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 a controversy. But for small to mid-size companies operating on a decent budget, it might ‘t be an option. Expenses since payroll and gas come 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 is actually not a recipe for financial hardship.
Therefore, trucking companies often have to turn to outside a mortgage. The following are some strategies for 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 time of the sale, customer gets 80-90% for 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 choices best for B2B businesses that cannot manage to wait for payment, and the cost usually 4-5% monthly with a powerful annual rate typically between 18-30%.
Bank Loans
Though in order to come by, bank loans are usually the cheapest way of financing. The money process involves an application and review of the company’s creditworthiness and financial track record. Small companies especially possess a be denied for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s life’s savings. This form of funding ideal for for trucking outfits by using a great credit ratings and don’t require the money immediately.
Cash-Advances
Cash advances take place when business receives an advance sum from our lender. The organization pays the lending company back with percentages of their monthly card receipts up to the loan (plus a predetermined rate) is repaid. Tend to be two legal limits to the rates, and they cannot be changed retroactively. The help cash advances is immediate cash- the time the fastest method for obtaining cash without likely to a loan shark.
This financing method is the for trucking companies who need immediate cash for a short amount of one’s time and have limited financing options. The cost is usually 20% and up.
Lease-Back
A trucking company might want to sell property, plant, and/or equipment, and simultaneously leases it back for resources.
It is best for trucking companies with valuable plant or equipment assets which might be underutilized, and also the cost is monthly lease payments as well as the depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, and in addition it is well over them inside your funding solutions that meet their individual needs. Being informed on all your options is customers 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