Though often overlooked, the trucking industry is truly essential 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 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 stop an option. Expenses since 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 a recipe for financial hardship.
Therefore, trucking companies often have to show to outside funding. The following are some strategies to 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 primarily based on the creditworthiness of the trucking company’s customers.
At the use of the sale, the client gets 80-90% belonging to the cash back immediately from the bills. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This choice is best for B2B companies that cannot afford to wait for payment, and also the cost is 4-5% monthly with an effective annual pace typically between 18-30%.
Bank Loans
Though hard to come by, bank loans are usually the cheapest form of financing. Mortgage loan process involves an application and athleanx workout review the company’s creditworthiness and financial story. Small companies especially possess a be rejected for loans, although exceptions do be available.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s bank account. This form of funding is better for trucking outfits using a great credit history and have no need for the money immediately.
Cash-Advances
Cash advances take place when a small business receives a loan sum during a lender. The organization pays the lender back with percentages of their monthly card receipts before the loan (plus a predetermined rate) is repaid. Tend to be two legal limits to the rates, which cannot be changed retroactively. The benefit to cash advances is immediate cash- is certainly the fastest method for obtaining cash without in order to a loan shark.
This financing method is better for trucking companies who need immediate cash for the short amount your own time and have limited financing options. Will not find is usually 20% if not more.
Lease-Back
A trucking company may want to sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It is better for trucking companies with valuable plant or equipment assets which might be underutilized, as well as the cost is monthly lease payments plus the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, however it is well over them to search out funding solutions that meet their individual needs. Being informed on all your options is initial step toward finding a suitable cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444