Though often overlooked, the trucking industry is vitally important to the health within 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 from 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 problem. But for small to mid-size companies operating on a good budget, it might halt an option. Expenses such as payroll and gas sum 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 is actually not a recipe for financial hardship.
Therefore, trucking companies often have to show to outside backing. 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 centered 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 invoices. 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 businesses that cannot manage to wait for payment, and also the cost is usually 4-5% monthly with annual rate typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are these cheapest type of financing. Mortgage loan process involves an application and athleanx workout review the company’s creditworthiness and financial history. Small companies especially possess a be thrown to the wolves for loans, although exceptions do be available.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s bank account. This form of funding ideal for for trucking outfits by using a great credit ratings and don’t want the money immediately.
Cash-Advances
Cash advances take place when a company receives funding sum from a lender. Business pays the lending company back with percentages of that monthly card receipts up to the loan (plus a predetermined rate) is repaid. Tend to be two legal limits to the rates, and so they also cannot be changed retroactively. The benefit to cash advances is immediate cash- is certainly the fastest method for obtaining cash without in order to 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. Will not find is usually 20% and up.
Lease-Back
A trucking company may wish to sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
It ideal for trucking companies with valuable plant or equipment assets that are underutilized, along with the cost is monthly lease payments plus the depreciation and tax burdens of machines.
Choices, Choices
Every trucking company is unique, however it is close to them to search out funding solutions that meet their individual needs. Being informed on all options is one step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444