Though often overlooked, the trucking industry is really 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 problems. But for small to mid-size companies operating on a decent budget, it might halt an option. Expenses with regard to example payroll and gas calculate in the time between payment, and not paying your drivers is never a good business 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 financing. The following are some choices 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 centered on the creditworthiness of the trucking company’s customers.
At the amount of the sale, customer gets 80-90% for this cash back immediately from the bills. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This option is best for B2B companies that cannot afford to wait for payment, as well as the cost is 4-5% monthly with an impressive annual rate typically between 18-30%.
Bank Loans
Though hard to come by, bank loans are often the cheapest involving financing. The loan process involves an application and review of the company’s creditworthiness and financial story. Small companies especially are more likely to be turned down for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s financial institution. This form of funding ideal for for trucking outfits along with a great credit record and don’t want the money immediately.
Cash-Advances
Cash advances take place when business receives an advance sum from the lender. The company pays loan provider back with percentages of their monthly card receipts up to the loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and also cannot be changed retroactively. The help cash advances is immediate cash- the time the fastest method for obtaining cash without in order to be a loan shark.
This financing method ideal for trucking companies who require immediate cash for any amount of this time and have limited financing options. The cost is usually 20% or older.
Lease-Back
A trucking company may want to sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
It ideal for trucking companies with valuable plant or equipment assets that are underutilized, and the cost is monthly lease payments as well as the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, however it is well over them to search out funding solutions that meet their individual needs. Being informed on all possibilities is initial step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444