Though often overlooked, the trucking industry is vitally important 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 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 problems. But for small to mid-size companies operating on a tight budget, it might not be an option. Expenses since payroll and gas calculate 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 a recipe for financial hardship.
Therefore, trucking companies often have to show to outside financing. The following are some options for 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 draws on on the creditworthiness of the trucking company’s customers.
At the use of the sale, customer gets 80-90% of your 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 choices are best for B2B companies that cannot manage to wait for payment, and the cost is usually 4-5% monthly with annual pace typically between 18-30%.
Bank Loans
Though in order to come by, bank loans are most of the cheapest type of financing. Mortgage loan process involves an application and breakdown of the company’s creditworthiness and financial track record. Small companies especially will usually be rejected for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s financial institution. 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 business receives funding sum from a lender. They pays loan provider back with percentages of that monthly card receipts prior to loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and also cannot be changed retroactively. The advantage of cash advances is immediate cash- the time the fastest method for obtaining cash without in order to a loan shark.
This financing method ideal for trucking companies who require immediate cash for a short amount associated with your and have limited financing options. The cost is usually 20% if not more.
Lease-Back
A trucking company might want to sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
It is better for trucking companies with valuable plant or equipment assets which usually underutilized, along with the cost is monthly lease payments in addition to depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, make use of is almost them to locate funding solutions that meet their individual needs. Being informed on all your options is begin step toward finding the right cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444