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 controversy. But for small to mid-size companies operating on a good budget, it might stop being an option. Expenses such as payroll and gas provide 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 it is a recipe for financial hardship.
Therefore, trucking companies often have to turn to outside backing. The following are some strategies to trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to might by which businesses sell their accounts receivables to a factoring company. Approval for factoring draws on on the creditworthiness of the trucking company’s customers.
At the amount of the sale, the client gets 80-90% for this cash back immediately from the statements. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This choices best for B2B firms that cannot afford to wait for payment, along with the cost is often 4-5% monthly with a healthy annual fee typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are an cheapest form of financing. Mortgage loan process involves an application and breakdown of the company’s creditworthiness and financial profile. Small companies especially possess a be turned down for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s life’s savings. This form of funding is better for trucking outfits by using a great credit file and don’t want the money immediately.
Cash-Advances
Cash advances take place when a small-business receives funding sum from a lender. The corporate pays the lender back with percentages of that monthly card receipts before the loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and so they also cannot be changed retroactively. The profit to cash advances is immediate cash- it is the fastest method for obtaining cash without in order to a loan shark.
This financing method very best for trucking companies who need immediate cash for the short amount your own time and have limited financing options. Cost of is usually 20% or more.
Lease-Back
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for cash.
It ideal for for trucking companies with valuable plant or equipment assets that are underutilized, as well as the cost is monthly lease payments as well as the depreciation and tax burdens of machines.
Choices, Choices
Every trucking company is unique, that’s why it is close to them inside your funding solutions that meet their individual needs. Being informed on all the choices is begin step toward finding a suitable cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444