Though often overlooked, the trucking industry is really 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 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 huge concern. But for small to mid-size companies operating on a decent budget, it might not be an option. Expenses with regard to example payroll and gas provide 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 this is a recipe for financial hardship.
Therefore, trucking companies often have flip to outside financing. The following are some strategies to 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 amount of the sale, customer gets 80-90% of your cash back immediately from the statements. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This option is best for B2B companies that cannot afford to wait for payment, as well as the cost is 4-5% monthly with a powerful annual interest rate typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are usually the cheapest involving financing. The loan process involves an application and review of the company’s creditworthiness and financial reports. Small companies especially tend to be rejected for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s savings. This form of funding is best for trucking outfits with a great credit report . and don’t need the money immediately.
Cash-Advances
Cash advances take place when an organization receives funding sum from the lender. They pays loan provider back with percentages associated with their monthly card receipts prior to loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and they cannot be changed retroactively. The benefits of cash advances is immediate cash- can be the fastest method for obtaining cash without likely to a loan shark.
This financing method is the for trucking companies who need immediate cash for regarding amount your own time and have limited financing options. Costly is usually 20% or even more.
Lease-Back
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for resources.
It is best for trucking companies with valuable plant or equipment assets usually are underutilized, and the cost is monthly lease payments in addition to depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, and it is nearly them to locate funding solutions that meet their individual needs. Being informed on all the options is begin step toward finding a suitable cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444