Though often overlooked, the trucking industry is really important 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 problems. But for small to mid-size companies operating on a good budget, it might ‘t be an option. Expenses like 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 definitely a recipe for financial hardship.
Therefore, trucking companies often have flip to outside backing. The following are some strategies to trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to might 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, the client gets 80-90% of the cash back immediately from the debts. 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 afford to wait for payment, along with the cost usually 4-5% monthly with a powerful annual pace typically between 18-30%.
Bank Loans
Though hard to come by, bank loans are these cheapest associated with financing. The money process involves an application and analysis of the company’s creditworthiness and financial reports. Small companies especially can be rejected for loans, although exceptions do be available.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s life’s savings. This form of funding is the for trucking outfits by using a great credit report . and do not require the money immediately.
Cash-Advances
Cash advances take place when business receives funding sum during a lender. The company pays financial institution back with percentages of their monthly card receipts up to the loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, and so they also cannot be changed retroactively. The help cash advances is immediate cash- can be the fastest method for obtaining cash without likely to a loan shark.
This financing method ideal for trucking companies who need immediate cash for any amount your own time and have limited financing options. Cost of 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 better for trucking companies with valuable plant or equipment assets usually are underutilized, and also the cost is monthly lease payments not to mention the depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, however it is close to them to discover funding solutions that meet their individual needs. Being informed on all the choices is one step toward finding a suitable cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444