Though often overlooked, the trucking industry is critical to the health belonging to 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 good budget, it might stop being an option. Expenses like payroll and gas sum up 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 it is a recipe for financial hardship.
Therefore, trucking companies often have to show to outside financing. The following are some methods trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to the process by which businesses sell their accounts receivables to a factoring company. Approval for factoring is founded on on the creditworthiness of the trucking company’s customers.
At the time period of the sale, the client gets 80-90% of this cash back immediately from the debts. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This choices are best for B2B companies that cannot manage to wait for payment, and also the cost is usually 4-5% monthly with a healthy annual fee typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are most of the cheapest type of financing. The borrowed funds process involves an application and review of the company’s creditworthiness and financial reports. Small companies especially can be thrown to the wolves for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s savings. This form of funding ideal for for trucking outfits having a great credit history and have no need for the money immediately.
Cash-Advances
Cash advances take place when a small-business receives funding sum from our lender. Business pays loan provider back with percentages regarding their monthly card receipts just before loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and they will cannot be changed retroactively. The advantage of cash advances is immediate cash- is certainly the fastest method for obtaining cash without likely to a loan shark.
This financing method ideal for trucking companies who require immediate cash for a short amount of this 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 moola.
It is best for trucking companies with valuable plant or equipment assets usually are underutilized, as well as the cost is monthly lease payments not to mention the depreciation and tax burdens of equipment.
Choices, Choices
Every trucking company is unique, that’s why it is well over them to locate funding solutions that meet their individual needs. Being informed on all options is initial step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444