Though often overlooked, the trucking industry is really important 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 the 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 problem. But for small to mid-size companies operating on a decent budget, it might halt an option. Expenses regarding payroll and gas come in the time between payment, and not paying your drivers is never a good business 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 flip to outside funding. The following are some strategies 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 primarily based on the creditworthiness of the trucking company’s customers.
At the time of the sale, the client gets 80-90% of the cash back immediately from the statements. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This choice is best for B2B businesses that cannot manage to wait for payment, along with the cost usually 4-5% monthly with an impressive annual price typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are most of the cheapest associated with financing. Mortgage loan process involves an application and athleanx workout review the company’s creditworthiness and financial story. Small companies especially will usually be refused for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s financial institution. This form of funding is the for trucking outfits using a great credit record and do not require the money immediately.
Cash-Advances
Cash advances take place when a small-business receives funding sum from our lender. Business pays financial institution back with percentages regarding their monthly card receipts prior to loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and so they also cannot be changed retroactively. The benefits of cash advances is immediate cash- can be the fastest method for obtaining cash without in order to a loan shark.
This financing method is better for trucking companies who require immediate cash for regarding amount of this time and have limited financing options. Will not find is usually 20% or more.
Lease-Back
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for moola.
It ideal for for trucking companies with valuable plant or equipment assets usually are underutilized, and the cost is monthly lease payments additionally, the depreciation and tax burdens of equipment.
Choices, Choices
Every trucking company is unique, however it is well over them to search out funding solutions that meet their individual needs. Being informed on all the options is the first step toward finding a fitting cash flow solution.
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4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444