pitch To Shippers?

A deeper discount? Better hold onto your shirt

By Timothy Brady

 

Under the current economic atmosphere, large segments of the trucking industry have fallen into the trap of “Volume Discounting.”  The greater volume a customer has to ship, the lower his shipping cost. While this works to a point, beyond that point lies the eventual collapse of the trucking company.

Let me recommend an excellent volume for your business reading list: The Profitmover’s Guide to Business Success by James B. Larsen. While his book is focused on the moving and relocation services part of the transportation industry, still a lot of his observations hold true for us all. Here’s a quote that resonates with any business, especially a small business: : “In a typical scenario, the company informs its salespeople that they can sell at a certain price or discount up to a certain percent to get the order … . What this really means is that salespeople are being allowed to set price without knowledge of what the actual COST is for the product or service they are selling. Does this make good business sense?”

No, frankly, it doesn’t. So don’t do it. There will always be a (usually new and inexperienced) trucking company that figures the best way to line up shipping contracts fast is to undercut every other motor carrier out there. It’s sad, but they’ll be holding an auction to sell off tractors and desks before they realize they didn’t run their numbers to know their costs and have a business plan in place to take the company beyond the first round of paychecks.

On the other hand, you know the numbers you deal with, day in and day out, that determine the profitability of your company and whether it grows or stagnates. You know the drill: you’ve got to know the Fixed, Operational and Load-Specific Costs on every piece of equipment that moves under your company name.

And to get ahead, you’ve got to remember to figure a salary for yourself and your office staff into Fixed Costs while placing the volatile fuel cost into the Load-Specific Costs. (Fuel, by the way, is going up again.  No surprise there. And the only way to handle the cost of fueling every shipment is to know exactly how much that transport of goods is costing your company.) Profits are set back to grow the company, whether in two years or five.

Most shippers understand ROI and other costs. Actually, if you took the time to sit down with your ‘old reliable’ shippers and showed them exactly how you arrive at your shipping costs on their invoices, my bet is they’d be impressed. You’d show them that not only do you know how to keep your stock rolling and get their products where they need to be on time and in perfect condition, but you also understand the dynamics of the entire logistics chain.

Maybe your pitch to shippers needs to be a short background lesson on how you figure your prices. Invite them into your motor carrier’s office for a short business meeting. Set up a white board, show them your figures, and see there’s a fresh pot of coffee and maybe some doughnuts for the meeting too.

Your shippers won’t be left scratching their heads and wondering why their shipping rates went up when they’ve been with you for a year already. You can show them why the customer service you provide them has gotten a little costlier, and also let them know you want their company to succeed just as much as they do.

You won’t lose many shippers to new competitors. Isn’t that worth an hour of your time and a box of doughnuts?

Good loads and good roads, everyone.

Timothy Brady © 2011

Contact Brady through www.timothybrady.com

How to Exit a Trucking Business

You do what you gotta do
By Timothy Brady

 

Have you ever been rolling down the interstate, suddenly looked at the fuel gauge and realized: “I’m not sure I’ll make it to where I was going to fuel next.” All kinds of thoughts start going through your mind. Where’s the next fuel stop; any fuel stop? Is that one I passed a few miles ago closer than the next one down the highway? Boy, this is going to cost me. I’m not going to be able to control what I pay. (This is followed or preceded by a string of expletives.)

That’s a micro-example of a problem to which many small carriers, owner/operators and lease operators don’t pay any mind—the Business Exit Strategy. Many truckers have had or will face a similar situation in the future, but instead of running out of fuel; it will be the financial fuel tank that begins to run dry. First realize there are many articles and resources on how to save your company from financial collapse, and every attempt should be made to rescue your operation.

But every company, regardless of size, should have exit strategies designed for multiple scenarios. There are different circumstances requiring you to extricate yourself from your business. Being prepared with different exit plans based on the possibilities is the only way to preserve personal assets and income.

