Though often overlooked, the trucking industry is really important to the health on 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 strict budget, it might halt an option. Expenses like payroll and gas provide in the time between payment, and not paying your drivers is never a good business put into practice. 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 turn to outside financing. The following are some strategies for 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 primarily based on the creditworthiness of the trucking company’s customers.
At the time of the sale, customer gets 80-90% of the cash back immediately from the debts. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This option is best for B2B businesses that cannot afford to wait for payment, as well as the cost usually 4-5% monthly with a powerful annual interest rate typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are an cheapest form of financing. Mortgage loan process involves an application and athleanx workout review the company’s creditworthiness and financial track record. Small companies especially can be turned down for loans, although exceptions do be available.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s financial institution. This form of funding greatest for for trucking outfits by using a great credit report . and don’t want the money immediately.
Cash-Advances
Cash advances take place when business receives an advance sum during a lender. They pays financial institution back with percentages of their monthly card receipts just before loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, which cannot be changed retroactively. The advantage of cash advances is immediate cash- is certainly the fastest method for obtaining cash without in order to a loan shark.
This financing method very best for trucking companies who need immediate cash for a short amount associated with your and have limited financing options. Will not find is usually 20% or even more.
Lease-Back
A trucking company may choose to 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 usually underutilized, and also the cost is monthly lease payments additionally, the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, and it is close to them to search out funding solutions that meet their individual needs. Being informed on all options is begin step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444