Though often overlooked, the trucking industry is essential 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 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 chore. But for small to mid-size companies operating on a decent budget, it might halt an option. Expenses such as payroll and gas sum up 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 this is a recipe for financial hardship.
Therefore, trucking companies often have flip to outside funding. The following are some choices 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 is founded on on the creditworthiness of the trucking company’s customers.
At the time period of the sale, the client gets 80-90% for this cash back immediately from the receipts. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This option is best for B2B businesses that cannot manage to wait for payment, and also the cost is often 4-5% monthly with a powerful annual rate typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are an cheapest involving financing. The borrowed funds process involves an application and review of the company’s creditworthiness and financial track record. Small companies especially are more likely to be turned down for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s banking. This form of funding is the for trucking outfits by using a great credit record and don’t need the money immediately.
Cash-Advances
Cash advances take place when business receives a loan sum from your local neighborhood lender. They pays loan provider back with percentages regarding their monthly card receipts up to the loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, and also cannot be changed retroactively. The advantage of cash advances is immediate cash- occasion the fastest method for obtaining cash without in order to a loan shark.
This financing method very best for trucking companies who need immediate cash for a much smaller amount your own time and have limited financing options. Zox pro training system is usually 20% or even more.
Lease-Back
A trucking company might want to sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It ideal for for trucking companies with valuable plant or equipment assets which usually underutilized, and the cost is monthly lease payments in addition to depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, that’s why it is nearly them to discover funding solutions that meet their individual needs. Being informed on all the choices is initial step toward finding a worthwhile cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444