Though often overlooked, the trucking industry is vitally important to the health within 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 problems. But for small to mid-size companies operating on a tight budget, it might stop being an option. Expenses such as payroll and gas provide in the time between payment, and not paying your drivers is never a good business practice. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and it is a recipe for financial hardship.
Therefore, trucking companies often have flip to outside borrowing. The following are some choices trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to implies 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 use of the sale, customer gets 80-90% of this cash back immediately from the bills. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This options best for B2B companies that cannot afford to wait for payment, as well as the cost is 4-5% monthly with a healthy annual interest rate typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are an cheapest associated with financing. The loan process involves an application and overview of the company’s creditworthiness and financial profile. Small companies especially tend to be turned down for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days achieve a trucking company’s financial institution. This form of funding is better for trucking outfits along with a great credit record and do not require the money immediately.
Cash-Advances
Cash advances take place when a small business receives a loan sum from a lender. They pays financial institution back with percentages from their monthly card receipts before the loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, and also cannot be changed retroactively. The benefit to cash advances is immediate cash- can be the fastest method for obtaining cash without going to a loan shark.
This financing method very best for trucking companies who require immediate cash for any amount your own time and have limited financing options. Zox pro training system is usually 20% if not more.
Lease-Back
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for cash.
It is better 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, and it is up to them to search out funding solutions that meet their individual needs. Being informed on all options is initial step toward finding a sufficient cash flow solution.
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12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
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