Though often overlooked, the trucking industry is truly 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 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 controversy. But for small to mid-size companies operating on a strong budget, it might stop being an option. Expenses like payroll and gas add up 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 a recipe for financial hardship.
Therefore, trucking companies often have to show to outside financing. The following are some choices trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to difficult . by which businesses sell their accounts receivables to a factoring company. Approval for factoring draws on on the creditworthiness of the trucking company’s customers.
At the amount of the sale, the client gets 80-90% of this 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 option is best for B2B businesses that cannot afford to wait for payment, and also the cost is frequently 4-5% monthly with an impressive annual price typically between 18-30%.
Bank Loans
Though in order to come by, bank loans are often the cheapest form of financing. Mortgage loan process involves an application and breakdown 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 to achieve a trucking company’s savings. This form of funding ideal for for trucking outfits along with a great credit history and have no need for the money immediately.
Cash-Advances
Cash advances take place when a small-business receives a loan sum during a lender. The corporate pays loan provider back with percentages associated with their monthly card receipts up to the loan (plus a predetermined rate) is repaid. Tend to be two legal limits to the rates, and so they also cannot be changed retroactively. The benefits of cash advances is immediate cash- it is the fastest method for obtaining cash without going to a loan shark.
This financing method is the for trucking companies who require immediate cash for a much smaller amount of one’s time and have limited financing options. Cost of is usually 20% or older.
Lease-Back
A trucking company may choose to sell property, plant, and/or equipment, and simultaneously leases it back for moola.
It is better for trucking companies with valuable plant or equipment assets which have been underutilized, and also the cost is monthly lease payments in addition to depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, that’s why it is close to them inside your funding solutions that meet their individual needs. Being informed on all your options is customers step toward finding a suitable cash flow solution.
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4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444