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Creating a cash flow positive trucking business

Whether you have a single truck or a fleet of vehicles, creating a cash flow positive trucking business involves strategic planning. Below we’ve shared several tips and tools for staying cashflow positive while you focus on growing your business. But first, let’s define what cashflow positive means and discuss the advantages for owner-operators. 

What is cash flow positivity? 

Cashflow is the sum of all inflows and outflows of cash to and from your business. If you have more money coming out of your bank account in a given time period than coming in, you are cashflow negative. If you have more money coming into the business than out, you are cashflow positive. 

All businesses should want their revenues to be greater than their expenses to be profitable. However, a business is only cashflow positive if payments for revenues are received during the same period that they must pay for those expenses. 

This means that if your payment for delivery is only coming in 60 days, you still need cash to cover the overhead costs for the next 2 months. 

How do you manage cash flow? 

Managing the cash flow of a trucking business is no easy task. Most expenses have to be paid immediately and many clients are known for being notoriously slow when it comes to making payments. You can often expect to wait up to 60 days to be paid. On the other hand, your drivers, fuel, insurance, and overhead must be paid right away. That’s before you consider unexpected expenses that pop up like fleet maintenance, fines, accidents, and any other unforeseen costs. How do you remain cash flow positive when dealing with so many changing variables?

Understanding your business’ cash requirements involves forecasting foreseeable expenses associated with running the day-to-day operations and comparing them against the payments that you expect to come in from your clients. If you know that you have more money going out next month than you expect to come in, you may want to consider strategies to increase your inflows, like injecting cash, renegotiating payment terms with your clients, accepting quick payments, or engaging a factoring company to liquidate your receivables.

Benefits of positive cash flow 

Ensuring that your company is cashflow positive has many benefits above and beyond just being able to cover your monthly expenses. 

You can:  

  • Pay off or reduce your debt 

With a positive cash flow, you won’t have to (fully) rely on loans or a line of credit, which would allow you to pay off any outstanding debts without accruing more interest.

  • Determine the best time to expand your business

Positive inflows can help you determine the right time and financial capacity needed for expansion and help with the purchases of new equipment. 

  • Maintain positive relationships with third parties

Whether it’s investors, suppliers, or customers, a positive cash flow can help to build trust with third parties by maximizing flexibility for your customers while still paying your suppliers on time.

6 strategies that help create positive cash flow

Here are six strategies for creating a positive cash flow that you can begin implementing in your business today.

Track and control your expenses

Effective money management requires your finances to be organized. Technology has introduced handy tools that track expenses and produce reports revealing financial trends, allowing you to make any necessary adjustments that can increase your cash flow in the future. 

Many trucking companies use accounting software to record, monitor and control how money is being spent. Finding ways to take control of operating expenses is going to help you manage your profitability and cash flow better. 

Look for inefficiencies in your business

Companies lose between 20% to 30% of their profits due to inefficient operations. To avoid unnecessary losses, start by looking for cheaper alternatives that can deliver similar results. Search for sales on equipment or talk to trusted vendors about preferred pricing rates for frequent buyers. 

Maintain your fleet

Trucks that constantly break down run up large repair bills. The out-of-pocket expenses for maintaining your fleet may seem enormous, but the return on investment is immeasurable. You’ll have durable, reliable equipment which will ensure smooth operations and reduce downtime allowing you to keep up with customer demands. 

Verify shippers’ and brokers’ ability to pay

Since payments aren’t received until long after the delivery is completed, each load you move has inherent credit risk. Be diligent about checking the background of the shippers and brokers you work with by checking their credit. Use that information to determine how reliable they will be in paying their invoices. 

Invoice customers immediately and collect payment quickly

It should become second nature to submit an invoice as soon as you receive the bill of lading from your drivers. This can help avoid any delays in payment and help you improve your cash flow. Follow up with your customers to verify that they received the invoice, and if you’re late, let them know immediately. Make it a habit to continue following up until you are paid. 

Utilize invoice factoring

An invoice factoring company purchases your invoices and pays you a percentage of the invoice right away. The percentage varies depending on the factoring company but can be up to 98%. The factor then assumes the responsibility of following up with your customers to collect the payment. Once the invoice is fully paid, you are sent the remaining amount less the factoring company’s fee, which can range anywhere from 1% to 3%. 

Your business receives immediate funds to cover your expenses for a small fee. This allows you to focus on growing your business rather than chasing down customers for payments. They also help with back-office tasks like running credit checks and billing. Factoring helps to keep your cash flow positive, allowing you to cut back on additional administrative costs that you would otherwise have to pay.

Cash flow vs net income

Net income is your business’s remaining profit after expenses, taxes, and other operating costs are deducted from revenues. Cash flow is the inflow of money generated by your business during a specific period. While the two are correlated, they have distinct differences. 

Cashflow and net income statements will show some differences due to the time gap between sales and payments. Revenues may be recorded, but if cash payments are delayed, the funds may not be enough to cover current operating costs.  

Investors may prefer to judge a company by its cash flow health because it tells how much money the company brings in before paying for expenses. Keep in mind that both are important to maintaining the success of your business.  

Keep your trucking company’s profit margin healthy

Running a trucking company is tough but keeping your cash flow positive can help to avoid many issues. By following some of the tips covered in this article, you’ll be able to maintain a stable and positive cash flow.


Why do most trucking companies fail?

High operational costs and a lack of cash flow management are usually at the root of the failure. This is caused by several factors, such as late payment terms that see businesses waiting 30-60-90 days for payments or having inefficient practices that are costing businesses more money than they should.

Can you have a negative net income with a positive cash flow?

It’s possible to have a negative net income despite having a positive cash flow. While a business can have positive revenue, expenses and other costs that need to be covered can exceed the amount earned for that given period. A cash flow statement only represents the business’s cash position for that given period and should not be confused to be a measure of profitability.

Depreciation, debt, and late payments can contribute to a negative net income for the period, despite positive cash inflows.

How do you keep track of trucking expenses?

Investing in accounting software is the best way to track your expenses and manage your cash flow profitability but is not always necessary. Regardless of which accounting tool you use, make sure it has a good processing capability.

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TAFS is More than Freight Factoring

As one of the industry leaders, TAFS assists trucking companies to increase cash flow with some of the lowest factoring rates in the industry and a 1-hour advance option.