The question is, how do you close down a business with the least financial impact on you and your family? Walking away is not the answer. It may seem like the course of least resistance, but it’s like stopping the truck in the middle of the interstate, getting out of the cab and hoofing it to the house. The inevitable wreck will leave a lot of collateral damage and probably get you room and board with three squares and a striped suit. You need a course of action so if those circumstances arise, then you already know how to get to where you need to go (without a side trip to the big house in the worst of all scenarios).

Planning is everything in a small business. If the operator of the above-mentioned vehicle had planned where to fuel and had enough in reserve for the unexpected, he wouldn’t be in that situation. The same is true in the financial end of business. As is constantly said; know your costs, control those costs, know your market, and have something in the wings to replace revenue lost from an economic downturn. Planning is the secret to real business success. The same holds true if it becomes necessary to shut the whole thing down. Yes, it’s like writing a Last Will and Testament; we know we need to do so, but avoid it because it’s not something we want to think about.

So what are the steps to graciously step away from a trucking business?

  1. If you have a partnership, corporation or LLC, you must reach agreement and obtain authorization from other partners and stockholders to close your business. This agreement and authorization to dissolve a business should have been established under some acceptable governing set of rules, such as the original bylaws or partnership agreement.
  2. If there is more than a single owner involved, form a Closing the Business Committee. You need a person covering finance, accounting (Accounts Payable, Accounts Receivable and business taxes), Human Resources and Legal.
  3. When necessary, hire professionals, experts to fill the gaps in your Business Closing Committee. For many carriers and owner/operators this could be your accountant, attorney, banker, equipment valuation expert and even an auctioneer.
  4. Review your current business obligations and those vendors or customers who have obligations to your company. Write a List of Problems To Be Resolved from this same review.
  5. Inventory what is owned by the company, what is owed on these assets and how best to dispose of them with the least negative financial impact. The inventory is very important. It’s used to establish the value of the business, make decisions, manage the sale or disposal of assets and becomes the basis for tax calculations and tax returns. Print out a copy for everyone involved.
  6. What is your carrier’s current worth? It’s difficult to make decisions without knowing the value of the business and its assets. Don’t forget you may have customer lists and information which can be of value to a competitor. This can be potential cash in your pocket.
  7. Develop a step-by-step schedule on each area to be discontinued. This schedule provides a way to measure progress and estimate both the time to complete important tasks and when the closure will be final.
  8. Notifying customers, vendors, creditors, independent contractors (lease operators) and employees will be necessary and may require legal notice. In some cases this can be by classified ad in a local paper or by individual letters to each party. Consult an attorney to be sure you don’t miss anything required by law.
  9. Check your Business Closing Plan and then check it again. Events will happen very quickly and it’s easy to lose control. Done correctly and by the numbers your net worth can be preserved; do it haphazardly, and your money can be drained very quickly, substantially reducing the net value of what’s left.
  10. Close or transfer contracts, leases and agreements. This process may require
    approval from contracting parties and involve negotiation of final terms. If you lease office space, is it transferable or can you sublet? What about any equipment leases? Know your post-shutdown obligations and responsibilities. In regard to your business insurance, the timing of stop coverage dates is very important so you don’t expose yourself to risks that otherwise would be covered.
  11. We recently saw the results of a badly planned trucking company shutdown that
    left employees, contractors and vendors holding the proverbial bag. One
    extremely important reason for a Closing Business Plan is to avoid putting
    employees, contractors, vendors or yourself at odds with one another, creating
    the need for litigation to resolve issues. Communication is your best tool, and
    honesty your best policy.
  12. Once your operations have been shut down, you can begin disposing of or
    transferring assets according to your plan. Remember, this is an important tax event and if done correctly, will reduce your tax responsibility. This is also when most insurance coverage can be reduced or eliminated.
  13. You need to satisfy and pay all remaining Accounts Payable and debt obligations
    from the proceeds you receive through the sale and transfer of assets along with
    capital in the company’s bank account.
  14. Finally, prepare the financial statement and balance sheets required to file the
    final business tax returns. These financial statements and balance sheets
    determine the taxes owed for the business and capital gains or losses on asset
    sales for the company, its principals and stockholders.
  15. Many states require a company that is closing to file Articles of Dissolution. This
    formal filing is required to terminate the legal and tax status of the business. You
    may file Articles of Dissolution, Certificates of Withdrawal, and/or Cancellation
    Certificates. This process also results in a review of tax liabilities, and issuance of a tax clearance notice or certificate. Consult an attorney or CPA to be sure you do this correctly.
  16. Prepare and issue special filings, notices, informational returns, and taxes as
    required by the type of business entity under which your company was organized. The best way to be sure you don’t miss anything is to look back at the licenses,
    bonds and permits required at the company start-up. Generally, some action is
    required regarding every federal and state registration, tax, and licensing agency
    which you contacted in order to start the business. Final filing of payroll and
    unemployment taxes, workers compensation insurance certificates, required
    liability insurance and other business tax returns must indicate the business is now
    closed.
  17. Close bank accounts by distributing the remaining funds according to the
    agreement reached by all principals, partners and stockholders.
  18. File and store all business records and copies of files in a safe, accessible location.
    These records should be kept for at least seven years.

