Though often overlooked, the trucking industry is essential 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 chore. But for small to mid-size companies operating on a good budget, it might stop an option. Expenses since payroll and gas calculate 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 it is a recipe for financial hardship.
Therefore, trucking companies often have to turn to outside funding. 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 draws on on the creditworthiness of the trucking company’s customers.
At the use of the sale, the client gets 80-90% of your cash back immediately from the statements. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This options best for B2B businesses that cannot afford to wait for payment, along with the cost is often 4-5% monthly with a powerful annual fee typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are these cheapest way of financing. Mortgage loan process involves an application and analysis of the company’s creditworthiness and financial profile. Small companies especially possess a be thrown to the wolves for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s bank account. This form of funding is the for trucking outfits with a great credit ratings and don’t require the money immediately.
Cash-Advances
Cash advances take place when a small business receives a loan sum from your local neighborhood lender. Business pays loan provider back with percentages of their monthly card receipts just before loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, which cannot be changed retroactively. The profit to cash advances is immediate cash- the time the fastest method for obtaining cash without in order to be a loan shark.
This financing method is the for trucking companies who require immediate cash for a much smaller amount your own time and have limited financing options. Costly is usually 20% or older.
Lease-Back
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It is better for trucking companies with valuable plant or equipment assets usually are underutilized, and the cost is monthly lease payments plus the depreciation and tax burdens of machines.
Choices, Choices
Every trucking company is unique, and in addition it is well over them to search out funding solutions that meet their individual needs. Being informed on all your 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