Though often overlooked, the trucking industry is really important 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.
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 problems. But for small to mid-size companies operating on a good budget, it might stop being an option. Expenses such as 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 financing. The following are some methods trucking companies to consider:
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 amount of the sale, customer gets 80-90% of your cash back immediately from the statements. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This options best for B2B companies that cannot manage to wait for payment, as well as the cost is 4-5% monthly with a powerful annual rate typically between 18-30%.
Though in order to come by, bank loans are these cheapest associated with financing. The money 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.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s life’s savings. This form of funding greatest for for trucking outfits with a great credit history and don’t want the money immediately.
Cash advances take place when an organization receives a loan sum from your local neighborhood lender. Business pays the lender back with percentages of that monthly card receipts before the loan (plus a predetermined rate) is repaid. Tend to be two legal limits to the rates, and so they also cannot be changed retroactively. The profit to cash advances is immediate cash- can be 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 the short amount of one’s time and have limited financing options. Costly is usually 20% or even more.
A trucking company might want to sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It very best for trucking companies with valuable plant or equipment assets which have been underutilized, and the cost is monthly lease payments in addition to depreciation and tax burdens of equipment.
Every trucking company is unique, however it is well over them inside your funding solutions that meet their individual needs. Being informed on all the choices is customers step toward finding the right cash flow solution.
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