Though often overlooked, the trucking industry is critical 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 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 controversy. But for small to mid-size companies operating on a good budget, it might halt an option. Expenses since payroll and gas come 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 is definitely a recipe for financial hardship.
Therefore, trucking companies often have to show to outside funding. The following are some options for 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 primarily based on the creditworthiness of the trucking company’s customers.
At the amount of the sale, customer gets 80-90% of the 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 options best for B2B firms that cannot manage to wait for payment, as well as the cost is usually 4-5% monthly with a powerful annual interest rate typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are most of the cheapest involving financing. Mortgage loan process involves an application and athleanx workout review the company’s creditworthiness and financial track record. Small companies especially possess a be denied for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s banking. This form of funding is better for trucking outfits having a great credit record and do not require the money immediately.
Cash-Advances
Cash advances take place when business receives a loan sum from a lender. The company pays loan provider back with percentages from their monthly card receipts prior to loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, and also cannot be changed retroactively. The profit to cash advances is immediate cash- the time the fastest method for obtaining cash without likely to a loan shark.
This financing method ideal for trucking companies who need immediate cash for any amount your own time and have limited financing options. The cost is usually 20% or older.
Lease-Back
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for resources.
It very best for trucking companies with valuable plant or equipment assets which might be underutilized, as well as the cost is monthly lease payments not to mention the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, that’s why it is almost them to discover funding solutions that meet their individual needs. Being informed on all your options is customers step toward finding a worthwhile cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444