Though often overlooked, the trucking industry is critical 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 strict budget, it might not be an option. Expenses such as payroll and gas calculate 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 turn to outside funding. 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 draws on on the creditworthiness of the trucking company’s customers.
At the use of the sale, customer gets 80-90% of the cash back immediately from the bills. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This choices best for B2B businesses that cannot afford to wait for payment, along with the cost is usually 4-5% monthly with a healthy annual interest rate typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are an cheapest type of financing. The money process involves an application and analysis of the company’s creditworthiness and financial track record. Small companies especially can be denied for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s banking. This form of funding is the for trucking outfits by using a great credit record and do not require the money immediately.
Cash-Advances
Cash advances take place when a small business receives a loan sum from our lender. The corporate pays financial institution back with percentages of their monthly card receipts prior to loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, which cannot be changed retroactively. The benefit to cash advances is immediate cash- can be the fastest method for obtaining cash without going to a loan shark.
This financing method is better for trucking companies who need immediate cash for a short amount of this time and have limited financing options. Zox pro training system is usually 20% or older.
Lease-Back
A trucking company may wish to sell property, plant, and/or equipment, and simultaneously leases it back for moola.
It is better for trucking companies with valuable plant or equipment assets usually are underutilized, along with the cost is monthly lease payments not to mention the depreciation and tax burdens of machines.
Choices, Choices
Every trucking company is unique, make use of is up to them inside your funding solutions that meet their individual needs. Being informed on all the choices is one step toward finding a worthwhile cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444