Though often overlooked, the trucking industry is vitally important 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 in the 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 regarding payroll and gas provide 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 this is a recipe for financial hardship.
Therefore, trucking companies often have to turn to outside backing. The following are some strategies to 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 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 options best for B2B firms that cannot afford to wait for payment, along with the cost is usually 4-5% monthly with a powerful annual pace typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are most of the cheapest form of financing. The loan process involves an application and review of the company’s creditworthiness and financial history. Small companies especially tend to be thrown to the wolves for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s banking. This form of funding greatest for for trucking outfits using a great credit ratings and don’t need the money immediately.
Cash-Advances
Cash advances take place when a company receives funding sum during a lender. The organization pays loan provider back with percentages from their monthly card receipts until the loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, and so they also cannot be changed retroactively. The benefit to cash advances is immediate cash- it is the fastest method for obtaining cash without in order to be a loan shark.
This financing method is the for trucking companies who need immediate cash for a short amount your own time and have limited financing options. Cost of is usually 20% or more.
Lease-Back
A trucking company might want 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 usually underutilized, along with the cost is monthly lease payments not to mention the depreciation and tax burdens of equipment.
Choices, Choices
Every trucking company is unique, however it is up to them to find funding solutions that meet their individual needs. Being informed on all possibilities 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