Though often overlooked, the trucking industry is really 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 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 problems. But for small to mid-size companies operating on a good budget, it might stop an option. Expenses since 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 a recipe for financial hardship.
Therefore, trucking companies often have to show to outside a mortgage. The following are some methods 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 is based on the creditworthiness of the trucking company’s customers.
At the use of the sale, the client gets 80-90% for this cash back immediately from the statements. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This option is best for B2B businesses that cannot manage to wait for payment, and also the cost is usually 4-5% monthly with annual price typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are an cheapest type of financing. The money process involves an application and analysis of the company’s creditworthiness and financial reports. Small companies especially possess a be denied for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s bank account. This form of funding is the for trucking outfits along with a great credit record and don’t need the money immediately.
Cash-Advances
Cash advances take place when business receives a loan sum from the lender. They pays the lender back with percentages of their monthly card receipts up to the 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- it is the fastest method for obtaining cash without in order to be a loan shark.
This financing method ideal for trucking companies who require immediate cash for a short amount associated with your and have limited financing options. Cost of is usually 20% or older.
Lease-Back
A trucking company may wish to sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
It ideal for for trucking companies with valuable plant or equipment assets usually are underutilized, and the cost is monthly lease payments plus the depreciation and tax burdens of equipment.
Choices, Choices
Every trucking company is unique, and it is almost them to search out funding solutions that meet their individual needs. Being informed on all possibilities is begin step toward finding the right cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444
Posted on:
September 18, 2019