As you can see, closing a trucking business is equally as involved as the process of starting one up. Doing it correctly can save time, money and legal fights in the future. There are transitional times in everyone’s life, but when you’re a business owner, if you’re closing your motor carrier, do it with a complete plan so you’re not left standing in the middle of the business interstate, out of financial fuel and no planned direction.

Good loads and good roads, everyone; or in this case, God speed in your next adventure.

Timothy Brady  © 2010
www.timothybrady.com
731-749-8567

Developing a Niche 1

Niche Hauling: a geographic area, commodity, particular service, unique method, or specialized market for which a small trucking company is best suited.

For the small or start-up trucking company, the highway to success is to find a specific niche which is not filled by the more traditional, larger trucking companies. Under the current economic conditions, in the traditional truckload and LTL freight areas there more trucks available than freight, making this the lowest-paying tonnage. Trying to compete with the mega-truckload and LTL carriers with business models of volume hauling in which profits can be a mere penny-a-mile, can bring the best independent trucker to his knees.

So what are the solutions?

  1. Think regional: Find a commodity or service you can provide which encompasses the smallest geographic area possible. This reduces your fuel costs by placing you closer to your origin and destination points and reducing the distance if any deadheading is required.
  2. Think labor-intensive: Most truckload carriers haven’t any interest in loads which need special handling beyond the trailer doors and freight dock. Finding loads that require out of the ordinary care either in the trailer, on the trailer, or at the time of delivery will reap higher revenues to your operation.
  3. Find groups of shippers needing similar services: specific ways of securing the items hauled, disassembly and reassembly of equipment, crating and uncrating, etc. The more time spent in a trailer and the less time spent in the left seat of a tractor, the greater the revenue you earned for the time invested.
  4. Haul your passion: The more you believe in what you’re hauling the more care you will provide your customer. There are small trucking companies in business today that haul private individual’s motorcycles to rallies and shows, windmill blades for generating electricity, custom cars in enclosed car carriers, travel trailers, boats, cargo trailers, small trade shows and displays, children’s play sets, modular offices, and—well, just use your imagination.
  5. Become lean and nimble: One of the advantages you have over a large carrier is you adjust more quickly with the changing transportation industry. This changing industry includes fuel costs not abating any time soon; the requirement of special IDs to haul in and out of ports, the new attitudes of buyers concerned with how much energy is consumed bringing the products they purchase to market, and the adjustments shippers and receivers are making in how they do business with haulers.

For the small motor carrier, niche hauling is a necessity to its survival. The whole idea of positioning your company in this manner is to create a higher level of efficiency, better cash flow, and lower costs. This type of business model allows you to become theexpert in your chosen area; whether it be geographical, commodity-specific, defined by service or unique method, or specialized market. Or it can include a combination of some or all of these attributes.

