Though often overlooked, the trucking industry is essential to the health of 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 huge concern. But for small to mid-size companies operating on a decent budget, it might stop an option. Expenses regarding 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 is actually not a recipe for financial hardship.
Therefore, trucking companies often have flip to outside backing. The following are some strategies to 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 is based on the creditworthiness of the trucking company’s customers.
At the use of the sale, customer gets 80-90% for this cash back immediately from the receipts. 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 firms that cannot afford to wait for payment, and also the cost is frequently 4-5% monthly with annual rate typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are most of the cheapest type of financing. Mortgage loan process involves an application and athleanx workout review the company’s creditworthiness and financial profile. Small companies especially will usually be turned down for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s savings. This form of funding greatest for for trucking outfits with a great credit file and don’t want the money immediately.
Cash-Advances
Cash advances take place when business receives funding sum from our lender. Business pays the lender back with percentages regarding their monthly card receipts until the loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, and also cannot be changed retroactively. The help cash advances is immediate cash- occasion the fastest method for obtaining cash without likely to a loan shark.
This financing method is better for trucking companies who need immediate cash for a much smaller amount your own time and have limited financing options. Zox pro training system is usually 20% or more.
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 which have been underutilized, and also the cost is monthly lease payments in addition to depreciation and tax burdens of equipment.
Choices, Choices
Every trucking company is unique, and it is well over them to locate funding solutions that meet their individual needs. Being informed on all possibilities is initial step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444