There’s no doubt that operating a trucking business has become more expensive in recent years. In fact, the past few years have seen the highest operating costs on record. This has left many small- to medium-sized trucking companies, as well as individual owner-operators, to examine and monitor their finances more closely going into the new year and beyond.

With so many businesses and owner-operators struggling to maintain their financial stability, careful management of finances is critical to staying afloat. Below, we’ll talk about some of the key metrics trucking companies can use to evaluate their financial performance, as well as offer solutions for reducing operating costs and increasing cashflow in the future. 

Financial Metrics to Measure

When it comes to bookkeeping for truckers, the financial data points tracked by your company will usually depend on its size. For example, larger carriers will generally benefit more from taking a granular approach that aims to cut more specific costs, such as load weight. When scaled out to dozens or hundreds of trucks, these measures can lead to significant savings.

Small companies and independent owner-operators, however, may be better off looking at specific financial metrics that will directly inform their operational decisions. Some areas that will be helpful to pay close attention to as you evaluate your finances going into the new year include:

Vital metrics

It’s basic, but nonetheless important to mention how important it is to regularly track the money coming in and out of your business. In addition to your total revenue and expenses, you should also be tracking your assets and liabilities to ensure that you aren’t racking up any additional debt that your fleet can’t take on. Knowing your total income and equity is essential for assessing your current financial health and for developing future budgets.

These figures are also vital for determining the efficiency and performance of your operation. For example, you should look at your gross/net profit and total revenue and not only compare them to previous years, but also your previous projections and target goals. Is your business generating its desired or expected return? If not, was it due to increased costs or lower revenue than projected? How much of those cost increases were within your control? These are all questions that you’ll be able to answer.

Fixed and variable costs

There are certain costs you can expect to remain the same regardless of whether you’re moving freight. These will include the cost of your truck, the cost of commercial insurance, scheduled preventative maintenance, your drivers’ wages (which can be variable or fixed, depending on whether your company’s drivers are salaried or paid by the mile) and more. These are areas that are easier to track and budget for.

Variable costs, on the other hand, are trickier because they fluctuate depending on certain factors. Diesel fuel is likely the most prominent variable cost, as prices can fluctuate on a daily basis. However, where carriers and owner operators can run into issues is with unexpected variable costs. A good example is costs incurred due to things like vehicle breakdowns or driver fines. It’s important to budget for these unexpected costs, and then evaluate their frequency to inform future decisions.

Total cost-per-mile

If you aren’t familiar, your total cost-per-mile is exactly what it sounds like. This metric takes all of the overhead and operating costs it takes to keep your business running, then divides by the total number of loaded and empty miles.

This calculation is very useful for trucker bookkeeping and ensuring your operation effectively manages its expenses. Not only that, but it’s also an important tool that companies can use during the RFP bidding season. By having this information, you can accurately determine the breakeven cost for a specific job and also multiply it by your target profit percentage to help inform your final bid.  

Days sales outstanding

Your days sales outstanding, or your DSO, measures the average number of days it takes for your company to collect payment on a sale. Evaluating this metric is critical for a few reasons. For one, it’s a quick way to determine the state of your company’s cashflow over a certain timeframe. It can also help you identify whether specific customers are trustworthy when it comes to making their payments in a timely manner.

Over a longer period of time, an increasing DSO can be an early warning sign of larger problems. It could be a sign of issues such as decreased customer satisfaction or poor customer vetting, for example. Whatever the issue, increases in DSO can lead to significant cashflow problems that affect your ability to make payments and cover unforeseen operating expenses.

How RTS Can Help Improve Your Financial Health

For over 25 years, RTS has been dedicated to helping trucking companies and owner-operators find financial stability through our working capital solutions. These services help simplify bookkeeping for truckers and can assist your operation in becoming more efficient and profitable. Solutions include:

• Factoring services – Since we just talked about DSO, it should be noted that the average turnaround on freight invoices for trucking companies falls somewhere between 30 and 60 days. RTS ensures funding within 24 hours on invoices, which helps ensure your company has the cashflow it needs to run your day-to-day operations. 
• Fuel and maintenance discounts – Through our partnership with Pilot Flying J, our fuel card program has the flexibility and scale to save your company thousands of dollars per year. Not only do companies save an average of 25 cents per gallon at over 2,600 fuel stations, they also get preventative maintenance and tire discounts at over 200 service centers nationwide. 
• Advanced technology – Our mobile app, RTS Pro, provides convenient mobile and web access to services from RTS. In addition to managing your fuel card and factoring invoices, the app also allows you view credit reports on shippers and brokers while giving you access to a free load board. This means you can find the best loads available based on your preferences while also ensuring that you’re working with a reliable partner.  
• Funding assistance – Finally, RTS can help boost your cashflow by providing funding assistance tailored to the specific needs of your operation. Whether you need assistance with insurance or tag renewals, large equipment purchases or down payments on property, our team can ensure you get the cashflow boost you need.

Visit our website to view our services and get more industry insights! If you’re looking to boost your company’s cashflow or improve its long-term financial outlook, contact a representative today.