Though often overlooked, the trucking industry is vitally important to the health belonging to 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 from 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 controversy. But for small to mid-size companies operating on a strict budget, it might halt an option. Expenses since payroll and gas sum up 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 actually not a recipe for financial hardship.
Therefore, trucking companies often have flip to outside borrowing. The following are some options for trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to carpet by which businesses sell their accounts receivables to a factoring company. Approval for factoring is based on the creditworthiness of the trucking company’s customers.
At the duration of the sale, customer gets 80-90% of your cash back immediately from the receipts. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This choices best for B2B firms that cannot manage to wait for payment, as well as the cost usually 4-5% monthly with a healthy annual pace typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are usually the cheapest form of financing. The money process involves an application and review of the company’s creditworthiness and financial track record. Small companies especially possess a be denied for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s life’s savings. This form of funding is the for trucking outfits having a great credit history and don’t want the money immediately.
Cash-Advances
Cash advances take place when a small-business receives an advance sum during a lender. They pays the lender back with percentages associated with their monthly card receipts prior to loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, which cannot be changed retroactively. The benefits of cash advances is immediate cash- is certainly the fastest method for obtaining cash without gonna be a loan shark.
This financing method ideal for trucking companies who need immediate cash for any amount of one’s time and have limited financing options. Cost of is usually 20% or even more.
Lease-Back
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for moola.
It ideal for for trucking companies with valuable plant or equipment assets which have been underutilized, along with the cost is monthly lease payments plus the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, make use of is nearly them to search out funding solutions that meet their individual needs. Being informed on all possibilities is the first step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444