In the world of trucking, especially in North America, there are numerous moving parts that need to work seamlessly together in order to maintain a successful business offering factoring services.
Two crucial components of this industry are operations and accounting.
While they may seem like separate entities, the truth is that these two departments are deeply intertwined and have a direct impact on a trucking company's cash flow.
However, many trucking businesses struggle with effectively connecting these areas, resulting in financial challenges and missed opportunities for growth. Worse, it affects the customer base due to mismanaged lines of credit.
In this article, we will discuss the importance of uniting operations and accounting in the trucking industry and how truck brokers can utilize this integration to increase cash flow.
By understanding the relationship between these departments and implementing strategies to align them, trucking companies can streamline their processes, reduce costs, and ultimately, boost their bottom line.
Ready to flourish in this competitive industry by gaining more knowledge on freight factoring rates, access to capital, discovering sources of capital, integration costs, restructuring costs, and more?
Whether you are a trucking business owner, operator, or a truck broker looking to improve your financial standing, this article will provide valuable insights on how to bridge the gap between operations and accounting for increased cash flow.
To achieve success, brokers must recognize the importance of integrating their freight operations and accounting teams. However, connecting these teams can be more challenging than it seems.
Traditionally, the logistics industry has operated in a compartmentalized manner, with separate track and trace and billing teams. Breaking down these barriers requires significant effort. It is a common tendency to isolate different departments within companies, making it difficult to foster collaboration.
Nevertheless, when brokers successfully establish a culture of collaboration among their teams, the results can be transformative.
By promoting a cohesive work environment, brokers gain the ability to identify and resolve discrepancies before they escalate into major issues. This not only improves efficiency but also helps to prevent potential problems from arising.
The first step in this process is the initial shipment quoting and creation.
The key to efficient collection lies in accurately creating the shipment and collecting all relevant information from customers.
This includes identifying potential delivery challenges before providing a freight quote. Although this may result in a less competitive initial quote, it ultimately saves time and money for everyone involved in the long term.
Despite the best efforts of brokers during the shipment creation process, unexpected issues may still arise while the freight is in transit. However, effective collaboration greatly simplifies the navigation of these issues.
According to Mitchell, CEO of a financial services company, being aware of any issues that arise during transit provides an opportunity to address them before sending out the invoice.
By taking advantage of these updates, you can prevent potential complications during the revision stage and save yourself unnecessary hassle. Moreover, this affects all statements of cash flows in the long run.
Real-time detection of discrepancies in invoices, such as the unexpected addition of a liftgate, allows for prompt resolution in a mutually agreeable manner. For instance, in the case of a liftgate being added, the broker can contact the shipper to clarify if it is necessary for the shipment.
Based on their response, the broker can either resolve the issue with the carrier or provide a revised quote to the shipper. This proactive approach ensures that the new quote matches the final invoice, thereby preventing any potential issues with collections.
Technology plays a crucial role in facilitating such collaboration within a bustling brokerage environment.
As Mitchell rightly points out, the absence of tools to bridge the gap between freight operations and accounting can result in financial losses cause by unseen administrative expenses or direct operating expenses.
The advancements in modern technology, particularly automation tools, have revolutionized the way teams can collaborate, even if they are seemingly unrelated. One area that has immense potential for automation is the processing of carrier bills and proof of delivery (POD).
While the benefits of these technologies are unparalleled, the initial onboarding process for popular options such as electronic data interchange (EDI) and application programming interfaces (APIs) can present a challenge for certain companies.
EDI, in particular, has been in use for quite some time and has proven to be an effective tool for facilitating connections. However, implementing it can be a complex and resource-intensive task. Similarly, newer connections like APIs offer undeniable value, but the effort required to establish them can be considerable.
According to Mitchell, the key is to recognize the immense benefits these technologies offer, despite the initial obstacles involved in their implementation. It is crucial for companies to navigate through these challenges and leverage the power of automation to streamline processes and enhance collaboration across teams to manage operating costs.
One of the key benefits of email-based technologies is the minimal upfront implementation work required. Similarly, a transportation management system with ready-to-use integrations offers the same advantage. These integrated solutions provide effortless access to tools that effectively streamline operations for users, without demanding significant effort.
By eliminating the need for extensive setup, these tools empower brokers to automate more freight operations, regardless of their frequency with individual shippers.
Although altering the way business functions can be overwhelming, even with the most user-friendly technologies, it is a worthwhile endeavor for those aiming to stay ahead in the logistics industry of tomorrow.
Mitchell emphasized that although change can pose challenges, there is a growing recognition that achieving success in this profession is increasingly reliant on automation. He explained that allocating time away from day-to-day business operations to implement technological advancements requires extra effort, but it ultimately serves as a valuable investment into the growth and development of the enterprise.
Truck brokers and freight broker companies have a unique opportunity to increase cash flow by uniting their operations and accounting departments. They can consider this as a startup cost.
By streamlining processes, improving communication, and utilizing technology, truck brokers can reduce errors, improve efficiency, and ultimately increase their bottom line.
With the trucking industry experiencing significant growth, it is more important than ever for truck brokers to optimize their operations and accounting practices.
Imagine having invoices on time, better accounts receivable and cash equivalents monitoring, a good track record, and better management of additional costs or even upfront costs.
By doing so, they can not only increase their own success but also contribute to the overall success of the industry.
Moreover, are you looking for a company to help you to stay DOT and FMCSA compliant? We at Labworks USA can support you.