Though often overlooked, the trucking industry is essential 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 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 huge concern. But for small to mid-size companies operating on a strong budget, it might halt an option. Expenses such as payroll and gas provide 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 it 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 carpet 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% of your cash back immediately from the invoices. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This choice is best for B2B businesses that cannot manage to wait for payment, as well as the cost usually 4-5% monthly with a healthy annual pace typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are usually the cheapest way of financing. The money process involves an application and athleanx workout review the company’s creditworthiness and financial profile. Small companies especially tend to be denied for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s bank account. This form of funding is the for trucking outfits using a great credit file and don’t require the money immediately.
Cash-Advances
Cash advances take place when an organization receives funding sum from our lender. The company pays loan provider back with percentages of that monthly card receipts until the 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- the time the fastest method for obtaining cash without in order to a loan shark.
This financing method very best for trucking companies who need immediate cash for a much smaller amount of one’s time and have limited financing options. The cost 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 cash money.
It ideal for for trucking companies with valuable plant or equipment assets which might be underutilized, and the cost is monthly lease payments not to mention the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, that’s why it is well over them to search out funding solutions that meet their individual needs. Being informed on all the choices is initial step toward finding the right cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444