Though often overlooked, the trucking industry is really important 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 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 problems. But for small to mid-size companies operating on a tight budget, it might halt an option. Expenses since payroll and gas sum up in the time between payment, and not paying your drivers is never a good business put into 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 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 centered on the creditworthiness of the trucking company’s customers.
At the duration of the sale, customer gets 80-90% of this cash back immediately from the invoices. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This options best for B2B companies that cannot manage to wait for payment, and also the cost is usually 4-5% monthly with a powerful annual pace typically between 18-30%.
Bank Loans
Though in order to come by, bank loans are usually the cheapest involving financing. The loan process involves an application and overview of the company’s creditworthiness and financial story. Small companies especially will usually be refused for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s financial institution. This form of funding ideal for for trucking outfits along with a great credit report . and have no need for the money immediately.
Cash-Advances
Cash advances take place when a company receives an advance sum during a lender. The organization pays financial institution back with percentages regarding their monthly card receipts up to the loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, and they will cannot be changed retroactively. The benefit to cash advances is immediate cash- occasion the fastest method for obtaining cash without in order to 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. Costly is usually 20% and up.
Lease-Back
A trucking company might want to sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
It ideal for trucking companies with valuable plant or equipment assets which have been underutilized, and the cost is monthly lease payments additionally, the depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, however it is nearly them to search out funding solutions that meet their individual needs. Being informed on all possibilities is the first step toward finding the right cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444