Though often overlooked, the trucking industry is vitally important 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 the 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 strong budget, it might not be an option. Expenses regarding 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 this is a recipe for financial hardship.
Therefore, trucking companies often have flip to outside borrowing. The following are some methods 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 duration of the sale, customer gets 80-90% of the cash back immediately from the invoices. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This choice is best for B2B businesses that cannot afford to wait for payment, and also the cost is frequently 4-5% monthly with an effective annual pace typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are most of the cheapest type of financing. Mortgage loan process involves an application and overview of the company’s creditworthiness and financial reports. Small companies especially will usually be rejected for loans, although exceptions do be available.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s bank account. This form of funding is better for trucking outfits with a great credit history and do not require the money immediately.
Cash-Advances
Cash advances take place when a small business receives a loan sum from your local neighborhood lender. They pays the lending company back with percentages regarding their monthly card receipts just before loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, which cannot be changed retroactively. The profit to cash advances is immediate cash- can be the fastest method for obtaining cash without likely to a loan shark.
This financing method is best for trucking companies who require immediate cash for regarding amount of time and have limited financing options. Zox pro training system is usually 20% if not more.
Lease-Back
A trucking company may choose 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 which have been underutilized, along with the cost is monthly lease payments not to mention the depreciation and tax burdens of equipment.
Choices, Choices
Every trucking company is unique, that’s why it is up to them to find funding solutions that meet their individual needs. Being informed on all options is the first step toward finding the right cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444