Though often overlooked, the trucking industry is essential 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 from 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 strict budget, it might stop an option. Expenses such as 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 it is a recipe for financial hardship.
Therefore, trucking companies often have to show to outside financing. The following are some strategies to 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 amount of the sale, the client gets 80-90% of this 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 option is best for B2B firms that cannot manage to wait for payment, and the cost is frequently 4-5% monthly with an effective annual pace typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are usually the cheapest associated with financing. Mortgage process involves an application and overview of the company’s creditworthiness and financial reports. Small companies especially are more likely to be turned down for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s savings. This form of funding is better for trucking outfits along with a great credit file and don’t need the money immediately.
Cash-Advances
Cash advances take place when a small-business receives an advance sum from a lender. The organization pays loan provider back with percentages of that monthly card receipts before the loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, which cannot be changed retroactively. The benefit to cash advances is immediate cash- is certainly the fastest method for obtaining cash without likely to 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. Zox pro training system is usually 20% or even more.
Lease-Back
A trucking company may wish to sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It is better for trucking companies with valuable plant or equipment assets which usually underutilized, and also the cost is monthly lease payments as well as the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, that’s why it is close to them to discover funding solutions that meet their individual needs. Being informed on all 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