Though often overlooked, the trucking industry is really important to the health for 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 controversy. But for small to mid-size companies operating on a tight budget, it might not be an option. Expenses with regard to example payroll and gas calculate 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 actually not a recipe for financial hardship.
Therefore, trucking companies often have flip to outside funding. The following are some options 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 use of the sale, the client gets 80-90% for this cash back immediately from the invoices. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This options best for B2B companies that cannot manage to wait for payment, along with the cost is often 4-5% monthly with a healthy annual pace typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are most of the cheapest type of financing. The borrowed funds process involves an application and analysis of the company’s creditworthiness and financial profile. Small companies especially tend to be rejected for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s financial institution. This form of funding is better for trucking outfits with a great credit history and don’t want the money immediately.
Cash-Advances
Cash advances take place when business receives a loan sum from a lender. They pays the lending company back with percentages of their monthly card receipts just before loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, and also cannot be changed retroactively. The benefit to cash advances is immediate cash- the time the fastest method for obtaining cash without in order to a loan shark.
This financing method very best for trucking companies who require immediate cash for a much smaller amount of one’s time and have limited financing options. Will not find is usually 20% or older.
Lease-Back
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
It very best for trucking companies with valuable plant or equipment assets usually are underutilized, and also the cost is monthly lease payments not to mention the depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, make use of is almost them to find funding solutions that meet their individual needs. Being informed on all the options is one step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444