Though often overlooked, the trucking industry is truly essential to the health belonging to 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 chore. But for small to mid-size companies operating on a strong 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 is definitely a recipe for financial hardship.
Therefore, trucking companies often have flip 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 implies by which businesses sell their accounts receivables to a factoring company. Approval for factoring centered on the creditworthiness of the trucking company’s customers.
At the amount of the sale, the client gets 80-90% for this cash back immediately from the bills. 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 firms that cannot afford to wait for payment, as well as the cost usually 4-5% monthly with an effective annual fee typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are often the cheapest involving financing. The loan process involves an application and overview of the company’s creditworthiness and financial profile. Small companies especially can be thrown to the wolves for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s life’s savings. This form of funding greatest for for trucking outfits by using a great credit history and don’t want the money immediately.
Cash-Advances
Cash advances take place when a small business receives an advance sum during a lender. The organization pays the lender back with percentages regarding their monthly card receipts up to the loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, which 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 best for trucking companies who need immediate cash for any amount of this time and have limited financing options. Zox pro training system is usually 20% and up.
Lease-Back
A trucking company may choose to sell property, plant, and/or equipment, and simultaneously leases it back for cash.
It is best for trucking companies with valuable plant or equipment assets that are underutilized, and also the cost is monthly lease payments not to mention the depreciation and tax burdens of equipment.
Choices, Choices
Every trucking company is unique, and in addition it is close to them to discover funding solutions that meet their individual needs. Being informed on all options is the first step toward finding a suitable cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444