How Transportation & Logistics Businesses Can Improve Cash Flow

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The transportation and logistics industry has faced many challenges in the last few years due to record-high freight rates, a shortage of containers, environmental regulations, a global pandemic, and the macroeconomy. These disruptions have exposed key vulnerabilities across the industry, more specifically around managing credit, collections, and cash flow.

Cash flow is a key metric for success in every business, and it is essential to have the resources to pay operating expenses, manage inventory, secure working capital, and service customer demand. The reality is that most transportation and logistics companies face trade-offs between their cash flows and investments needed to remain competitive. The good news is that there are practical ways these businesses can improve their cash flow while competing in an ever-changing marketplace.

Disruption in the transportation and logistics Industry

The transportation and logistics industry has endured a period of continuous and unforeseen challenges. Trucking companies have faced a shortage of drivers and rising fuel costs, which have significantly increased operating expenses and put pressure on margins, ultimately affecting cash flow.

The pandemic also introduced additional obstacles such as increased cleaning and sanitization costs, which have impacted operating expenses for all transportation companies.

Companies that provide passenger transportation services, such as airlines and public transit operators, have experienced decreased cash flow due to the lower demand for these services during the pandemic, ultimately impacting revenues, particularly for companies that have high fixed costs.

While the impact on cash flow depends on a variety of factors, including the specific sector and company, it is critical that businesses have the ability to adapt to changing market conditions and have enough cash on hand to deal with unprecedented costs and obstacles.

It is now more important than ever for transportation and logistics companies to manage their cash flow well if they want to succeed and stay competitive.

Strategies to Improve Cash Flow

During this economic downturn, many companies are struggling with stagnant cash flow and are uncertain of how to manage their operations while implementing a successful long-term strategy. Fortunately, transportation companies can streamline processes and steadily strengthen their cash position by leveraging the right tools.

One area where transportation and logistics companies can focus their efforts to improve cash flow is their collection processes. Effective collections are critical to ensuring that invoices are paid on time and that cash flow is consistent. By automating accounts receivable processes, companies can accelerate cash flow, provide real-time visibility into financial data, and enhance the overall customer experience.

Automation is empowering transportation companies to be able to streamline invoicing, helping to avoid errors and delays, improve customer communications and relationships, and create a single source of visibility to monitor and better forecast cash.

As a result, transportation and logistics companies are able to focus on managing credit and getting paid faster. By eliminating manual processes and increasing visibility, these companies can improve their cash flow management without having to add any additional resources.

Now is the Time to Take Advantage of New Technology

Incorporating new technology can have a significant impact on a business's efficiency and operational costs. Automation tools that leverage artificial intelligence (AI) and machine learning (ML) can simplify mundane tasks, provide insights into customer behavior and market trends, and streamline processes.

Cloud-based solutions, such as enterprise resource planning (ERP) systems, offer easy access to real-time financial data that helps companies make informed decisions about managing their finances.

Automating cash collections for improved cash flow

Cash flow management is critical for any transportation and logistics businesses looking to stay competitive in today's market. By implementing strategies to manage working capital effectively and investing in new technology, companies are able to improve their cash flow significantly while still delivering quality services to customers at a competitive price point and level of service.

Automating cash collections can add significant value to transportation businesses by streamlining cash collections to accelerate cash flow, providing real-time visibility into financial data, enabling informed decisions, and enhancing the overall customer experience.

Tesorio helps 100+ businesses collect cash quickly, scale without the need for additional resources, and make better cash flow decisions. We work with clients like nShift, Flexport, and FlexiVan Leasing to automate their AR processes by providing a single, consolidated system to manage collections that's directly integrated with their existing financial, email, and CRM systems.

The result? Our customers typically see a 20–30% reduction in DSO, an ROI within 60–90 days, a 2–5x improvement in collection team efficiency, and a 4x increase in customer base reach.

Ready to improve your cash flow? Speak to a finance expert today.