Next week I will provide with details on how niche hauling can be an excellent means of avoiding sudden shifts in the open freight market: but it comes with a  word of caution.

Good loads and safe roads, everyone.

Timothy Brady
©2009

Do You Know Your Break-Even Point?

How important is knowing your Break-Even Point when you are a trucker?
I’m constantly saying, “You’ve got to know your Break-Even Point!”  But is it that important?

According to Renee Cloud, of Clerical Business Solutions, a business management company providing business consulting & administrative support (virtual assistant services): A number one rule for business is to know your break-even point when it comes to profitability. Many business owners pay a lot of attention to their profitability instead putting some focus on their break-even point. To tell if your business is profitable look at your break even point and your break even margin. When you know your break-even point on certain services, products and overall business operations, it’s the key to strategic planning, maintaining and increasing profitability in the long run.”

According to Charles Alexander at Volunteer State Community College and the Tennessee Small Business Development Center (www.tsbdc.org): “Knowing your break-even point is one of the most important pieces of information that a business owner should know. Whenever I ask someone if they know what their break-even is, I always get the answer of “I have a ballpark idea of what it is.” This is not good enough to make important decisions in your business such as hiring additional personnel, buying a piece of equipment, or offering a new product or service. You need to know exactly how much money it takes to break-even.”

If it is so important to know your business’s Break-Even Point, why does it seem a large number of truckers either don’t know what theirs is, or have the wrong figure?

I think it stems from lack of information, especially when most of these folks are thrust into being business owners. Most lease operators were offered the “opportunity” to make more money by leasing or owning their trucks rather than being a company driver. At the time it seemed like a no-brainer, because to the uninformed observer, by making three to four times what they were making as company drivers, there should be plenty of money “left over” after all the expenses had been paid. They would be making substantially more money. They assumed the information they were being given was correct, but they never checked the numbers by doing a Break-Even Analysis. The reason? They didn’t know what a BEP Analysis was, didn’t know it was important, or figured the trucking company’s accountants had already done one and it wasn’t necessary.  There’s also another incentive called the Pride of Ownership. Many truckers are of such independent stock that they would give up some income to say, “That’s my truck.” Not a solid business decision, obviously, but one anybody who has owned or desired to own a truck can understand.

So what makes up a break-even point?

It’s made up of all the costs required to own and operate a truck. But many truckers only include a partial list of those expenses.  It always amazes me when I ask a trucker what his Break-Even Point is, and he quotes me a per-mile figure. The problem is a per-mile Break-Even Point moves all over the map. Example:  if a trucker’s fixed costs are $300 per day, his maintenance cost per-mile is 20 cents, his fuel cost is 40 cents per mile, and his truck moves one mile in a day, what is his per-mile Break-Even Point? It’s $300 and 60 cents. If the truck goes 100 miles in a day, his per-mile BEP is $3.60 per mile. The same holds true as you look at a week. Using $300 per day fixed cost and 60 cents per mile maintenance and fuel, if a truck travels 3,000 miles in seven days his per-mile BEP is  $1.30 per mile; for 2500 miles in the same seven days, the BEP’s $1.44 per mile, and at 2,000 miles it increases to $1.65 per mile. So if I ask someone what his BEP is and he quotes me a per-mile figure, unless he qualifies it with how many miles it’s based on, this shows me he doesn’t have a clue. And if he can’t tell me his daily fixed cost and what his per-mile maintenance and fuel cost is today, he’s operating his business without all the facts he needs.  Kind of like trying to drive a truck without wheels and tires. It just sits there and digs a deep hole.

If a trucker says his Break-Even Point is, say, 70 cents a mile, what does that tell me?
It indicates he is either quoting a number he heard from someone else, or he’s only using the cost of fuel, maintenance, and maybe his per diem. But what he hasn’t included are all the other costs that are required to own and operate a truck.

