What we usually see when a carrier adds its tenth truck
By Chris Greco, Founder and President.
When a carrier adds its tenth truck, revenue per truck goes up and cash per truck goes down. New equipment goes on new notes before the lanes that pay for them are full. Shippers get bigger and pay slower. Fuel moves faster than rates.
The covenants were set in a different fuel environment. Nobody knows which lanes make money after driver pay and deadhead, so the company adds trucks to lanes that lose money faster.
Margin per lane after driver pay, DSO by shipper, and a 13-week forecast with the equipment notes on their real dates. The tenth truck is usually fine. The decision about the eleventh should be made on those three numbers.
Chris Greco
Founder and President, CFO Anywhere. CFO for owner-led companies since 2002. Executive MBA, Gies College of Business, University of Illinois.
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