Though often overlooked, the trucking industry is vitally important to the health of 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 within 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 huge concern. But for small to mid-size companies operating on a strong budget, it might not be an option. Expenses such as payroll and gas provide in the time between payment, and not paying your drivers is never a good business rehearsal. 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 to show to outside backing. The following are some strategies for 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 draws on on the creditworthiness of the trucking company’s customers.
At the use 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 options best for B2B firms that cannot manage to wait for payment, along with the cost is often 4-5% monthly with an effective annual pace typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are usually the cheapest type of financing. The borrowed funds process involves an application and athleanx workout review the company’s creditworthiness and financial history. Small companies especially are more likely to be rejected for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s financial institution. This form of funding is best for trucking outfits using a great credit record and don’t need the money immediately.
Cash-Advances
Cash advances take place when a small business receives funding sum from the lender. Business pays financial institution back with percentages of that monthly card receipts up to the loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, which cannot be changed retroactively. The help cash advances is immediate cash- the time the fastest method for obtaining cash without gonna be a loan shark.
This financing method ideal for trucking companies who need immediate cash for regarding amount your own time and have limited financing options. Will not find is usually 20% and up.
Lease-Back
A trucking company may choose to sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
It very best for trucking companies with valuable plant or equipment assets which might be underutilized, along with the cost is monthly lease payments in addition to depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, that’s why it is close to them inside your funding solutions that meet their individual needs. Being informed on all the choices is begin step toward finding the right cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444