Business Credit Advice for Carriers and Forwarders
The trucking industry faces a host of challenges as whole, but each sector also faces its own unique business challenges. Carriers and forwarders in the trucking industry face additional obstacles, like thin margins, credibility, unexpected costs, and more. Often, carriers and forwarders don’t know how business credit can help them manage these challenges, or they discover they need business credit at a critical point in their business but don’t have strong scores and ratings ready to assist. Building business credit early on can be crucial for carriers and forwarders. Here’s why:
Challenges for Carriers and Forwarders
1. Thin Margins
Carriers and forwarders run on thin margins, and interest rates and insurance premiums can be the difference between turning a profit or breaking even.
Strong business credit scores and ratings can help companies get more favorable rates, terms, and conditions. When a company’s business credit file indicates that it’s low risk, it can negotiate better deals.
2. Unexpected Costs
Unexpected costs while on the road, such as fuel, tire replacement, and repairs, can leave carriers and forwarders in need of quick cash. Employees also need access to credit accounts to cover unexpected expenses while they are on the road, and the trucking company may need to obtain high credit limits to manage these costs.
Business credit can help companies manage their cash flow to avoid shortages and help them get higher credit limit recommendations. Strong scores and ratings can influence others to offer more credit and can make it easier to get financing to offset unexpected expenses.
Carriers and forwarders often work with a set customer or group of customers, but many of them also regularly look for loads to pick up. Credibility can be a huge issue for those trying to grow and work with new brokers, who will require trucking companies to meet certain qualifications before hiring them.
A strong business credit report can help companies create new relationships and grow. Scores and ratings convey how a company pays its bills and help predict whether it will be a reliable supplier or might cease operations. A business credit file also contains information on suits, liens, and judgments, and all of this information can convey credibility. When trying to win new business or show it can meet certain standards, business credit can be instrumental for a trucking company.
4. High-Dollar Purchases
Trucks and other equipment are high-dollar purchases for carriers and forwarders, so these companies tend to have heavy credit needs and require financing on a regular basis.
Business credit is routinely checked by lenders when a company seeks a business loan. Lenders want to be confident that a loan will be repaid, and they turn to business credit reports for help when deciding how much capital to offer and at what rates. Building strong business credit can help companies get a loan with favorable interest rates.
Even if new equipment or vehicles aren’t anticipated in the near future, it’s important to establish a complete business credit file early on, so that there’s time to build and impact it before a loan becomes necessary.
Start Building Business Credit Here
It’s clear that business credit can help carriers and forwarders succeed in multiple ways. With strong business credit that is established early on, trucking companies like these can have better access to funding, fewer cash flow issues, higher credit limits, and clear credibility.
The first step in building business credit is getting a free Dun & Bradstreet D-U-N-S® Number to identify your business, aggregate your information, and establish your business credit file. Apply for your D-U-N-S Number today.
Already have a D-U-N-S Number? Learn more about building business credit.
Stay tuned for part three in this series: 'Business Credit for Freight Brokers.'