Though often overlooked, the trucking industry is vitally important 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 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 decent budget, it might stop being an option. Expenses regarding payroll and gas provide in the time between payment, and not paying your drivers is never a good business rehearsal. 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 a mortgage. The following are some choices 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 is based on the creditworthiness of the trucking company’s customers.
At the amount of the sale, customer gets 80-90% of the cash back immediately from the receipts. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This option is best for B2B firms that cannot afford to wait for payment, as well as the cost usually 4-5% monthly with an effective annual interest rate typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are often the cheapest form of financing. The money process involves an application and review of the company’s creditworthiness and financial reports. Small companies especially will usually be thrown to the wolves for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s banking. This form of funding is the for trucking outfits along with a great credit ratings and do not require the money immediately.
Cash-Advances
Cash advances take place when an organization receives funding sum from the lender. The organization pays the lending company back with percentages regarding their monthly card receipts just before loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, and they cannot be changed retroactively. The profit to cash advances is immediate cash- is certainly the fastest method for obtaining cash without going to a loan shark.
This financing method ideal for trucking companies who require immediate cash for a short amount of time and have limited financing options. Will not find is usually 20% or even more.
Lease-Back
A trucking company might want to 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 that are underutilized, along with 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 nearly them to search out funding solutions that meet their individual needs. Being informed on all options is initial step toward finding a worthwhile cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444