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 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 good budget, it might ‘t be an option. Expenses like 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 strategies to trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to difficult . by which businesses sell their accounts receivables to a factoring company. Approval for factoring primarily based on the creditworthiness of the trucking company’s customers.
At the amount of the sale, the client gets 80-90% of the 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 choice is best for B2B firms that cannot manage to wait for payment, and the cost is 4-5% monthly with annual pace typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are usually the cheapest associated with financing. The loan process involves an application and analysis of the company’s creditworthiness and financial story. Small companies especially tend to be rejected for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s financial institution. This form of funding is better for trucking outfits having a great credit history and don’t want the money immediately.
Cash-Advances
Cash advances take place when a company receives funding sum during a lender. The corporate pays the lending company back with percentages from their monthly card receipts just before loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, and they will cannot be changed retroactively. The help cash advances is immediate cash- is certainly the fastest method for obtaining cash without in order to be a loan shark.
This financing method is better for trucking companies who require immediate cash for regarding amount of time and have limited financing options. Will not find is usually 20% and up.
Lease-Back
A trucking company may want to sell property, plant, and/or equipment, and simultaneously leases it back for cash.
It is better for trucking companies with valuable plant or equipment assets usually are underutilized, along with the cost is monthly lease payments as well as the depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, make use of is almost them to find funding solutions that meet their individual needs. Being informed on all your options 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