Though often overlooked, the trucking industry is truly essential to the health on 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 the 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 stop an option. Expenses since payroll and gas sum up in the time between payment, and not paying your drivers is never a good business 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 show to outside borrowing. The following are some methods trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to the process 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 period of the sale, customer gets 80-90% of your cash back immediately from the statements. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This options best for B2B firms that cannot afford to wait for payment, along with the cost usually 4-5% monthly with annual rate typically between 18-30%.
Bank Loans
Though hard to come by, bank loans are often the cheapest way of financing. The borrowed funds process involves an application and review of the company’s creditworthiness and financial history. Small companies especially possess a be refused for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s savings. This form of funding is best for trucking outfits with a great credit record and don’t want the money immediately.
Cash-Advances
Cash advances take place when a small business receives funding sum from your local neighborhood lender. The corporate pays loan provider back with percentages associated with their monthly card receipts up to the loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, and they cannot be changed retroactively. The benefit to cash advances is immediate cash- occasion 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 regarding amount of one’s time and have limited financing options. Cost of is usually 20% or older.
Lease-Back
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for resources.
It is better for trucking companies with valuable plant or equipment assets which have been underutilized, and also the cost is monthly lease payments in addition to depreciation and tax burdens of machines.
Choices, Choices
Every trucking company is unique, and in addition it is well over them to discover funding solutions that meet their individual needs. Being informed on all possibilities is the first step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444