Though often overlooked, the trucking industry is truly essential to the health on 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 not be an option. Expenses since payroll and gas sum 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 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 centered on the creditworthiness of the trucking company’s customers.
At the duration of the sale, customer gets 80-90% of your cash back immediately from the bills. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This choice is best for B2B companies that cannot afford to wait for payment, and the cost usually 4-5% monthly with annual price typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are usually the cheapest type of financing. Mortgage process involves an application and review of the company’s creditworthiness and financial history. Small companies especially can be denied for loans, although exceptions do be available.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s bank account. This form of funding is best for trucking outfits along with a great credit report . and don’t want the money immediately.
Cash-Advances
Cash advances take place when a small-business receives an advance sum from the lender. Business 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 also cannot be changed retroactively. The advantage of cash advances is immediate cash- it is the fastest method for obtaining cash without in order to be a loan shark.
This financing method very best for trucking companies who need immediate cash for a short amount of one’s time and have limited financing options. Zox pro training system is usually 20% or more.
Lease-Back
A trucking company might want to sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It is best for trucking companies with valuable plant or equipment assets that are underutilized, as well as the cost is monthly lease payments additionally, the depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, make use of is nearly them to locate funding solutions that meet their individual needs. Being informed on all your options is one step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444