Last Mile Fleets: How Tech Fuels Cash Flow Optimization in a Fast-Paced Industry

Sean Campbell

Last Modified : Dec 17, 2024

Fact-checked by: Bruce Sayer

The last mile delivery sector is booming, driven by the e-commerce surge and ever-increasing consumer demand for fast, reliable service. Projections indicate the global market could reach a staggering $340.56 billion by 2032, yet last mile fleet owners face a concealed challenge amidst this expansion – cash flow constraint!

The final leg of the supply chain often proves the most intricate and expensive. It demands meticulous route optimization, seamless customer communication, and intricate logistics – all while operating on tight margins. These factors combined can put significant pressure on working capital resources. High operating costs and lagging customer payments often hinder last mile fleets’ ability to invest in growth and effectively meet customer demands.

Fintechs have significantly transformed financial services through innovative, customer-focused value propositions, collaborative business approaches, and versatile, agile teams. Their bespoke financial services aid last mile fleets by offering customized funding options featuring technological enhancements to improve financial health and bolster competitive advantage.

This article provides a guided tour through the financial hurdles typically faced by last mile fleets and the technology-based solutions the best fintech companies offer to meet these challenges. A real-life example illustrates how eCapital, a leading fintech, leveraged the transformative power of technology-based financing options to fuel cash flow optimization in this fast-paced industry.

The cash flow challenge

Last mile fleets face several cash flow hurdles due to the nature of operations and industry dynamics. Here are some key challenges they typically encounter:

High Operating Costs: Last mile delivery involves significant expenses, including labor costs (drivers, couriers), fuel, TMS subscriptions, maintenance, and insurance.

Seasonal Demand Fluctuations: Demand can vary significantly, requiring providers to scale up rapidly during peak seasons. Revenues tend to tail off, creating cash flow gaps and reducing cash reserves during off-peak periods.

Delayed Payments: Late customer payments hinder operations by creating cash flow gaps, delaying operational expansions or necessary investments, and potentially affecting service levels due to financial constraints.

Last mile fleets that cannot overcome these challenges will likely experience strained liquidity and overall financial instability, risking the business’s viability in the long term.

The Power of Tech-Enabled Finance Solutions

Fintechs are best known for leveraging technology to innovate and improve various aspects of financial services. Technology offers a multi-pronged approach to enhance the speed of funding, maximize transactional transparency, and streamline efficiencies to optimize cash flow management. Here are some key areas where tech can make a significant impact:

• Faster Payments: Technology expedites the funding process. Invoices are submitted electronically, document verification is almost instant, and advanced payment is transferred within hours, easing the pressure of waiting for customer payments.
• Real-Time Financial Insights: User-friendly software tracks outstanding invoices, monitors cash flow, and provides real-time data. This empowers management to make informed pricing strategies and resource allocation decisions to maximize profitability.
• More Cash in Hand: Mining vast databases allows fintechs to swiftly analyze asset valuations and verify the creditworthiness of client customers to maximize a fleet’s access to capital.

Improved cash flow management enables fleets to maintain consistent service levels, promptly fulfill customer expectations, and build customer trust and loyalty.

Asset-Based Lending and Invoice Factoring: Tools for Improved Cash Flow

Technology sits at the core of several financial products specifically designed to address the unique needs of last mile delivery businesses. Two prominent examples are asset-based lending and invoice factoring, both of which utilize technology to expedite financing and improve account management.

Asset-Based Lending: This financing option leverages a company’s existing assets, such as vehicles or accounts receivable, as collateral for a loan. Technology is crucial in streamlining account management and ensuring fast processing times. This allows last mile fleets to quickly access the capital they need to invest in new vehicles, expand operations, or cover unexpected expenses.

Invoice Factoring: In this funding arrangement, a business sells its outstanding invoices to a financing company (factor) at a discount in exchange for immediate cash. The factor then manages the collection process. Technology streamlines the entire process, from invoice submission to approval and payment. This provides last mile fleets with immediate access to working capital, allowing them to cover operational expenses, payroll, and fuel costs before customer payments arrive.

