Owner-Operator Truck Driver’s Guide

Managing Money

Best Practices for Maintaining Healthy Cash Flow

Overdrive Online and ATBS recently shared some important business tips through their Partners in Business program. Below is a brief summary of some of the most relevant recommendations to owner-operator truckers to maintain healthy cash flow, identity protection and avoiding debt.

The first ‘Business 101’ recommendation is to create separate bank accounts to manage business income and expenses which will make things much smoother in the event of an IRS audit. Then write a monthly distribution check from your operating business account to your personal checking account to cover your personal living expenses. Once you have separated your business from your personal accounts, now it’s time to manage your money more efficiently. Here are some tips to help you to avoid debt and maintain healthy cash flow.

Reserve Account

It’s recommended that you have at least $5,000 in reserve before even going into business. Equipment won’t last forever, things wear out so it’s smart to put money aside for maintenance, repairs, and replacement. The purpose is to be prepared for any unforeseen items that could put a substantial drain your operating cash, such as major maintenance items, tires, quarterly estimated taxes, repairs and insurance deductibles.

Cash Flow Problems

It’s crucial to maintain a healthy cash flow in order to keep your business operating smoothly. Here are some sure ways to avoid financial trouble as an owner-operator.

Don’t take cash advances – If you rely on cash advances you will never be satisfied with your settlement and you will have difficulty figuring out where the money is going. Plus, transaction fees can add up to as much as 10% of the advance.

Avoid too much debt – A large truck loan along with a few maxed-out credit cards can be a recipe for disaster. Successful owner-operators never take on more debt than they can manage to repay on a regular schedule.

Avoid overdrafts – Monitor your account regularly. Record every check as soon as it’s written and don’t forget debit card purchases. Get a system for logging automatic monthly payments. Use overdraft protection. Most banks offer it, pulling money from your savings rather than paying costly fees for bouncing a check. If you don’t have online access, get it. It allows to monitor your account 24/7 and move money between accounts when needed.

Credit cards and other alternatives

It is useful to have business credit cards to take advantage of reward programs. For business use, cash-back rewards are usually the most measurable and cost-effective. Managing credit cards responsibly can help maintain a high credit rating but if your credit card balance is not paid off each month, the interest charges can easily exceed 18%. Federal law now requires that the 3 major credit reporting agencies provide a free copy of your credit report per year. Visit www.annualcreditreport.com.

Fuel card resources, such as Comdata, FleetOne Truckers Advantage, and TCH offer alternatives to high-interest credit cards.




Managing Money