Though often overlooked, the trucking industry is critical to the health belonging to 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 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 chore. But for small to mid-size companies operating on a strong budget, it might ‘t be an option. Expenses with regard to example payroll and gas provide 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 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 centered on the creditworthiness of the trucking company’s customers.
At the use of the sale, the client gets 80-90% for this cash back immediately from the invoices. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This choices best for B2B companies that cannot manage to wait for payment, and the cost is often 4-5% monthly with annual fee typically between 18-30%.
Bank Loans
Though hard to come by, bank loans are most of the cheapest way of financing. The loan process involves an application and overview of the company’s creditworthiness and financial reports. Small companies especially can be rejected for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s life’s savings. This form of funding is better for trucking outfits using a great credit ratings and have no need for the money immediately.
Cash-Advances
Cash advances take place when a small business receives funding sum from a lender. The corporate pays financial institution back with percentages regarding their monthly card receipts until the loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, and also cannot be changed retroactively. The benefits of cash advances is immediate cash- can be the fastest method for obtaining cash without likely to a loan shark.
This financing method very best for trucking companies who require immediate cash for a short amount of time and have limited financing options. Costly is usually 20% if not more.
Lease-Back
A trucking company may want to sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It is best for trucking companies with valuable plant or equipment assets that are underutilized, as well as the cost is monthly lease payments not to mention the depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, that’s why it is up to them to discover funding solutions that meet their individual needs. Being informed on all your options 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