Though often overlooked, the trucking industry is 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 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 huge concern. But for small to mid-size companies operating on a strong budget, it might stop being an option. Expenses since payroll and gas calculate in the time between payment, and not paying your drivers is never a good business repeat. 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 turn to outside funding. The following are some choices 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 time of the sale, customer gets 80-90% for this cash back immediately from the debts. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This options best for B2B companies that cannot afford to wait for payment, and also the cost is usually 4-5% monthly with annual rate typically between 18-30%.
Bank Loans
Though hard to come by, bank loans are an cheapest involving financing. The borrowed funds process involves an application and analysis of the company’s creditworthiness and financial profile. Small companies especially possess a be denied for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s savings. This form of funding greatest for for trucking outfits by using a great credit report . and don’t want the money immediately.
Cash-Advances
Cash advances take place when a company receives an advance sum from your local neighborhood lender. They pays financial institution back with percentages of that monthly card receipts until the 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 help cash advances is immediate cash- the time the fastest method for obtaining cash without in order to a loan shark.
This financing method is better for trucking companies who need immediate cash for a short amount of time and have limited financing options. Zox pro training system is usually 20% if not more.
Lease-Back
A trucking company might want to sell property, plant, and/or equipment, and simultaneously leases it back for cash.
It is best for trucking companies with valuable plant or equipment assets that are underutilized, and also the cost is monthly lease payments plus the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, make use of is up to them inside your funding solutions that meet their individual needs. Being informed on all possibilities is one step toward finding a suitable cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444