Though often overlooked, the trucking industry is essential to the health on 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 the 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 stop an option. Expenses like payroll and gas come in the time between payment, and not paying your drivers is never a good business repeat. 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 to show to outside funding. The following are some methods trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to might 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 duration of the sale, customer gets 80-90% of 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 options best for B2B firms that cannot afford to wait for payment, and also the cost is frequently 4-5% monthly with an effective annual price typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are often the cheapest type of financing. Mortgage process involves an application and review of the company’s creditworthiness and financial track record. Small companies especially will usually be thrown to the wolves for loans, although exceptions do be available.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s savings. This form of funding ideal for for trucking outfits along with a great credit report . and do not require the money immediately.
Cash-Advances
Cash advances take place when business receives a loan sum from our lender. The company pays the lending company back with percentages of that monthly card receipts before the loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and they cannot be changed retroactively. The help cash advances is immediate cash- the time the fastest method for obtaining cash without in order to be a loan shark.
This financing method is the for trucking companies who need immediate cash for a much smaller amount of this time and have limited financing options. The cost is usually 20% or more.
Lease-Back
A trucking company might 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 which usually underutilized, along with the cost is monthly lease payments in addition to depreciation and tax burdens of machines.
Choices, Choices
Every trucking company is unique, however it is well over them to locate funding solutions that meet their individual needs. Being informed on all options is one step toward finding a suitable cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444