Though often overlooked, the trucking industry is really important to the health of 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 huge concern. But for small to mid-size companies operating on a decent budget, it might halt an option. Expenses like payroll and gas calculate 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 is actually not a recipe for financial hardship.
Therefore, trucking companies often have flip to outside borrowing. The following are some strategies for 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 draws on on the creditworthiness of the trucking company’s customers.
At the time period of the sale, the client gets 80-90% of your cash back immediately from the invoices. 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 firms that cannot afford to wait for payment, and the cost is frequently 4-5% monthly with annual rate typically between 18-30%.
Bank Loans
Though hard to come by, bank loans are an cheapest associated with financing. The loan process involves an application and overview of the company’s creditworthiness and financial track record. Small companies especially tend to be denied for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s savings. This form of funding greatest for for trucking outfits along with a great credit file and don’t require the money immediately.
Cash-Advances
Cash advances take place when a small business receives a loan sum during a lender. The organization pays the lending company back with percentages of that monthly card receipts prior to loan (plus a predetermined rate) is repaid. Tend to be two legal limits to the rates, and also cannot be changed retroactively. The help cash advances is immediate cash- it is 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 much smaller amount your own time and have limited financing options. The cost is usually 20% or older.
Lease-Back
A trucking company may want to sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It ideal for trucking companies with valuable plant or equipment assets which have been underutilized, and the cost is monthly lease payments in addition to depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, make use of is almost them to discover funding solutions that meet their individual needs. Being informed on all your 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