Though often overlooked, the trucking industry is truly essential 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 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 tight budget, it might ‘t be an option. Expenses since payroll and gas come 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 to show to outside financing. 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 is founded on on the creditworthiness of the trucking company’s customers.
At the use of the sale, the client gets 80-90% of the cash back immediately from the receipts. 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 afford to wait for payment, and also the cost is 4-5% monthly with an impressive annual pace typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are these cheapest type of financing. The money process involves an application and review of the company’s creditworthiness and financial track record. Small companies especially can be rejected for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s savings. This form of funding ideal for for trucking outfits by using a great credit file and have no need for the money immediately.
Cash-Advances
Cash advances take place when an organization receives an advance sum during a lender. The company pays the lender back with percentages from their monthly card receipts before the loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, and they cannot be changed retroactively. The benefits of cash advances is immediate cash- it is the fastest method for obtaining cash without in order to a loan shark.
This financing method is best for trucking companies who require immediate cash for a much smaller amount of this time and have limited financing options. Costly is usually 20% or even more.
Lease-Back
A trucking company may want to sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It very best for trucking companies with valuable plant or equipment assets that are underutilized, and also the cost is monthly lease payments additionally, the depreciation and tax burdens of machines.
Choices, Choices
Every trucking company is unique, and in addition it is nearly them to find funding solutions that meet their individual needs. Being informed on all possibilities is customers step toward finding a suitable cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444