Though often overlooked, the trucking industry is vitally important 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 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 chore. But for small to mid-size companies operating on a good budget, it might ‘t be an option. Expenses regarding payroll and gas add 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 to show to outside backing. The following are some choices trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to implies 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 time period of the sale, customer gets 80-90% for this cash back immediately from the receipts. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This choices best for B2B businesses that cannot afford to wait for payment, along with the cost usually 4-5% monthly with annual interest rate typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are these cheapest type of financing. Mortgage loan process involves an application and overview of the company’s creditworthiness and financial profile. Small companies especially can be denied for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s bank account. This form of funding is better for trucking outfits with a great credit ratings and don’t want the money immediately.
Cash-Advances
Cash advances take place when a small-business receives an advance sum from our lender. The corporate pays loan provider back with percentages associated with their monthly card receipts before the loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, and so they also cannot be changed retroactively. The help cash advances is immediate cash- is certainly the fastest method for obtaining cash without likely to a loan shark.
This financing method very best for trucking companies who need immediate cash for a short amount of this time and have limited financing options. Cost of 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 cash money.
It is best for trucking companies with valuable plant or equipment assets usually are underutilized, along with the cost is monthly lease payments additionally, the depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, however it is almost them to find funding solutions that meet their individual needs. Being informed on all options is begin step toward finding the right cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444