Though often overlooked, the trucking industry is really important 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 within 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 good budget, it might stop an option. Expenses regarding payroll and gas add 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 definitely a recipe for financial hardship.
Therefore, trucking companies often have to turn to outside financing. 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 is founded 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 bills. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This choices best for B2B businesses that cannot manage to wait for payment, along with the cost is frequently 4-5% monthly with an impressive annual rate typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are most of the cheapest form of financing. The loan process involves an application and overview of the company’s creditworthiness and financial reports. Small companies especially will usually be refused for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s savings. This form of funding ideal for for trucking outfits along with a great credit ratings and do not require the money immediately.
Cash-Advances
Cash advances take place when a small business receives funding sum from your local neighborhood lender. The organization pays loan provider back with percentages associated with their monthly card receipts prior to loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, which cannot be changed retroactively. The advantage of cash advances is immediate cash- is certainly the fastest method for obtaining cash without likely to a loan shark.
This financing method ideal for trucking companies who require immediate cash for any amount associated with your and have limited financing options. Cost of is usually 20% or even more.
Lease-Back
A trucking company might want to sell property, plant, and/or equipment, and simultaneously leases it back for moola.
It is best for trucking companies with valuable plant or equipment assets that are underutilized, and also the cost is monthly lease payments in addition to depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, and in addition it is almost them to locate funding solutions that meet their individual needs. Being informed on all options is begin step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
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