Though often overlooked, the trucking industry is vitally important 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 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 controversy. But for small to mid-size companies operating on a strong budget, it might not be an option. Expenses such as 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 is a recipe for financial hardship.
Therefore, trucking companies often have flip to outside a mortgage. The following are some strategies for 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 draws on on the creditworthiness of the trucking company’s customers.
At the duration of the sale, the client gets 80-90% of the 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 option is best for B2B companies that cannot manage to wait for payment, and the cost is usually 4-5% monthly with a powerful annual interest rate typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are often the cheapest involving financing. The loan process involves an application and athleanx workout review the company’s creditworthiness and financial reports. Small companies especially can be turned down for loans, although exceptions do live.
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 along with a great credit ratings and don’t want the money immediately.
Cash-Advances
Cash advances take place when a company receives an advance sum during a lender. Business pays the lending company back with percentages from their monthly card receipts prior to loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, which cannot be changed retroactively. The advantage of cash advances is immediate cash- occasion the fastest method for obtaining cash without in order to be a loan shark.
This financing method is better for trucking companies who need immediate cash for any amount of one’s time and have limited financing options. Cost of 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 trucking companies with valuable plant or equipment assets that are underutilized, along with the cost is monthly lease payments additionally, the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, that’s why it is close to them to locate funding solutions that meet their individual needs. Being informed on all the options is initial step toward finding a worthwhile cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444