Though often overlooked, the trucking industry is critical 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 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 a huge concern. But for small to mid-size companies operating on a good budget, it might ‘t be an option. Expenses since payroll and gas come 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 definitely a recipe for financial hardship.
Therefore, trucking companies often have to turn to outside backing. The following are some methods 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 centered on the creditworthiness of the trucking company’s customers.
At the time of the sale, the client gets 80-90% of your cash back immediately from the bills. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This choices are best for B2B firms that cannot afford to wait for payment, along with the cost is usually 4-5% monthly with an impressive annual rate typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are most of the cheapest associated with financing. The money process involves an application and overview of the company’s creditworthiness and financial reports. Small companies especially will usually be refused for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s banking. This form of funding is better for trucking outfits having a great credit report . and do not require the money immediately.
Cash-Advances
Cash advances take place when a company receives an advance sum from our lender. The corporate pays the lending company back with percentages associated with their monthly card receipts just before loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, which cannot be changed retroactively. The profit to cash advances is immediate cash- is certainly the fastest method for obtaining cash without in order to be a loan shark.
This financing method is the for trucking companies who require immediate cash for a short amount associated with your and have limited financing options. Cost of is usually 20% or older.
Lease-Back
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for resources.
It ideal for trucking companies with valuable plant or equipment assets usually are underutilized, as well as the cost is monthly lease payments as well as the depreciation and tax burdens of tools.
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 possibilities is the first step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444
Posted on:
September 18, 2019