Overview of the Transportation Industry

Transportation and trucking are crucial to the effective operation of our economy. There are over 400,000 companies in America that contribute to the transport of products in the United States. These companies range from single truck, owner operators to global, full-service logistics firms. Because of the crucial role many of these companies play in supply chains, there are a wide range of innovative financing opportunities being utilized.

The difference in working capital and cash flow management practices between large and small transportation companies is significant. Larger companies often make use of more sophisticated and efficient methods of managing capital. Some smaller companies on the other hand, barely track cash flow and working capital at all. The primary focus of this course will be on helping small to medium sized transportation and trucking companies better manage their working capital.

Working Capital Challenges For Trucking Companies

In the transportation industry there are two working capital challenges that occur frequently. One issue many truckers run into is waiting for payment. When a trucking company makes a delivery they often wait 30 to 60 days to receive payment. This results in the trucking company having too much of the capital tied up in accounts receivable.

The second problem that is often encountered is insufficient cash flow. Because the transportation industry features thousands of small trucking companies, the competition for freight can be intense. Many small trucking companies have a few customers that they are highly dependent on for sustained operations. If anything happens to these customers, it can leave the company in a tough spot. This short term cash flow disruptions make factoring a must for many small trucking companies.