Though often overlooked, the trucking industry is critical to the health within 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 problems. But for small to mid-size companies operating on a tight budget, it might stop an option. Expenses such as payroll and gas provide in the time between payment, and not paying your drivers is never a good business practice. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and this is a recipe for financial hardship.
Therefore, trucking companies often have flip to outside funding. The following are some choices trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to difficult . 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, customer gets 80-90% of the 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 choice is best for B2B firms that cannot afford to wait for payment, and the cost is often 4-5% monthly with an impressive annual fee typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are these cheapest form of financing. The borrowed funds process involves an application and overview of the company’s creditworthiness and financial story. Small companies especially possess a be refused for loans, although exceptions do be available.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s life’s savings. This form of funding ideal for for trucking outfits using a great credit ratings and don’t need the money immediately.
Cash-Advances
Cash advances take place when an organization receives a loan sum from our lender. The corporate pays the lending company back with percentages regarding their monthly card receipts until the loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, and also cannot be changed retroactively. The help cash advances is immediate cash- the time the fastest method for obtaining cash without gonna be a loan shark.
This financing method is the for trucking companies who require immediate cash for a much smaller amount associated with your and have limited financing options. Will not find is usually 20% and up.
Lease-Back
A trucking company may choose 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 that are underutilized, as well as the cost is monthly lease payments not to mention the depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, and it is nearly them to discover funding solutions that meet their individual needs. Being informed on all options is initial step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444