Ask ten experts when the next recession will hit and you’ll get ten different answers.
A string of big closures in the industry have some calling that a freight recession is here. According to ACT Research, the trucking industry is already technically in a recession, after experiencing negative growth for the past six months.
The point, in any case, is that it’s only a matter of time before hard times hit. Sooner or later the tide always turns.
That’s why preparation matters more than prediction.
Weathering the Storm
If you read articles from HBR or McKinsey on surviving recessions, they likely won’t tell you much you don’t already know. Anyone who’s been in transportation long knows that it’s a boom and bust industry. Money is made and legacies are built by making hay while the sun shines and managing to stay dry when it rains.
Debt should be minimized and working capital should be maximized. Operations should be lean and mean, no matter what the economic forecasts say. Investing in technology is important at every stage of the cycle. The companies who are best positioned to survive a recession are also best positioned to thrive afterward.
One thing that’s often overlooked, however, is the importance of strong document management and automated back-office systems.
How Document Management and Back-Office Automation Help Recession-Proof Companies
Having a good system for managing documents and automating back-office work helps transportation companies survive recessions in four key ways.
1. Lower Operating Costs
In a recession, being the lowest cost producer is the name of the game. In transportation, much of that has to do with how you run your fleet. But back-office costs are also an important part of the equation. In tight times, every penny counts.
Good document management and strong automation minimizes back-office costs. Countless hours are saved on entering data, validating information, processing invoices, verifying amounts, and posting transactions. Paperless systems eliminate the costs of printing, storing and sending paper.
With a more organized system, fewer errors get made, reducing back and forth communication and costly delays. Payments don’t get missed, unbilled revenue doesn’t creep up, and bottlenecks can be removed. Productivity increases by 3-5 times. The cost savings fall directly to the bottom line.
2. More Reliable Cash Flow
The transportation business is always a cash flow business, but it’s especially so during hard times. The more reliable your cash flow, the more likely you survive.
Document management software speeds up billing and gives the process greater consistency. By automating billing from end-to-end, you can invoice customers within minutes of drivers delivering loads with almost no human involvement. The process can simply run in the background, sending out invoices as the necessary documents get checked into the system.
Collection reminders can be automated, too. Missing documents, errors and other delays get reduced, if not eliminated, and your receivables come in as quickly and consistently as possible.
3. Clearer Visibility Into Company Spending
When times are tight, having a clear line of sight into all outstanding payables is essential.
That’s what a good document management system and accounts payable workflow give you—tighter controls on spending and a way to see exactly what you owe and when you owe it. Handling carrier payables, vendor invoices, and maintenance orders can quickly become chaotic. It’s easy to end up missing payments, paying late fees, and operating in the dark.
That doesn’t work in a recession. You need to know exactly where you stand, so that you can make informed decisions about spending.
4. Greater Back-Office Flexibility
Finally, the most dreadful part of a recession is the cutbacks, the layoffs, the having to let people go.
Having a good document management system in place helps because it gives you greater flexibility to ratchet up and down, rather than having fixed headcount costs. Adding and subtracting licenses is more straightforward than adding and subtracting people. An automated system can handle 50 invoices a day, or 5,000, which makes handling the ups and downs a heck of a lot easier and a lot less heartbreaking.
The Best Time is Now
Whether the next recession is right around the corner or ten years away, investing in a document management system is a proven strategy for maximizing upside and minimizing down. In good times it can help you grow faster. In bad times it can prevent you from going under. It can help you survive a recession and ensure you thrive afterward.
Have you considered the role of document management and back-office automation in your recession-proofing preparations?
Steele Roddick is a Content Specialist at Microdea where he creates content that helps transportation companies drive their business forward. He’s endlessly fascinated by technology trends, chess, and discovering new places to travel with his wife.