Though often overlooked, the trucking industry is critical 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 decent budget, it might ‘t be an option. Expenses since payroll and gas sum up in the time between payment, and not paying your drivers is never a good business approach. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and this is a recipe for financial hardship.
Therefore, trucking companies often have to show to outside financing. The following are some strategies for 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, the client gets 80-90% of this cash back immediately from the invoices. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This option is best for B2B firms that cannot afford to wait for payment, and also the cost is frequently 4-5% monthly with a powerful annual rate typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are usually the cheapest way of financing. The borrowed funds process involves an application and overview of the company’s creditworthiness and financial story. Small companies especially can be denied for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s banking. This form of funding is better for trucking outfits having a great credit file and don’t need the money immediately.
Cash-Advances
Cash advances take place when business receives a loan sum from the lender. The company pays financial institution back with percentages of their monthly card receipts up to the loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and they cannot be changed retroactively. The profit to cash advances is immediate cash- occasion the fastest method for obtaining cash without gonna be a loan shark.
This financing method is better for trucking companies who require immediate cash for any amount of time and have limited financing options. Zox pro training system is usually 20% or even more.
Lease-Back
A trucking company may choose to sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It is best for trucking companies with valuable plant or equipment assets which might be underutilized, as well as the cost is monthly lease payments not to mention the depreciation and tax burdens of machines.
Choices, Choices
Every trucking company is unique, and it is nearly them inside your funding solutions that meet their individual needs. Being informed on all your options is the first step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444