Though often overlooked, the trucking industry is truly essential 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 decent budget, it might halt an option. Expenses with regard to example payroll and gas come 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 it is a recipe for financial hardship.
Therefore, trucking companies often have flip to outside backing. 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 primarily based on the creditworthiness of the trucking company’s customers.
At the time of the sale, customer gets 80-90% belonging to the 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 manage to wait for payment, along with the cost is 4-5% monthly with a powerful annual fee typically between 18-30%.
Bank Loans
Though in order to come by, bank loans are most of the cheapest associated with financing. Mortgage loan process involves an application and overview of the company’s creditworthiness and financial history. Small companies especially possess a be thrown to the wolves for loans, although exceptions do be available.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s savings. This form of funding is the for trucking outfits using a great credit ratings and don’t need the money immediately.
Cash-Advances
Cash advances take place when a company receives an advance sum from our lender. The organization pays financial institution back with percentages of their monthly card receipts up to the loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, and they will cannot be changed retroactively. The advantage of cash advances is immediate cash- can be the fastest method for obtaining cash without in order to a loan shark.
This financing method is better for trucking companies who need immediate cash for any amount associated with your and have limited financing options. Cost of is usually 20% and up.
Lease-Back
A trucking company may choose 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 usually underutilized, as well as the cost is monthly lease payments not to mention the depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, that’s why it is well over them to find funding solutions that meet their individual needs. Being informed on all the options is the first step toward finding a worthwhile cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444