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 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 controversy. But for small to mid-size companies operating on a strict budget, it might not be 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 put into practice. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and is definitely a recipe for financial hardship.
Therefore, trucking companies often have to turn 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 implies 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 duration of the sale, customer gets 80-90% belonging to 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 options best for B2B businesses that cannot afford to wait for payment, as well as the cost is usually 4-5% monthly with an impressive annual fee typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are usually the cheapest associated with financing. Mortgage process involves an application and review of the company’s creditworthiness and financial reports. Small companies especially can be thrown to the wolves for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s bank account. This form of funding greatest for for trucking outfits along with a great credit report . and don’t need the money immediately.
Cash-Advances
Cash advances take place when business receives funding sum during a lender. They pays the lending company back with percentages regarding their monthly card receipts just before loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, and also cannot be changed retroactively. The profit to cash advances is immediate cash- occasion the fastest method for obtaining cash without gonna be a loan shark.
This financing method is best for trucking companies who require immediate cash for a much smaller amount of this time and have limited financing options. The cost is usually 20% or even more.
Lease-Back
A trucking company may wish to sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It ideal for for trucking companies with valuable plant or equipment assets which might be 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, make use of is nearly them inside your funding solutions that meet their individual needs. Being informed on all the choices is initial step toward finding the right cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444