Though often overlooked, the trucking industry is critical 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 within 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 huge concern. But for small to mid-size companies operating on a decent budget, it might stop an option. Expenses with regard to example 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 it is a recipe for financial hardship.
Therefore, trucking companies often have flip to outside a mortgage. The following are some methods trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to difficult . 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 time of the sale, customer gets 80-90% belonging to the 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 options best for B2B companies that cannot manage to wait for payment, along with the cost is frequently 4-5% monthly with a powerful annual fee typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are often the cheapest way of financing. Mortgage loan process involves an application and athleanx workout review the company’s creditworthiness and financial track record. Small companies especially can be refused for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s life’s savings. This form of funding is better for trucking outfits by using a great credit report . and have no need for the money immediately.
Cash-Advances
Cash advances take place when an organization receives an advance sum from our lender. The corporate pays financial institution back with percentages from their monthly card receipts before the loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, and also cannot be changed retroactively. The benefit to cash advances is immediate cash- it is the fastest method for obtaining cash without likely to a loan shark.
This financing method very best for trucking companies who need immediate cash for a much smaller amount of time and have limited financing options. Will not find is usually 20% and up.
Lease-Back
A trucking company might want to sell property, plant, and/or equipment, and simultaneously leases it back for moola.
It is better for trucking companies with valuable plant or equipment assets which have been underutilized, along with the cost is monthly lease payments as well as the depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, and it is well over them to discover funding solutions that meet their individual needs. Being informed on all the options is one step toward finding a suitable cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444