Truckers and Credit Cards: Matching Expenses With Cash Receipts

Most small and mid-sized trucking companies deal with cash shortages at one time or another. These cash “crunches” are partly to blame on a trucking company’s expenses being paid before it is able to collect its cash from its customers. In accounting there is a principle called the matching principle. The matching principle is the concept that when accounting for a business’ financial transactions, the expenses and revenue for a specific transaction must be reported in the same accounting period. By following this principle, you get a true picture of a company’s profitability, or lack thereof.

When analyzing the cash flow challenges of a typical trucking, you quickly realize that much of the problem is that truckers pay for many of their expenses immediately even though they have to wait for 30 -60 days to receive payment from their customers. Although this blog will focus on accounts receivable factoring as a primary method of accelerating cash flow, there are other solutions to helping deal with the mismatched timing of cash disbursements and cash receipts. One such solution is using credit cards to make business purchases.

Trucking companies should look at the many benefits of using a credit card for many of its daily expenditures such as fuel and maintenance. Using a credit card buys you more time to pay for your expenses because most credit card companies give you a grace period in which to make your payment without incurring any finance charges. This allows you to more closely match your expenditures with your collections. Additionally, many credit cards are offered as reward credit cards that give you benefits such as discounted gas, travel rewards, free merchandise and much more.

Many people have long been aware of the rewards you can get from a credit card, as well as the many reasons you may want a credit card, such as applying for a student credit card for your college student. However, many small business owners have yet to realize the benefits a credit card can offer their business. So go ahead and find the best credit card for your business and put it to work for you.