Fourth Quarter 2008 has found many trucking companies having difficulty securing credit. Those fortunate enough to have access have found the costs of borrowing have skyrocketed.
In our industry, receipt of revenue trails expenses by 30-90 days; a difficult challenge even in a healthy economy due to the high costs and frequent payment demands of fuel and labor.
As a result, managing Cash Flow - cash collected vs. cash paid out in a certain period - has become a survival factor for most carriers. Here's an outline of activities that can help carriers improve cash flow :
- REDUCE COSTS - audit operations for cost reductions. Lowering expenses automatically improves Cash Flow.
- MANAGE WAGES - reduce and defer payroll obligations where possible.
- IMPROVE SPEED OF COLLECTIONS - Reducing the number of Days Outstanding on Collectables will get you your money sooner.
- REDUCE INVENTORY - lower inventory levels means less money sitting on the shelf.
- MANAGE ACCOUNTS PAYABLE - extending credit terms and taking advantage of discounts will also improve Cash Flow performance.
For a more detailed description of activities you can perform to improve Cash Flow, read the Managing Cash Flow white paper in our web library.
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