Though often overlooked, the trucking industry is vitally important to the health for 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 controversy. But for small to mid-size companies operating on a decent budget, it might stop an option. Expenses since payroll and gas calculate 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 it is a recipe for financial hardship.
Therefore, trucking companies often have to turn to outside borrowing. The following are some strategies to 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 based on the creditworthiness of the trucking company’s customers.
At the time of the sale, customer gets 80-90% belonging to the cash back immediately from the debts. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This choices are best for B2B firms that cannot manage to wait for payment, along with the cost is frequently 4-5% monthly with a powerful annual fee typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are often the cheapest form of financing. The money process involves an application and overview of the company’s creditworthiness and financial history. Small companies especially tend to be refused for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s bank account. This form of funding is the for trucking outfits with a great credit record and don’t require the money immediately.
Cash-Advances
Cash advances take place when a small business receives an advance sum during a lender. They pays the lender back with percentages from their monthly card receipts before 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 benefit to cash advances is immediate cash- it is the fastest method for obtaining cash without gonna be a loan shark.
This financing method ideal for trucking companies who require immediate cash for any amount your own time and have limited financing options. Zox pro training system is usually 20% or even more.
Lease-Back
A trucking company may wish to sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
It ideal for for trucking companies with valuable plant or equipment assets which might be underutilized, and the cost is monthly lease payments in addition to depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, make use of is almost them to search out 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