Though often overlooked, the trucking industry is 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 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 problems. But for small to mid-size companies operating on a strong budget, it might stop an option. Expenses regarding payroll and gas add up 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 actually not a recipe for financial hardship.
Therefore, trucking companies often have flip to outside backing. The following are some methods trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to the process 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 time period of the sale, the client gets 80-90% belonging to the cash back immediately from the debts. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This options best for B2B firms that cannot manage to wait for payment, as well as the cost is 4-5% monthly with a healthy annual fee typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are often the cheapest way of financing. The money process involves an application and overview of the company’s creditworthiness and financial story. Small companies especially will usually be rejected for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s financial institution. This form of funding is the for trucking outfits with a great credit ratings and don’t require the money immediately.
Cash-Advances
Cash advances take place when a company receives a loan sum from your local neighborhood lender. The company pays the lending company back with percentages of that monthly card receipts prior to loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, and they cannot be changed retroactively. The profit to cash advances is immediate cash- is certainly the fastest method for obtaining cash without likely to a loan shark.
This financing method is better for trucking companies who require immediate cash for any amount your own time and have limited financing options. Cost of is usually 20% and up.
Lease-Back
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for resources.
It ideal for trucking companies with valuable plant or equipment assets which have been underutilized, and the cost is monthly lease payments not to mention the depreciation and tax burdens of machines.
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 options is customers step toward finding the right cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444