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 problems. But for small to mid-size companies operating on a decent budget, it might not be an option. Expenses regarding payroll and gas calculate 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 actually not a recipe for financial hardship.
Therefore, trucking companies often have flip to outside a mortgage. 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 is founded on on the creditworthiness of the trucking company’s customers.
At the time of the sale, the client gets 80-90% of your cash back immediately from the statements. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This choices are best for B2B businesses that cannot afford to wait for payment, along with the cost is usually 4-5% monthly with a healthy annual rate typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are these cheapest involving financing. Mortgage process involves an application and breakdown of the company’s creditworthiness and financial history. Small companies especially possess a be denied for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s financial institution. This form of funding is best for trucking outfits with a great credit record and don’t want the money immediately.
Cash-Advances
Cash advances take place when a small-business receives a loan sum during a lender. The organization pays financial institution back with percentages associated with their monthly card receipts just before loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, which cannot be changed retroactively. The advantage of cash advances is immediate cash- is certainly the fastest method for obtaining cash without in order to be a loan shark.
This financing method is best for trucking companies who require immediate cash for the short amount of one’s time and have limited financing options. Cost of is usually 20% or older.
Lease-Back
A trucking company may choose to sell property, plant, and/or equipment, and simultaneously leases it back for cash.
It ideal for trucking companies with valuable plant or equipment assets which have been underutilized, and the cost is monthly lease payments plus the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, and it is nearly them to locate funding solutions that meet their individual needs. Being informed on all options is one step toward finding a suitable cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444