Though often overlooked, the trucking industry is critical 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 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 good budget, it might not be an option. Expenses since payroll and gas add up 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 this is a recipe for financial hardship.
Therefore, trucking companies often have to show to outside borrowing. The following are some options for 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 is based on the creditworthiness of the trucking company’s customers.
At the amount of the sale, the client gets 80-90% belonging to the cash back immediately from the statements. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This choices best for B2B firms that cannot manage to wait for payment, and also the cost is 4-5% monthly with an effective annual price typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are these cheapest involving financing. The loan process involves an application and review of the company’s creditworthiness and financial profile. Small companies especially can be turned down for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s life’s savings. This form of funding is best for trucking outfits with a great credit report . and do not require the money immediately.
Cash-Advances
Cash advances take place when a company receives a loan sum from our lender. The company pays loan provider back with percentages of that monthly card receipts before the loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, and so they also cannot be changed retroactively. The benefit to cash advances is immediate cash- it is the fastest method for obtaining cash without in order to a loan shark.
This financing method is better for trucking companies who need immediate cash for a much smaller amount of time and have limited financing options. Zox pro training system is usually 20% if not more.
Lease-Back
A trucking company might want to sell property, plant, and/or equipment, and simultaneously leases it back for moola.
It very best for trucking companies with valuable plant or equipment assets that are underutilized, as well as the cost is monthly lease payments in addition to depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, make use of is close to them to locate funding solutions that meet their individual needs. Being informed on all your options is the first step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444