Though often overlooked, the trucking industry is really important 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 controversy. But for small to mid-size companies operating on a decent budget, it might stop an option. Expenses like payroll and gas provide 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 a recipe for financial hardship.
Therefore, trucking companies often have flip to outside borrowing. The following are some strategies for trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to carpet 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 time period of the sale, the client gets 80-90% for this 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 choice is best for B2B firms that cannot afford to wait for payment, and also the cost is usually 4-5% monthly with annual rate typically between 18-30%.
Bank Loans
Though in order to come by, bank loans are often the cheapest associated with financing. The loan process involves an application and review of the company’s creditworthiness and financial track record. Small companies especially tend to be denied for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s savings. This form of funding greatest for for trucking outfits having a great credit file and don’t require the money immediately.
Cash-Advances
Cash advances take place when a small business receives a loan sum during a lender. The organization pays the lending company back with percentages of that monthly card receipts before the loan (plus a predetermined rate) is repaid. Tend to be two legal limits to the rates, and also cannot be changed retroactively. The help cash advances is immediate cash- it is the fastest method for obtaining cash without likely to a loan shark.
This financing method ideal for trucking companies who need immediate cash for a much smaller amount your own time and have limited financing options. The cost is usually 20% and up.
Lease-Back
A trucking company may want to sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It is better for trucking companies with valuable plant or equipment assets which have been underutilized, and also the cost is monthly lease payments plus the depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, make use of is nearly them to discover funding solutions that meet their individual needs. Being informed on all options is initial step toward finding a suitable cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444