Revving up Cash Flow

Fleets focus on technology to put money in the bank

A decline in revenue, an increase in fuel prices, a credit freeze or a slow-paying customer – all of these problems strain cash flow. For many troubled carriers, these pressures – difficult enough to handle one at a time – have converged for more than a year now, causing a liquidity crunch. The pressure is even more intense for companies that depend on credit to pay for fuel and other operating costs before customers pay invoices.

“Banks have tightened down,” says Gary Salisbury, president and chief executive officer of Fikes Truck Lines, a 100 percent owner-operator fleet of 350 trucks. “Credit is almost nonexistent unless you give them a pint of blood.”

Accounts receivable turnover, or days sales outstanding (DSO), is measured from the time most carriers realize revenue — the date of delivery — to when payment is received. For many carriers, DSO averages more than 45 days. About eight years ago, Fikes was sending invoices to customers as long as 10 days after drivers were making deliveries. Drivers for the Hope, Ark.-based carrier were mailing bills of lading and other documents once a week to meet the company’s Monday cutoff for settlements.

To speed billing, Fikes began using overnight dropbox and scanning services from Affiliated Computer Services (ACS) TripPak; Fikes since has added TripPak Truck Stop Scanning. Some drivers now are using TripPak In-Cab software on personal laptops to send documents immediately after delivery. With these systems in place, Fikes is able to bill all of its 1,000 loads per week within 24 hours of delivery. “We took DSO from 35 to 40 days down to 24 to 25 days,” Salisbury says.

Transportation is rife with paper documents, but that doesn’t mean paper has to impede cash flow. Many fleets are capturing images and data remotely and using the real-time integration and automation tools of their document management systems to accelerate cash flow and reduce administrative costs.