Freight company managers that mainly focus on the day-to-day responsibilities of running their companies must also prioritize refining their money management practices to ensure continued success. By focusing on cost projection, improving invoice collection, utilizing fuel tax credits, and using methods for tracking finances online, freight companies can easily streamline their finances. Consider the following four tip.
Prioritize Cost Projecting
Owners of freight companies that are working to streamline their finances would do well to hire a designated accountant for cost projecting. While many freight companies have an in-house accountant to handle all of the company’s financial obligations, it helps to have someone that focuses on cost projection for every new endeavor. This process involves identifying costs during the initial stages of development and continuing to monitor costs throughout the maintenance, implementation, and completion of the project.
Improve Invoice Collection
Another effective way to cut costs and improve a freight company’s finances is to work with a factoring company for more efficient invoice collection. Essentially freight factoring gives companies the opportunity to sell their accounts receivables or invoices to a third-party company or the “factor”. The third party then collects the payments of these invoices from the freight company’s customers.
Another term for factoring is account receivable financing or “AR financing”. This factoring process helps freight companies get paid on time. By delegating their invoices to these factors, freight companies will be able to enjoy more stability in their cash flow.
Take Advantage of Fuel Tax Credits
Freight companies are unique in that a significant portion of their expenses goes towards fueling. Companies can make up for this spending with fuel tax credits. Fuel tax credits give freight companies the opportunity to reduce the amount of taxable income that they spend on certain fuel costs.
These tax credits apply to various types of fuel. Freight companies can take advantage of these tax credits by filling out Form 4136 when filing taxes.
Track Finances Online
Basic money management best practices require businesses to keep track of the money coming in and out of a business. Businesses that aren’t taking advantage of online reporting tools are making their finances more complicated than they need to be. Though some smaller companies may prefer conventional means of tracking finances, using technology makes this process much more efficient.
Money management is a science. With the right formula, freight company managers can easily improve their financial standing and grow their companies.