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 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 tight budget, it might ‘t be an option. Expenses regarding 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 is a recipe for financial hardship.
Therefore, trucking companies often have to show to outside a mortgage. The following are some methods 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 centered on the creditworthiness of the trucking company’s customers.
At the use of the sale, the client gets 80-90% of this cash back immediately from the invoices. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This choices best for B2B firms that cannot manage to wait for payment, and also the cost is often 4-5% monthly with an effective annual pace typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are these cheapest type of financing. Mortgage process involves an application and review of the company’s creditworthiness and financial profile. Small companies especially are more likely to be thrown to the wolves for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s savings. This form of funding is the for trucking outfits by using a great credit report . and don’t want the money immediately.
Cash-Advances
Cash advances take place when an organization receives funding sum during a lender. Business pays loan provider back with percentages from their monthly card receipts until the loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, which cannot be changed retroactively. The profit to cash advances is immediate cash- it is the fastest method for obtaining cash without in order to a loan shark.
This financing method is the for trucking companies who require immediate cash for the short amount of one’s time and have limited financing options. Costly is usually 20% or more.
Lease-Back
A trucking company may want to sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It ideal for for trucking companies with valuable plant or equipment assets which might be underutilized, as well as the cost is monthly lease payments as well as the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, however it is almost them to discover funding solutions that meet their individual needs. Being informed on all options is initial step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444