Though often overlooked, the trucking industry is really important to the health of 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 chore. But for small to mid-size companies operating on a strict budget, it might not be an option. Expenses such as payroll and gas calculate in the time between payment, and not paying your drivers is never a good business approach. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and this is a recipe for financial hardship.
Therefore, trucking companies often have flip to outside funding. The following are some choices 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 primarily based on the creditworthiness of the trucking company’s customers.
At the use of the sale, the client gets 80-90% for this cash back immediately from the receipts. 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 firms that cannot afford to wait for payment, as well as the cost is usually 4-5% monthly with an effective annual pace typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are often the cheapest involving financing. The borrowed funds process involves an application and overview of the company’s creditworthiness and financial history. Small companies especially can be thrown to the wolves for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s banking. This form of funding greatest for for trucking outfits having a great credit report . and don’t require the money immediately.
Cash-Advances
Cash advances take place when business receives funding sum from the lender. The company pays financial institution back with percentages associated with their monthly card receipts prior to loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, and they cannot be changed retroactively. The help cash advances is immediate cash- occasion the fastest method for obtaining cash without in order to a loan shark.
This financing method is best for trucking companies who require immediate cash for a much smaller amount of time and have limited financing options. Costly 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 moola.
It ideal for trucking companies with valuable plant or equipment assets which have been underutilized, as well as the cost is monthly lease payments additionally, the depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, that’s why it is close to them to locate funding solutions that meet their individual needs. Being informed on all the choices is initial step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444