Guide to Automating Trucking Carrier Payroll Settlements

‍

Automating trucking payroll is essential for simplifying settlements for truck drivers and managing owner-operators payroll efficiently. Handling payroll for a trucking company can be complex, especially when balancing payments for company drivers and independent contractors. From calculating tiered miles to tracking recurring expenses and cash advances, every detail matters to ensure accuracy and efficiency.

By automating these processes with software like Vektor TMS, trucking companies can save time, reduce errors, and provide full transparency for all parties involved. This step-by-step guide will walk you through the key aspects of trucking payroll management, demonstrating how automation can streamline even the most intricate scenarios.

Step-by-Step Guide to Trucking Payroll Management

1. Establish a Clear Pay Cycle

A consistent pay cycle is essential for trucking companies to streamline payroll management and avoid confusion. By defining a structured schedule, you can ensure timely and accurate payments to drivers while maintaining operational efficiency.

Example: Set a weekly cutoff time, such as Monday at 12 PM, to include all loads, fuel, tolls, and expenses for that pay period. This approach keeps payroll organized and ensures no critical details are missed.

Automating this process can further enhance efficiency, reducing the risk of errors and delays while ensuring settlements are always prepared on time. A clear pay cycle not only simplifies payroll but also builds trust and reliability with your drivers.

2. Pick Driver Compensation: Per Mile vs. Percentage Pay

When compensating company drivers, trucking companies typically choose between two common methods:

• Per Mile Pay: Drivers are paid based on the miles they drive, with separate rates for loaded and empty miles.
• Percentage Pay: Drivers earn a percentage of the gross revenue from the loads they haul.

Both methods have their advantages, but ensuring accuracy in pay calculations is critical to maintaining fairness and transparency.

The Importance of Automated Calculations

• Empty Miles: A reliable system should automatically calculate pay for empty miles, ensuring drivers are compensated for all miles driven.
• Estimated vs. Actual Miles: Comparing estimated miles (assigned during dispatch) to actual miles driven is essential for accurate pay. For example, if a driver is assigned 2,800 miles but only drives 2,600, the system can adjust pay accordingly.

Automating these processes not only reduces the risk of over- or underpayment but also builds trust with drivers by providing clear and accurate settlements.

3. Simplifying Payroll for Owner-Operators

Paying owner-operators requires a clear and efficient process to handle their unique needs. Most companies either retain a percentage of revenue (typically 10%-30%) or charge for specific services like insurance, fuel, or equipment.

To streamline this process, it’s essential to automate key tasks, such as deducting recurring expenses, tracking fuel costs, and managing negative balances. Additionally, providing clear and detailed settlement documentation ensures transparency and builds trust with owner-operators.

By focusing on automation and clarity, trucking companies can simplify payroll management while keeping owner-operators satisfied.

4. Vendor Settlements for Trucking Mini-Fleets

‍

Managing payroll for vendors or mini-fleets, such as investors who own multiple trucks, requires a streamlined approach to handle the added complexities of multiple drivers, equipment, and recurring expenses. Here’s how to simplify the process:

Revenue Structure

Vendors are typically compensated with a percentage of gross revenue, often around 80%, after deducting all expenses.

Optimized Settlements

• Example: A truck generates $7,000 in gross revenue over 3,000 miles.
  • Driver Pay: $1,800 for 3,000 miles at $0.60 per mile.
  • Deductions: Automatically account for fuel, tolls, and recurring expenses like insurance, trailer rent, and parking.
  • Final Settlement: After all deductions, the vendor receives their net pay.

Key Considerations

• Automated Expense Tracking: Automatically import and assign fuel and toll costs to the correct truck and settlement.
• Recurring Expense Management: Deduct recurring costs like insurance and trailer rent without manual input.
• Professional Documentation: Provide clear, itemized settlements to ensure transparency and build trust with vendors.

By automating these processes and ensuring detailed documentation, trucking companies can simplify vendor settlements and maintain strong relationships with their mini-fleet partners.

5. The Best Way to Calculate Trucking Company Profitability

‍

For trucking companies, calculating profitability at scale is most effective when integrated into the settlement process. Settlements provide a natural opportunity to track revenue and expenses for each truck, offering a clear and accurate picture of your fleet’s financial performance.

