Though often overlooked, the trucking industry is truly essential 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 strict budget, it might halt an option. Expenses since payroll and gas add up in the time between payment, and not paying your drivers is never a good business put into practice. 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 turn 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 time period of the sale, customer gets 80-90% for this cash back immediately from the debts. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This choices best for B2B companies that cannot manage to wait for payment, and the cost is 4-5% monthly with annual fee typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are usually the cheapest form of financing. The money process involves an application and overview of the company’s creditworthiness and financial reports. Small companies especially tend to be refused for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s banking. This form of funding greatest for for trucking outfits using a great credit ratings and don’t need the money immediately.
Cash-Advances
Cash advances take place when a small business receives an advance sum from a lender. Business pays the lender back with percentages regarding their monthly card receipts up to the loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, and also cannot be changed retroactively. The benefits of cash advances is immediate cash- occasion the fastest method for obtaining cash without in order to a loan shark.
This financing method ideal for trucking companies who require immediate cash for regarding amount associated with your and have limited financing options. Zox pro training system is usually 20% or even more.
Lease-Back
A trucking company may want to sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It ideal for for trucking companies with valuable plant or equipment assets which might be underutilized, and also the cost is monthly lease payments not to mention the depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, make use of is close to them to find funding solutions that meet their individual needs. Being informed on all possibilities is begin step toward finding the right cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444