Cash flow is a crucial component of running a business, a shortage of which can cause serious challenges for even the most well-run businesses. For those in the transport industry, the last few years have brought unprecedented roadblocks, impacting cash flow across the industry. Between COVID-19, soaring fuel prices and widespread natural disasters, Australia's transport industry needs to be on its A-Game to keep its B-doubles moving — and its cash flow too.
Read on to find out our top 3 suggestions for keeping cash flowing for those in the transport industry.
Why cash flow in transport is important
Unlike other industries, where stock can be an infrequent purchase and tools are readily available, the transport industry in Australia relies on consistent cash flow to help keep freight and passengers moving.
Big trips mean big fuel bills, and with the average cost of E10 petrol across Australia almost reaching $2 per litre last month, having reliable cash flow is even more critical. Not to mention the ongoing and regular costs for registration, licensing, insurance, maintenance and tolls.
With borders now open and floodwaters receding from Australia's east coast, many companies may now be looking at how they can afford to keep on trucking.
How to improve cash flow in the transport industry
With mounting costs and a recent deluge of disruptions, many in the transport industry are looking at all their options to keep cash flow moving. Here's what they can do.
1. Reduce Expenses
Reducing your expenses can seem an impossible feat in the current transport climate. However, there are a number of things you can try:
- Ensuring your fleet of vehicles are regularly maintained
- Providing drivers with well-planned and optimised routes
- Rewarding your field reps for using fuel-efficient driving methods and optimising their trips
- Allowing customers to choose delivery windows to eliminate failed deliveries
Seek advice from professionals
You may even look to the books, asking your accountant or financial advisor to sift through financial statements and seek out available tax benefits within your current set-up. Any tax deduction is effectively money back in your pocket and there is a wide range of available deductions within the transport industry.
Review your finance
If you have a finance broker, you can also ask them to make sure that you're getting the best deal and the lowest interest rates with any equipment finance, car loans, truck leasing or truck financing. Understanding your finance options when it comes to things like heavy vehicle finance or a new truck purchase can save you thousands. Your current bank may not be the best on the market amongst the many truck loan options. So use your buying power to negotiate your loan term, interest rate, reduce monthly payments, waive an establishment fee or even consider using balloon payments to your advantage.
2. Use technology to your advantage
If the National Transport Commission is realising the benefits of technology to enhancing productivity, then so can you! Finding the right accounting software can make the world of difference to understanding your cash flow and will provide the best oversight. Software programs are not just designed for business finance in general but can help with freight billing, driver management, expense management and invoicing solutions.
The more efficient your technology is, the more you can get out of your team and the more control you have over the flow of funds within your company.
3. Use invoice financing
You're probably well aware of truck finance options such as truck loans, commercial hire purchase or a chattel mortgage, but you might not have discovered a way to unlock cash from your customers' unpaid invoices. Invoice financing allows you to access up to 80% of the money tied up in unpaid invoices. So you don't need to wait around for your customers to pay.
If you've delivered a product or service and have issued invoices on credit terms, the time it takes for your customers to settle their accounts can cause cash flow gridlock. Free up the flow of cash by linking Waddle to your accounting software and get an indicative offer in seconds.
With invoice finance, there are no monthly repayments to keep on top of. The balance is paid down directly as your customers pay their invoices.