Though often overlooked, the trucking industry is essential to the health of 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 a problem. But for small to mid-size companies operating on a decent budget, it might halt an option. Expenses with regard to example payroll and gas add up in the time between payment, and not paying your drivers is never a good business 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 show to outside backing. The following are some strategies for 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 centered on the creditworthiness of the trucking company’s customers.
At the amount of the sale, the client gets 80-90% of this 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 options best for B2B firms that cannot manage to wait for payment, and also the cost is often 4-5% monthly with annual pace typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are usually the cheapest involving financing. Mortgage process involves an application and breakdown of the company’s creditworthiness and financial profile. Small companies especially are more likely to 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 bank account. This form of funding greatest for for trucking outfits along with a great credit history and have no need for the money immediately.
Cash-Advances
Cash advances take place when a small-business receives an advance sum from your local neighborhood lender. The organization pays the lending company back with percentages associated with their monthly card receipts up to the loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, and so they also cannot be changed retroactively. The help cash advances is immediate cash- the time the fastest method for obtaining cash without gonna be a loan shark.
This financing method very best for trucking companies who require immediate cash for a much smaller amount of time and have limited financing options. Cost of is usually 20% or even more.
Lease-Back
A trucking company may want 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 have been underutilized, and also the cost is monthly lease payments additionally, the depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, and in addition it is well over them to search out funding solutions that meet their individual needs. Being informed on all possibilities is customers step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444