Though often overlooked, the trucking industry is critical 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 within 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 problems. But for small to mid-size companies operating on a strict budget, it might stop an option. Expenses like 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 is 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 might by which businesses sell their accounts receivables to a factoring company. Approval for factoring is based on the creditworthiness of the trucking company’s customers.
At the time of the sale, customer 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 option is best for B2B businesses that cannot afford to wait for payment, along with the cost is often 4-5% monthly with annual fee typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are usually the cheapest involving financing. The loan process involves an application and athleanx workout review the company’s creditworthiness and financial profile. Small companies especially tend to be thrown to the wolves 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 greatest for for trucking outfits using a great credit history and do not require the money immediately.
Cash-Advances
Cash advances take place when a small business receives funding sum from a lender. Business pays the lending company back with percentages regarding their monthly card receipts up to the loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and they will cannot be changed retroactively. The profit to cash advances is immediate cash- is certainly the fastest method for obtaining cash without likely to a loan shark.
This financing method ideal for trucking companies who need immediate cash for the short amount of one’s time and have limited financing options. The cost is usually 20% or more.
Lease-Back
A trucking company may wish to sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
It ideal for trucking companies with valuable plant or equipment assets which usually underutilized, as well as the cost is monthly lease payments plus the depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, and it is close to them to search out funding solutions that meet their individual needs. Being informed on all the choices is one step toward finding the right cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444