Though often overlooked, the trucking industry is truly essential 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 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 strict budget, it might stop an option. Expenses with regard to example payroll and gas provide in the time between payment, and not paying your drivers is never a good business approach. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and is definitely a recipe for financial hardship.
Therefore, trucking companies often have to turn to outside funding. The following are some strategies to trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to implies 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 duration of the sale, the client gets 80-90% of the cash back immediately from the bills. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This choices are best for B2B companies that cannot manage to wait for payment, and the cost is frequently 4-5% monthly with a powerful annual fee typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are an cheapest type of financing. Mortgage loan process involves an application and overview of the company’s creditworthiness and financial track record. Small companies especially are more likely to be refused for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s financial institution. This form of funding ideal for for trucking outfits by using a great credit history and have no need for the money immediately.
Cash-Advances
Cash advances take place when an organization receives funding sum from a lender. They pays the lending company back with percentages regarding their monthly card receipts until the loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and they will cannot be changed retroactively. The help cash advances is immediate cash- can be the fastest method for obtaining cash without in order to be a loan shark.
This financing method is the for trucking companies who require immediate cash for regarding amount associated with your 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 cash.
It is best for trucking companies with valuable plant or equipment assets which have been underutilized, and also the cost is monthly lease payments not to mention the depreciation and tax burdens of equipment.
Choices, Choices
Every trucking company is unique, however it is up to them to search out funding solutions that meet their individual needs. Being informed on all the options is begin step toward finding a worthwhile cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444