Though often overlooked, the trucking industry is truly essential to the health of 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 chore. But for small to mid-size companies operating on a tight budget, it might stop being an option. Expenses with regard to example payroll and gas come 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 funding. The following are some options for trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to implies 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 time of the sale, customer 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 option is best for B2B companies that cannot manage to wait for payment, and the cost is usually 4-5% monthly with annual fee typically between 18-30%.
Bank Loans
Though hard to come by, bank loans are an cheapest associated with financing. Mortgage process involves an application and analysis of the company’s creditworthiness and financial story. Small companies especially are more likely to be rejected for loans, although exceptions do be available.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s financial institution. This form of funding is best for trucking outfits having a great credit history and don’t want the money immediately.
Cash-Advances
Cash advances take place when a company receives a loan sum from a lender. The corporate pays financial institution back with percentages from their monthly card receipts just before loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, and they will cannot be changed retroactively. The benefit to cash advances is immediate cash- can be the fastest method for obtaining cash without gonna be a loan shark.
This financing method is the for trucking companies who require immediate cash for a short amount of time and have limited financing options. Will not find is usually 20% if not more.
Lease-Back
A trucking company may wish to sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
It ideal for trucking companies with valuable plant or equipment assets usually are underutilized, as well as the cost is monthly lease payments additionally, the depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, however it is nearly them inside your funding solutions that meet their individual needs. Being informed on all the options is the first step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444