Though often overlooked, the trucking industry is vitally important to the health for 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 strong budget, it might halt an option. Expenses regarding payroll and gas sum 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 actually not a recipe for financial hardship.
Therefore, trucking companies often have to show to outside financing. The following are some options 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 is founded on on the creditworthiness of the trucking company’s customers.
At the amount 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 choice is best for B2B companies that cannot afford to wait for payment, and also the cost is 4-5% monthly with a powerful annual rate typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are these cheapest associated with financing. Mortgage process involves an application and athleanx workout review the company’s creditworthiness and financial profile. Small companies especially possess a be denied for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s financial institution. This form of funding is better for trucking outfits using a great credit record and have no need for the money immediately.
Cash-Advances
Cash advances take place when a small-business receives an advance sum from our lender. They pays the lender back with percentages of that monthly card receipts before the loan (plus a predetermined rate) is repaid. There are legal limits to the rates, which cannot be changed retroactively. The profit to cash advances is immediate cash- the time the fastest method for obtaining cash without going to a loan shark.
This financing method very best for trucking companies who require immediate cash for any amount of one’s time and have limited financing options. The cost is usually 20% or older.
Lease-Back
A trucking company might want to sell property, plant, and/or equipment, and simultaneously leases it back for cash.
It is better for trucking companies with valuable plant or equipment assets that are underutilized, along with the cost is monthly lease payments not to mention the depreciation and tax burdens of equipment.
Choices, Choices
Every trucking company is unique, make use of is well over them to search out funding solutions that meet their individual needs. Being informed on all the options is one step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444