What are those costs?
Those costs include everything from the obvious to ones you might not think about.
The obvious ones are the truck lease payment or loan payment, insurance. workers comp (or occupational hazard), FHUT, cell phone, QUALCOMM, office supplies, labor fees, tolls, permits, parking  fees, shower fees, lodging, tires, repairs, maintenance costs,  Air Card fees, PrePass fees, fuel taxes, meals, tools, bling for the truck, paid claims, accounting fees. If it’s spent on the truck, for the truck or to keep the truck rolling, it’s a part of your Break-Even Point.

Which one is the most commonly missed by owner/operators?
Believe it or not, it’s the one expense that without it the truck can’t roll down the highway!
It’s the driver’s paycheck. Many owner/operators are under the misconception that their pay is what’s left over after all expenses have been paid and the reserves have received their deposits.  The problem with this approach for the owner/operator is the times when there are no leftovers—something that’s happening with regularity right now—the driver and the owner both aren’t getting paid. This creates a terrible internal conflict, because if most company drivers don’t get paid they’d quit, but how does an owner/operator quit himself?  There are experts in our industry who say if you’re an entrepreneur trucker, your pay is based on the profits left after expenses.  In my opinion that is so wrong on many levels.  Number one, profits are where you get the money to grow your operation. Two, if an owner/operator doesn’t calculate a paycheck for himself as a part of his expenses, he will either take too much from the trucking operation, weakening its capital for sustainability and growth, or he’ll never get a paycheck with any regularity because he hasn’t established a target at which to aim. Most truckers would rather die than miss a truck payment. The reason they don’t miss that truck payment is they’ve established a target amount, and they make sure it’s there when the payment is due. By including a regular paycheck amount for the drivers (themselves) within the Break-Even Point, just like that truck payment, they’ve established a target. If you’ve got a target and you practice enough, you will start hitting it. The more you practice, the more often you’ll hit it. [Side Note: Including a regular salary or draw in the Break-Even Point to the company owner even when he doesn’t drive a truck is also a great way to make sure your operation survives the difficult times.]

What’s the difference between the trucker who knows his true Break-Even Point and the trucker who either thinks he does, or has no idea how to calculate it?
It’s education. Lots of people go swimming without ever taking a swimming lesson, and they do just fine until they get into turbulent waters. Lacking the information they would have learned if they had taken lessons, their chances of survival are reduced substantially. The same holds true in trucking. As I have told all my students and clients, knowing how to operate a truck does not mean you know the business of trucking. While it is one of the components in a trucking business, it’s not the one that will create the foundation for a successful trucking operation. The trucker who thinks he understands the business of trucking but lacks the education and knowledge of basic business principles is the greatest threat to this industry, because the people who do understand these business basics will be able to take advantage of the ones who don’t.   I see it every time a trucker goes lease or gets his or her own authority and within a couple of weeks they’re blaming low hauling rates on the brokers, shippers, or the  trucking company. In fact the situation can be traced back to the point where they jumped into the trucking pool without a plan and without knowing how to calculate their Break-Even Point. If I’m going to jump into a lake I’m going to make sure one, I know how to swim, and two, what’s in the lake. Truckers need to know the cost and revenue projections of what they are getting into before they even start looking at a truck.  My advice to anyone either struggling in this industry or thinking of leasing or buying a truck, don’t assume you know how to make it successful.  Get the education and knowledge so you have all the tools required to be successful. Then move forward again by taking continuing education classes to stay on top of how things are changing.

Good roads and good loads, everyone.
Timothy Brady
©2009

What Determines the Quality of a Load?

In the last blog, we went through the process of determining the value of a load, but that was only the first step in selecting which loads to haul and which ones to leave on the dock. Now for the next step, looking at the quality of a load. Value is what a load pays; quality is what does or doesn’t occur as you develop multiple loads into a freight lane. Note: A freight lane is the combination of outbound loads and required inbound loads needed to come back to your original departure location of the outbound shipment. The objective when developing Freight Lane is to craft a series of loads that combine to generate the necessary revenue which creates a profit at the completion of each freight lane run. The combined revenue of all the loads in a specific trip, plus the amount by which this revenue exceeds your Break-Even Point is what determines the quality of the loads.

