Though often overlooked, the trucking industry is really important to the health belonging to 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 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 not be an option. Expenses like payroll and gas provide in the time between payment, and not paying your drivers is never a good business rehearsal. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and is actually not a recipe for financial hardship.
Therefore, trucking companies often have to show to outside borrowing. The following are some options for 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 draws on on the creditworthiness of the trucking company’s customers.
At the amount of the sale, customer gets 80-90% belonging to the cash back immediately from the invoices. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This choices are best for B2B firms that cannot manage to wait for payment, as well as 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 form of financing. Mortgage process involves an application and review of the company’s creditworthiness and financial reports. Small companies especially tend to be refused for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s financial institution. This form of funding is better for trucking outfits using a great credit record and don’t need the money immediately.
Cash-Advances
Cash advances take place when a small-business receives funding sum from a lender. The company pays the lender back with percentages from their monthly card receipts prior to loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, and they cannot be changed retroactively. The advantage of cash advances is immediate cash- is certainly the fastest method for obtaining cash without gonna be a loan shark.
This financing method is best for trucking companies who need immediate cash for a much smaller amount your own time and have limited financing options. Costly is usually 20% or more.
Lease-Back
A trucking company may wish to sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It ideal for trucking companies with valuable plant or equipment assets which usually underutilized, as well as the cost is monthly lease payments not to mention the depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, that’s why it is close to them to find funding solutions that meet their individual needs. Being informed on all your options is initial step toward finding a worthwhile cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444