Though often overlooked, the trucking industry is critical to the health of 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 chore. But for small to mid-size companies operating on a tight budget, it might stop being an option. Expenses since payroll and gas provide 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 show to outside backing. The following are some methods trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to difficult . 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 amount of the sale, the client gets 80-90% for this 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 companies that cannot afford to wait for payment, along with the cost is frequently 4-5% monthly with an impressive annual fee typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are these cheapest associated with financing. The borrowed funds process involves an application and review of the company’s creditworthiness and financial track record. Small companies especially are more likely to be denied for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s bank account. This form of funding is the for trucking outfits using a great credit ratings and don’t require the money immediately.
Cash-Advances
Cash advances take place when business receives funding sum from our lender. They pays financial institution back with percentages from their monthly card receipts just before loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, and so they also cannot be changed retroactively. The benefit to cash advances is immediate cash- can be the fastest method for obtaining cash without in order to a loan shark.
This financing method is best for trucking companies who need immediate cash for the short amount of one’s time and have limited financing options. Zox pro training system is usually 20% or older.
Lease-Back
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for cash.
It very best for trucking companies with valuable plant or equipment assets which usually underutilized, along with the cost is monthly lease payments additionally, the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, however it is almost them to search out funding solutions that meet their individual needs. Being informed on all possibilities is customers step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444
Posted on:
September 18, 2019