Though often overlooked, the trucking industry is vitally important to the health for 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 decent budget, it might not be an option. Expenses since payroll and gas sum up 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 to turn to outside backing. The following are some strategies for trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to carpet 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 duration of the sale, customer gets 80-90% of your cash back immediately from the receipts. 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 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 these cheapest involving financing. The borrowed funds process involves an application and athleanx workout review the company’s creditworthiness and financial history. Small companies especially tend to be rejected for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s savings. This form of funding is better for trucking outfits by using a great credit history and don’t need the money immediately.
Cash-Advances
Cash advances take place when an organization receives an advance sum from a lender. They pays financial institution back with percentages of that monthly card receipts up to the loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, and they will cannot be changed retroactively. The advantage of cash advances is immediate cash- occasion the fastest method for obtaining cash without likely to a loan shark.
This financing method is better for trucking companies who require immediate cash for a short amount of this time and have limited financing options. Cost of is usually 20% or more.
Lease-Back
A trucking company may choose to sell property, plant, and/or equipment, and simultaneously leases it back for resources.
It is best 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 gadget.
Choices, Choices
Every trucking company is unique, and in addition it is almost them to locate funding solutions that meet their individual needs. Being informed on all your options is the first step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
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