Though often overlooked, the trucking industry is really important 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 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 problems. But for small to mid-size companies operating on a strong budget, it might halt an option. Expenses like payroll and gas add up in the time between payment, and not paying your drivers is never a good business rehearsal. 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 turn to outside borrowing. The following are some choices trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to might 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% belonging to the cash back immediately from the receipts. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This options best for B2B firms that cannot afford to wait for payment, as well as the cost is usually 4-5% monthly with a powerful annual interest rate typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are most of the cheapest associated with financing. The loan process involves an application and review of the company’s creditworthiness and financial track record. Small companies especially possess a be refused for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s financial institution. This form of funding is best for trucking outfits by using a great credit ratings and don’t need the money immediately.
Cash-Advances
Cash advances take place when a small-business receives funding sum from the lender. The organization pays the lending company back with percentages associated with their monthly card receipts just before loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, and so they also cannot be changed retroactively. The help cash advances is immediate cash- occasion the fastest method for obtaining cash without likely to a loan shark.
This financing method very best for trucking companies who require immediate cash for a much smaller amount associated with your and have limited financing options. Zox pro training system is usually 20% or older.
Lease-Back
A trucking company may choose to sell property, plant, and/or equipment, and simultaneously leases it back for moola.
It ideal for trucking companies with valuable plant or equipment assets that are underutilized, as well as the cost is monthly lease payments not to mention the depreciation and tax burdens of equipment.
Choices, Choices
Every trucking company is unique, however it is well over them to discover funding solutions that meet their individual needs. Being informed on all your options is begin step toward finding a worthwhile cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444