Though often overlooked, the trucking industry is critical to the health within 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 controversy. But for small to mid-size companies operating on a strong budget, it might stop being an option. Expenses such as payroll and gas come in the time between payment, and not paying your drivers is never a good business repeat. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and is definitely a recipe for financial hardship.
Therefore, trucking companies often have to show to outside a mortgage. 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 amount of the sale, customer gets 80-90% for this cash back immediately from the bills. 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, along with the cost is usually 4-5% monthly with an effective annual price typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are often the cheapest type of financing. The loan process involves an application and analysis of the company’s creditworthiness and financial profile. Small companies especially will usually be denied for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s banking. This form of funding is better for trucking outfits using a great credit file and have no need for the money immediately.
Cash-Advances
Cash advances take place when a small-business receives funding sum from your local neighborhood lender. The organization pays the lending company back with percentages of that monthly card receipts until 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- occasion the fastest method for obtaining cash without gonna be a loan shark.
This financing method is the for trucking companies who require immediate cash for a much smaller amount of 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 cash money.
It ideal for trucking companies with valuable plant or equipment assets which might be underutilized, as well as the cost is monthly lease payments plus the depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, that’s why it is well over them to locate funding solutions that meet their individual needs. Being informed on all the options is customers step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444