Though often overlooked, the trucking industry is truly essential to the health within 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 strict budget, it might stop an option. Expenses with regard to example payroll and gas sum up in the time between payment, and not paying your drivers is never a good business rehearsal. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and is definitely a recipe for financial hardship.
Therefore, trucking companies often have flip to outside borrowing. The following are some strategies to 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 draws on on the creditworthiness of the trucking company’s customers.
At the duration of the sale, customer gets 80-90% belonging to the cash back immediately from the statements. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This option is best for B2B businesses that cannot afford to wait for payment, and also the cost is often 4-5% monthly with an impressive annual interest rate typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are usually the cheapest type of financing. The loan process involves an application and overview of the company’s creditworthiness and financial profile. Small companies especially possess a be rejected for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s life’s savings. This form of funding is better for trucking outfits having a great credit record and do not require the money immediately.
Cash-Advances
Cash advances take place when an organization receives an advance sum during a lender. Business pays loan provider back with percentages of their monthly card receipts prior to 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- it is the fastest method for obtaining cash without going to a loan shark.
This financing method is better for trucking companies who require immediate cash for regarding amount associated with your and have limited financing options. The cost 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 is best for trucking companies with valuable plant or equipment assets which might be underutilized, and also the cost is monthly lease payments additionally, the depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, and in addition it is nearly them to discover funding solutions that meet their individual needs. Being informed on all the options is the first step toward finding a suitable cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444