The biggest challenge to developing a freight lane is that outbound and inbound freight lanes are inherently imbalanced. This is particularly true when working in truckload hauling. The typical description of an unbalanced freight lane would be hauling steel girders to Miami, Florida, from Pittsburgh, Pennsylvania. Pittsburgh is a major manufacturing hub with numerous factories and support industries, whereas Miami is a large consumer locale with very little manufacturing; very little outbound freight. In short, Miami needs the steel to build its condominiums and high-rises, but has very little freight to send to Pittsburgh, thus the imbalanced freight lane. When developing your freight lane it’s important to take this imbalance into consideration. But because a freight lane is imbalanced to some degree, it doesn’t mean it’s not worth developing. There are always going to be freight areas where the inbound freight far exceeds the outbound freight, meaning there will be more trucks than freight in an area. In a well-designed freight lane this imbalance is taken into consideration. It might be necessary to depart a low freight area empty and  head to a location which has better paying freight, or it might make sense to take that cheap load to generate cash flow to increase your total revenue on the trip. This is all decided by doing a Freight Lane Development Analysis.

The first step in developing a freight lane is to look at your available outbound freight from your Home Domicile for the niche you’ve selected.

  • To what location is the largest amount of freight headed?
  • What is the available freight returning to your Home Domicile from the destination of the outbound freight?
  • What is the return freight area’s truck-to-load ratio average over the past month, quarter, and year?
  • If the truck-to-load ratio is too many trucks and not enough freight for the backhaul, how far will you need to run empty from this area to find a positive truck-to-load ratio which will give you the revenue to return to your Home Domicile? Is it moving your trucks further away from getting back to your Home Domicile?
  • Look at multiple scenarios to determine the best routes to produce the highest overall revenue at the end of each round (outbound and return).
  • You must have at least one loaded shipment returning (or being compensated at your minimum hauling rate if having to return to your Home Domicile empty) from any backhaul location. The trick is to be sure you’re paid for the miles and time required, regardless whether you are loaded or empty.

The best approach to finding, and continuing to get the best loads for your trucks, is by targeting specific areas where your outbound freight is headed.  This means going from a scattergun to the ‘lock and load’ approach with your sights on the bull’s-eye of available loads in your Freight Lane Development Plan.

Good roads and good loads, everyone.

Timothy Brady
©  2009

The Profitable Trucking Company

How to make a profit in today’s trucking industry.

Are you asking yourself if you can really make a profit in trucking today, especially with fuel going up again and the freight still not recovering? That’s the 64,000-dollar question for most trucking companies.

I’d still say, yes, you can make a profit in trucking with planning, forethought, and using correct business principles. If you’re a small motor carrier, you should be looking for a specific niche in which to specialize. If you want to compete in the truckload side of the business, you have to provide something no one else is willing to do, and then do it better than anyone else could. Always charge a profitable rate for your services, too. You won’t ever compete on just price alone with the big trucking companies, because they can easily afford to undercut their competition’s rates.

There’s always a need for any size company which provides excellent customer service. So yes, you can be successful in trucking, as long as you make a plan, know your costs, and be sure your rates reflect those costs. Find and fill your niche and become the best in the lane you service. Don’t try to haul everything to everyone. Know your market; create strong relationships with your customers, and give them true commitment to their wants and needs.

You won’t succeed if you go into trucking for the one and only reason of making money. The true bottom line to being prosperous in the trucking industry has multiple parts:

  • Believe what you do helps create a better quality of life for you and your neighbors.
  • Think safety, not just your own, but everyone around you.
  • Become the expert in your niche market.
  • Know your customers, what makes them tick, their wants and needs, and concentrate on serving them beyond their expectations.
  • Know your costs, down to every nut, bolt, airline, paper towel and staple.
  • Set your rates to reflect your costs, including your salary.
  • Have a plan, one that includes your vision of achieving your goals.
  • Know when to say no and when to say yes.

