Though often overlooked, the trucking industry is critical to the health within 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 problem. But for small to mid-size companies operating on a tight 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 repeat. 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 a mortgage. The following are some strategies for trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to the process 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 amount of the sale, the client gets 80-90% belonging to the cash back immediately from the receipts. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This options best for B2B firms that cannot afford to wait for payment, and also the cost is usually 4-5% monthly with a powerful annual fee typically between 18-30%.
Bank Loans
Though in order to come by, bank loans are often the cheapest associated with financing. Mortgage process involves an application and review of the company’s creditworthiness and financial track record. 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 banking. This form of funding greatest for for trucking outfits by using a great credit report . and don’t need the money immediately.
Cash-Advances
Cash advances take place when business receives a loan sum from a lender. The corporate pays the lender back with percentages regarding their monthly card receipts just before loan (plus a predetermined rate) is repaid. Tend to be two legal limits to the rates, and they will cannot be changed retroactively. The benefits of cash advances is immediate cash- can be the fastest method for obtaining cash without in order to be a loan shark.
This financing method is the for trucking companies who require immediate cash for a short amount your own time and have limited financing options. Zox pro training system is usually 20% or more.
Lease-Back
A trucking company may choose to sell property, plant, and/or equipment, and simultaneously leases it back for resources.
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 equipment.
Choices, Choices
Every trucking company is unique, and it is up to them inside your funding solutions that meet their individual needs. Being informed on all possibilities is the first step toward finding a suitable cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444
