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 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 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 calculate 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 it is a recipe for financial hardship.
Therefore, trucking companies often have to turn to outside financing. The following are some options for trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to difficult . 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 amount of the sale, the client gets 80-90% for this cash back immediately from the statements. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This option is best for B2B companies that cannot manage to wait for payment, along with the cost is 4-5% monthly with annual fee typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are these cheapest way of financing. The loan process involves an application and review of the company’s creditworthiness and financial track record. Small companies especially possess a be turned down for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s financial institution. This form of funding is best for trucking outfits having a great credit report . and don’t need the money immediately.
Cash-Advances
Cash advances take place when a small-business receives an advance sum from the lender. The organization pays financial institution back with percentages of their monthly card receipts until 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 advantage of cash advances is immediate cash- is certainly the fastest method for obtaining cash without going to a loan shark.
This financing method ideal for trucking companies who require immediate cash for a much smaller amount your own time and have limited financing options. Cost of is usually 20% or older.
Lease-Back
A trucking company may want to sell property, plant, and/or equipment, and simultaneously leases it back for moola.
It very best for trucking companies with valuable plant or equipment assets that are underutilized, and also the cost is monthly lease payments in addition to depreciation and tax burdens of machines.
Choices, Choices
Every trucking company is unique, and it is almost them to discover funding solutions that meet their individual needs. Being informed on all possibilities is initial step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444