There’s still profit to be made on the highway, by being the best driver and customer supplier ever. Maybe the real 64,000-dollar question is, how great a trucking company do you want to be?

Good loads and good roads, everyone.

Timothy Brady
©  2009

What Is Lane Density?

What is lane density? This is a term you may or may not have heard in the course of doing business as a trucker. But as you’re about to see, it’s very important in determining whether you are profitable or not. This applies to a single truck operation or multiple unit dispatch.

Lane density is the art of load planning, which keeps the truck full with profitable tonnage whenever it is rolling. It’s documented that over 40% of all OTR trucks traversing the American highway are partially or completely empty. This means that efficiency, or lane density, isn’t being calculated. But lane density should be one of the dispatch plans every trucking operation implements, regardless of size. The PLAN is simple: keep your trailer loaded every mile it has tires rolling on highway pavement. This means you’re looking for return tonnage while considering what you’re going to load outbound. Better yet; you’re looking two or three or more trips into the future, planning loads for each truck, so that every trailer has a load assigned to it long before it has reached its destination. Eliminate dead-heading and unnecessary sitting by maximizing lane density. Don’t allow the truck or your loads to dictate downtime, or contribute to unpaid or under-paid miles.

Every mile a truck is driven costs money, whether loaded or not. Once a load is delivered, both the number of days from that delivery date and the number of miles required to complete the next trip all belong to the new load. Regardless of whether you’re hauling paying tonnage or sailboat fuel; deadheading or traveling to your next pick-up, every time the truck is rolling there’s money going out the exhaust. To maintain lane density you must keep that loaded truck on the most direct path between pick-up and delivery; minimizing distance traveled, thus saving on operational costs and driver’s Hours of Service. The idea that a straight line is the shortest distance between two points works here. You must match your loads so as the truck starts pick-ups and deliveries, it deviates very little from the straight line. When it has to stray from the line to pick up or deliver, the rates charged reflect the time and distance required out of route. Small package trucking companies do this, why shouldn’t you? Don’t be fooled by the rate per mile of a specific shipment or load: what counts is the actual distance the rubber rolls and the amount of time required to accomplish the entire trip. A rate per mile is nothing more or less than a means by which you figure the amount to be charged the customer. That rate per mile is usually figured on some arbitrary mileage table that has absolutely nothing to do with the actual miles to be covered. You must compare your revenue to the actual miles to be driven and time required to complete the trip. Moreover, those miles and time must start from the place and time you delivered your previous trip’s load; not from origin to destination, but from destination to destination.

Here’s that four letter word again….PLAN! But don’t get caught with the wrong plan! Most truckers and small fleets run on the day-to-day plan. In the morning, they determine which trucks are going to be empty that day and start searching for loads for them: a plan, but not a good plan. You’ve got to have a Lane Density Strategy: one that not only looks at today, but one that looks as far into the future as possible. If you haven’t located the return load before you accept the outbound load… you have a failing plan. To set into motion the best plan, your Lane Density Strategy should include the following:

  1. Set up dedicated routes that maintain lane density.
  2. Look for tonnage along these routes before you need it.
  3. Find loads long before you need them.
  4. Try to have more tonnage available than trucks.
  5. Set up a bread and butter run for each truck and driver(s).
  6. Don’t look for loads at the last minute.
  7. Always plan two to three loads ahead for each truck.
  8. Think multi-directional, outbound, return, and in-between.
  9. Don’t send any truck out without a return plan.
  10. Provide quality service so shippers are calling you back.

In today’s tough market, there is less tonnage than there are trucks available. Any trucking company or individual Owner/Operator must be looking ahead as far as possible—planning loads weeks in advance. Remember the further ahead you plan your loads, the more control you have if one goes sour.

Good loads and good roads, everyone.

Timothy Brady
©  2009

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