Though often overlooked, the trucking industry is truly essential to the health on 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 the 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 good budget, it might ‘t be an option. Expenses like payroll and gas provide in the time between payment, and not paying your drivers is never a good business practice. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and is actually not a recipe for financial hardship.
Therefore, trucking companies often have to show to outside funding. The following are some methods 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 is founded on on the creditworthiness of the trucking company’s customers.
At the use of the sale, customer gets 80-90% of the cash back immediately from the receipts. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This choices are best for B2B firms that cannot manage to wait for payment, as well as the cost is usually 4-5% monthly with annual fee typically between 18-30%.
Bank Loans
Though hard to come by, bank loans are usually the cheapest associated with financing. The loan process involves an application and athleanx workout review the company’s creditworthiness and financial reports. Small companies especially tend to be rejected for loans, although exceptions do be available.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s financial institution. This form of funding ideal for for trucking outfits using a great credit ratings and don’t want the money immediately.
Cash-Advances
Cash advances take place when business receives a loan sum from the lender. The corporate pays loan provider back with percentages of their monthly card receipts before the loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, and they will cannot be changed retroactively. The benefit to cash advances is immediate cash- it is the fastest method for obtaining cash without gonna be a loan shark.
This financing method very best for trucking companies who need immediate cash for the short amount of time and have limited financing options. Costly is usually 20% if not more.
Lease-Back
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for resources.
It is best for trucking companies with valuable plant or equipment assets which might be underutilized, and also the cost is monthly lease payments as well as the depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, however it is close to them inside your funding solutions that meet their individual needs. Being informed on all options is begin step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444