Though often overlooked, the trucking industry is truly essential 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 from 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 strict budget, it might stop being an option. Expenses such as payroll and gas come 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 this is a recipe for financial hardship.
Therefore, trucking companies often have to show to outside borrowing. The following are some strategies to 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 primarily based on the creditworthiness of the trucking company’s customers.
At the duration of the sale, customer gets 80-90% of the cash back immediately from the invoices. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This options best for B2B companies that cannot manage to wait for payment, and also the cost usually 4-5% monthly with an effective annual rate typically between 18-30%.
Bank Loans
Though in order to come by, bank loans are most of the cheapest associated with financing. Mortgage loan process involves an application and breakdown of the company’s creditworthiness and financial story. Small companies especially will usually be denied for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s savings. This form of funding is best for trucking outfits having a great credit record and have no need for the money immediately.
Cash-Advances
Cash advances take place when business receives an advance sum during a lender. The corporate pays the lender back with percentages of their monthly card receipts before the loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, and they cannot be changed retroactively. The advantage of cash advances is immediate cash- it is the fastest method for obtaining cash without likely to a loan shark.
This financing method ideal for trucking companies who require immediate cash for a much smaller amount of this time and have limited financing options. Zox pro training system is usually 20% or more.
Lease-Back
A trucking company may want to sell property, plant, and/or equipment, and simultaneously leases it back for cash.
It is better for trucking companies with valuable plant or equipment assets which have been underutilized, and also the cost is monthly lease payments as well as the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, and in addition it is up to them to locate funding solutions that meet their individual needs. Being informed on all the options is the first step toward finding the right cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444