A Proven Track Record of Success: The Southern California Last mile Delivery Fleet Example

eCapital has deep-rooted experience and a proven track record in transportation financing. A recent example of eCapital’s impact comes from a prominent Southern California last mile delivery fleet. This company faced the challenge of optimizing cash flow while navigating the complexities of rapid growth. eCapital’s comprehensive approach to providing a $1 million invoice factoring facility empowered them to:

• Receive faster payments on invoices, improving cash flow.
• Gain real-time financial insights to optimize pricing and resource allocation.
• Manage business spending more effectively with increased visibility.
• Access immediate working capital through invoice factoring to fuel growth initiatives.

With a solid cash flow solution in place, this fleet is well-positioned with a stable financial structure to grow operations and command a firm footing in the highly competitive last mile industry.

eCapital’s Technology Platform: The Engine Driving Last Mile Success

eCapital’s robust technology platform goes beyond accelerated cash flow. It is the central hub of a fleet’s financial operations, featuring full transparency to provide a holistic view of its business health.

eCapital’s technology platform is a financial control center for last mile fleets:

• Immediate Cash in Hand with InstaPay: Electronically submit invoices through our secure platform and receive advance payment (up to 100%) within hours with InstaPay.
• Enhanced Visibility with Proprietary Account Management Software: Gain real-time insights into your financial performance with our user-friendly account management software. Track outstanding invoices, monitor cash flow trends, and analyze data to make informed pricing strategies and resource allocation decisions.
• Streamlined Spending with Visa® Commercial Cards: Take control of your business spending with eCapital’s Visa® Commercial Cards. Issuing Visa Commercial cards to employees with spending limits and categories for where the cards can be used creates an accurate expense management system for more control and visibility over how funds are utilized.
• Mobile App for On-the-Go Convenience: Manage your finances from anywhere with eCapital’s mobile app. Submit invoices electronically, track payment statuses, and access important account information, whether in your office or on the road.
• Integration Tools: eCapital’s technology stack includes APIs and other integration tools that connect with various other systems, such as transportation management systems (TMS), enterprise resource planning (ERP) systems, and customer relationship management (CRM) tools.

eCapital’s technology stack provides industry-leading cash management services, enabling faster access to more money and greater control over how funds are administered.

Conclusion

Last mile delivery is generally regarded as the most important and expensive stage of e-commerce logistics. This critical stage is where cost management, and customer satisfaction intersect, making it a focal point for innovation and operational improvements. Reliable cash flow is essential to support operational efficiency.

eCapital’s historical roots date back over 20 years in transportation financing. Our innovative approach and technological advancements streamline processes and accelerate the speed of funding to ensure uninterrupted cash flow. eCapital’s technology platform is designed to integrate seamlessly with our financing solutions to unlock even greater access to working capital, setting new industry standards for fast, reliable solutions tailored specifically for fleets.

As an industry leader, we’re passionate about helping last mile delivery businesses thrive. We understand that technology is key to success in today’s fast-paced environment. That’s why we offer a powerful combination of tech-enabled solutions and financing products designed to work together seamlessly.

Contact eCapital today to learn more about how our innovative cash flow solutions can help you achieve sustainable growth and navigate the challenges and opportunities that lie ahead.

Key Takeaways

• The final leg of the supply chain often proves to be the most intricate and expensive, putting significant pressure on the working capital resources of last mile fleets.
• Improved cash flow enables providers to maintain consistent service levels, promptly fulfill customer expectations, and build customer trust and loyalty.
• Fintechs are best known for leveraging technology to streamline business financing and optimize cash flow management.
• A recent example illustrates how eCapital, a leading fintech, helped position a prominent Southern California last mile delivery fleet with a stable financial structure to grow operations and command a firm footing in the highly competitive industry.

Sean Campbell

Sean Campbell, Business Development Officer, has over 15 years of experience in providing alternative finance solutions to businesses, with a focus on supporting clients in the transportation industry.

Prior to joining eCapital, Sean held business development positions at Crestmark Bank, now Pathward, and Bibby Financial Services North America, which was acquired by eCapital in 2020. Fueled by a trusted network of industry partners and unmatched expertise, Sean has helped transportation companies across the U.S. secure hundreds of millions in funding.

Sean earned his Bachelor of Science degree in Business Administration from Henderson State University.