Though often overlooked, the trucking industry is essential 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 from 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 problem. But for small to mid-size companies operating on a decent budget, it might halt an option. Expenses such as payroll and gas provide in the time between payment, and not paying your drivers is never a good business approach. 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 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 use of the sale, customer gets 80-90% of your cash back immediately from the statements. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This choices are best for B2B companies that cannot manage to wait for payment, and the cost is frequently 4-5% monthly with a powerful annual rate typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are usually the cheapest way of financing. Mortgage loan process involves an application and athleanx workout review the company’s creditworthiness and financial reports. Small companies especially will usually be turned down for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s financial institution. This form of funding greatest for for trucking outfits by using a great credit history 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 lender back with percentages of that monthly card receipts just before loan (plus a predetermined rate) is repaid. Tend to be two legal limits to the rates, and so they also cannot be changed retroactively. The advantage of cash advances is immediate cash- occasion the fastest method for obtaining cash without going to a loan shark.
This financing method is better for trucking companies who need immediate cash for a much smaller amount associated with your and have limited financing options. Costly is usually 20% or more.
Lease-Back
A trucking company may wish to sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
It ideal for for trucking companies with valuable plant or equipment assets which usually underutilized, along with the cost is monthly lease payments not to mention the depreciation and tax burdens of machines.
Choices, Choices
Every trucking company is unique, and in addition it is nearly them to search out funding solutions that meet their individual needs. Being informed on all the choices is customers step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444