Why Integrate Profitability into Settlements?

• Real-Time Visibility: Settlements allow you to see how much each truck earns after factoring in all expenses, such as driver pay, fuel, and recurring costs like insurance or trailer rent.
• Automation for Accuracy: Automated systems can handle recurring transactions, import fuel costs, and even carry over negative balances to the next settlement period, ensuring no detail is missed.
• Scalability: By automating profitability tracking as part of settlements, trucking companies can manage financial insights across large fleets without manual effort.

Benefits of Profitability Tracking at Scale

• Informed Decision-Making: Real-time insights into truck performance help you make smarter decisions about fleet management, route optimization, and cost control.
• Streamlined Financial Management: Integrating profitability calculations with settlements ensures seamless payroll, expense tracking, and profit-and-loss reporting.
• Operational Efficiency: Automating these processes reduces errors, saves time, and provides a consistent view of your fleet’s profitability.

By leveraging automated systems to calculate profitability as part of the settlement process, trucking companies can optimize their operations and make data-driven decisions.

6. Automating Expense Management with Integrations

‍

Integrating expense sources is a game-changer for trucking companies, enabling the automatic import of costs like tolls, fuel, and cash advances into the payroll system. This eliminates the need for manual entry, ensuring accurate accounting and seamless settlements.

Key Benefits of Expense Integration

• Real-Time Visibility: Automatically sync transactions from fuel providers or toll services, giving you up-to-date insights into expenses as they occur.
• Precise Allocation: Instantly and accurately assign expenses to the appropriate trucks, drivers, or units, ensuring transparency and accountability.
• Chargeable Expenses: Easily charge back expenses to the relevant parties when needed, streamlining financial management.

By automating expense imports and allocation, trucking companies can enhance operational efficiency, reduce errors, and gain better control over their financial processes.

7. Recurring Expenses with Automation

Recurring expenses, such as escrow, cargo insurance, or trailer rent, are a critical part of trucking operations. Automating these deductions ensures they are consistently accounted for, reducing the risk of missed payments and saving valuable time.

Why Automate Recurring Expenses?

• Consistency: Automatically deduct recurring costs like $250 for trailer rent or $400 for cargo insurance without manual input, ensuring no charges are overlooked.
• Efficiency: Streamlining these expenses lightens the workload for accounting teams, making financial management easier and more reliable.
• Accuracy: Automated systems ensure that all necessary charges are reflected in settlements, providing transparency and trust.

By automating recurring expenses, trucking companies can simplify their financial processes, focus on operational efficiency, and ensure that all costs are seamlessly managed.

8. Cash Advances with Automation

Managing cash advances can be a time-consuming process, but automation makes it seamless and efficient. By using tools like EFS to issue advance codes, trucking companies can ensure that advances are accurately tracked and automatically deducted from settlements.

Why Automate Cash Advances?

• Accuracy: Automating the deduction process ensures that every advance is accounted for in payroll, reducing errors and manual oversight.
• Efficiency: Drivers can request advances, such as $500, which are automatically deducted from their next settlement without additional administrative work.
• Transparency: Automated tracking provides clear records of advances, building trust with drivers and simplifying financial management.

By integrating cash advance automation into your payroll system, you can streamline operations and maintain precise financial records.

9. Provide Professional Settlement Documentation

‍

Automating trucking payroll is essential for simplifying settlements and managing payments efficiently. Whether you're handling payroll for company drivers or owner-operators, the process can be complex, involving tiered mileage calculations, recurring expenses, cash advances, and profitability tracking. Every detail matters to ensure accuracy, transparency, and efficiency.

Vektor TMS offers a comprehensive payroll software solution designed to streamline these processes. With features like automated expense tracking, recurring transaction management, and professional settlement documentation, Vektor TMS ensures that every aspect of payroll is handled seamlessly.

Explore Vektor TMS Payroll Features

• Carrier Component: Learn more about how Vektor TMS can transform your payroll processes by visiting the carrier component.
• Test Drive the Software: Experience the power of Vektor TMS firsthand by registering for a free trial here.

By leveraging Vektor TMS's robust payroll capabilities, trucking companies can save time, reduce errors, and provide full transparency for all parties involved. Take the next step in optimizing your operations and simplifying your payroll management today.