Though often overlooked, the trucking industry is vitally important to the health on 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 a chore. But for small to mid-size companies operating on a good budget, it might ‘t be an option. Expenses regarding payroll and gas provide in the time between payment, and not paying your drivers is never a good business put into practice. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and this is a recipe for financial hardship.
Therefore, trucking companies often have to show to outside a mortgage. The following are some options for trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to might 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 duration of the sale, customer gets 80-90% belonging to the cash back immediately from the receipts. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This option is best for B2B companies that cannot afford to wait for payment, and the cost is 4-5% monthly with an impressive annual price typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are these cheapest associated with financing. The borrowed funds process involves an application and review of the company’s creditworthiness and financial history. Small companies especially will usually be refused for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s life’s savings. This form of funding ideal for for trucking outfits using a great credit ratings and don’t need the money immediately.
Cash-Advances
Cash advances take place when a company receives an advance sum during a lender. The company pays the lender back with percentages of that monthly card receipts before the loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and also cannot be changed retroactively. The benefits of cash advances is immediate cash- it is the fastest method for obtaining cash without likely to a loan shark.
This financing method is best for trucking companies who require immediate cash for regarding amount associated with your and have limited financing options. The cost is usually 20% and up.
Lease-Back
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for resources.
It ideal for for trucking companies with valuable plant or equipment assets which usually underutilized, and the cost is monthly lease payments as well as the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, that’s why it is close to them to discover funding solutions that meet their individual needs. Being informed on all options 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