Trucking Companies and Cash Flow: What Are the Accessible?
Though often overlooked, the trucking industry is essential 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 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 huge concern. But for small to mid-size companies operating on a good budget, it might halt an option. Expenses such as payroll and gas provide 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 this is a recipe for financial hardship.
Therefore, trucking companies often have to show to outside financing. The following are some options for 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 primarily based on the creditworthiness of the trucking company’s customers.
At the duration of the sale, customer gets 80-90% for this cash back immediately from the bills. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This choices best for B2B businesses that cannot manage to wait for payment, as well as the cost is often 4-5% monthly with an effective annual interest rate typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are these cheapest form of financing. The loan process involves an application and overview of the company’s creditworthiness and financial story. Small companies especially possess a be refused 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 better for trucking outfits by using a great credit file and have no need for the money immediately.
Cash-Advances
Cash advances take place when a small business receives a loan sum from our lender. Business pays financial institution back with percentages associated with their monthly card receipts until the loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and they will cannot be changed retroactively. The profit to cash advances is immediate cash- it is the fastest method for obtaining cash without gonna be a loan shark.
This financing method very best 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 might want to sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
It very best for trucking companies with valuable plant or equipment assets which have been underutilized, and also the cost is monthly lease payments as well as the depreciation and tax burdens of machines.
Choices, Choices
Every trucking company is unique, make use of is close to them to find funding solutions that meet their individual needs. Being informed on all the choices is initial step toward finding a worthwhile cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444
