Though often overlooked, the trucking industry is essential to the health within the US economy. Think about it: without truck drivers delivering goods, interstate commerce would grind to a screeching, tire-burning halt.
Unique Challenges
Despite the importance of trucking companies, the way the system is structured often leaves them in a shaky financial position. Truck companies submit invoices for services rendered, and then often wait 30-90 days for payment on the accounts receivables.
For a bigger company with large cash reserves, waiting to be paid would not be a chore. But for small to mid-size companies operating on a strict budget, it might ‘t be an option. Expenses with regard to example payroll and gas calculate in the time between payment, and not paying your drivers is never a good business repeat. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and is a recipe for financial hardship.
Therefore, trucking companies often have flip to outside funding. The following are some strategies to trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to difficult . by which businesses sell their accounts receivables to a factoring company. Approval for factoring primarily based on the creditworthiness of the trucking company’s customers.
At the time period of the sale, the client gets 80-90% for this cash back immediately from the bills. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This option is best for B2B companies that cannot manage to wait for payment, and also the cost usually 4-5% monthly with annual rate typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are usually the cheapest form of financing. Mortgage loan process involves an application and overview of the company’s creditworthiness and financial reports. Small companies especially will usually be denied for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s savings. This form of funding ideal for for trucking outfits along with a great credit record and do not require the money immediately.
Cash-Advances
Cash advances take place when a company receives an advance sum from your local neighborhood lender. The company pays financial institution back with percentages of that monthly card receipts prior to loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, and also cannot be changed retroactively. The benefits of cash advances is immediate cash- is certainly the fastest method for obtaining cash without going to a loan shark.
This financing method is best for trucking companies who need immediate cash for a short amount of one’s time and have limited financing options. Cost of is usually 20% if not more.
Lease-Back
A trucking company may wish to sell property, plant, and/or equipment, and simultaneously leases it back for cash.
It is best for trucking companies with valuable plant or equipment assets which have been underutilized, and the cost is monthly lease payments plus the depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, and in addition it is close to them inside your funding solutions that meet their individual needs. Being informed on all the options is initial step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444