Though often overlooked, the trucking industry is essential 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 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 controversy. But for small to mid-size companies operating on a decent budget, it might ‘t be an option. Expenses such as payroll and gas add up 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 is a recipe for financial hardship.
Therefore, trucking companies often have to show to outside funding. The following are some strategies 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 primarily based on the creditworthiness of the trucking company’s customers.
At the time period of the sale, the client gets 80-90% of the cash back immediately from the debts. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This choice is best for B2B firms that cannot manage to wait for payment, along with the cost is usually 4-5% monthly with an effective annual rate typically between 18-30%.
Bank Loans
Though hard to come by, bank loans are often the cheapest way of financing. Mortgage loan process involves an application and breakdown of the company’s creditworthiness and financial track record. Small companies especially will usually be denied for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s financial institution. This form of funding is best for trucking outfits using a great credit history and have no need for the money immediately.
Cash-Advances
Cash advances take place when business receives a loan sum from the lender. The company pays the lender back with percentages from their monthly card receipts up to the loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, and so they also cannot be changed retroactively. The profit to cash advances is immediate cash- occasion the fastest method for obtaining cash without gonna be a loan shark.
This financing method ideal for trucking companies who need immediate cash for the short amount of this time and have limited financing options. Zox pro training system is usually 20% if not more.
Lease-Back
A trucking company may choose to sell property, plant, and/or equipment, and simultaneously leases it back for cash.
It is better for trucking companies with valuable plant or equipment assets which usually underutilized, along with the cost is monthly lease payments as well as the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, make use of is well over them inside your funding solutions that meet their individual needs. Being informed on all the choices is begin step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444