Though often overlooked, the trucking industry is truly 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 controversy. But for small to mid-size companies operating on a strict budget, it might halt 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 is definitely a recipe for financial hardship.
Therefore, trucking companies often have to show to outside financing. The following are some options for 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 centered on the creditworthiness of the trucking company’s customers.
At the use of the sale, the client gets 80-90% of your cash back immediately from the receipts. 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 businesses that cannot afford to wait for payment, along with the cost is 4-5% monthly with an impressive annual fee typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are these cheapest way of financing. Mortgage loan process involves an application and athleanx workout review the company’s creditworthiness and financial story. Small companies especially tend to be rejected for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s life’s savings. This form of funding is better for trucking outfits using a great credit history and do not require the money immediately.
Cash-Advances
Cash advances take place when business receives funding sum from a lender. They pays financial institution back with percentages of their monthly card receipts just before loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, and they will cannot be changed retroactively. The help cash advances is immediate cash- it is the fastest method for obtaining cash without going to a loan shark.
This financing method is the for trucking companies who need immediate cash for a short amount of one’s time and have limited financing options. Costly is usually 20% and up.
Lease-Back
A trucking company may wish to sell property, plant, and/or equipment, and simultaneously leases it back for moola.
It ideal for trucking companies with valuable plant or equipment assets which might be underutilized, along with the cost is monthly lease payments as well as the depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, that’s why it is nearly them to search out 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