Though often overlooked, the trucking industry is essential 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 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 problems. But for small to mid-size companies operating on a good budget, it might ‘t be an option. Expenses with regard to example payroll and gas sum up in the time between payment, and not paying your drivers is never a good business put into practice. 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 funding. The following are some options for 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 founded on on the creditworthiness of the trucking company’s customers.
At the amount of the sale, the client gets 80-90% of your 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 companies that cannot afford to wait for payment, and the cost usually 4-5% monthly with a healthy annual pace typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are an cheapest form of financing. The money process involves an application and overview of the company’s creditworthiness and financial reports. Small companies especially possess a be turned down for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s life’s savings. This form of funding ideal for for trucking outfits along with a great credit report . and don’t need the money immediately.
Cash-Advances
Cash advances take place when a small-business receives funding sum from the lender. The company pays the lender back with percentages regarding their monthly card receipts until the loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, which cannot be changed retroactively. The profit to cash advances is immediate cash- occasion the fastest method for obtaining cash without going to a loan shark.
This financing method is best for trucking companies who require immediate cash for a short amount of time and have limited financing options. Zox pro training system is usually 20% or older.
Lease-Back
A trucking company may choose to sell property, plant, and/or equipment, and simultaneously leases it back for resources.
It ideal for trucking companies with valuable plant or equipment assets which usually underutilized, along with the cost is monthly lease payments in addition to depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, however it is well over them inside your funding solutions that meet their individual needs. Being informed on all your options is the first step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444