Though often overlooked, the trucking industry is essential to the health belonging to 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 chore. But for small to mid-size companies operating on a decent budget, it might stop being an option. Expenses like payroll and gas add up in the time between payment, and not paying your drivers is never a good business repeat. 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 flip to outside financing. The following are some strategies for trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to implies 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% belonging to 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 choice is best for B2B businesses that cannot afford to wait for payment, as well as the cost usually 4-5% monthly with a powerful annual rate typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are an cheapest way of financing. The loan process involves an application and breakdown of the company’s creditworthiness and financial track record. Small companies especially will usually be turned down for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s life’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 an advance sum during a lender. The corporate pays the lending company back with percentages regarding their monthly card receipts prior to loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, which 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 very best for trucking companies who require immediate cash for a short amount associated with your and have limited financing options. The cost is usually 20% if not more.
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 that are underutilized, and the cost is monthly lease payments not to mention the depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, that’s why it is well over them to locate funding solutions that meet their individual needs. Being informed on all your options is customers step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444