Though often overlooked, the trucking industry is truly essential 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.
Despite the importance of trucking companies, the way the system is structured often leaves them in 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 a huge concern. But for small to mid-size companies operating on a strong budget, it might stop an option. Expenses like payroll and gas sum up 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 is a recipe for financial hardship.
Therefore, trucking companies often have to show to outside backing. The following are some methods trucking companies to consider:
Also known as factoring, this options refers to implies by which businesses sell their accounts receivables to a factoring company. Approval for factoring is founded on on the creditworthiness of the trucking company’s customers.
At the amount of the sale, customer gets 80-90% belonging to the cash back immediately from the receipts. 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, and the cost is frequently 4-5% monthly with a powerful annual rate typically between 18-30%.
Though tough to come by, bank loans are usually the cheapest way of financing. The money process involves an application and overview of the company’s creditworthiness and financial reports. Small companies especially possess a be turned down for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days to achieve a trucking company’s bank account. This form of funding is the for trucking outfits by using a great credit history and don’t require the money immediately.
Cash advances take place when business receives funding sum from the lender. The company pays the lending company back with percentages associated with their monthly card receipts before the loan (plus a predetermined rate) is repaid. Tend to be two legal limits to the rates, and also cannot be changed retroactively. The help cash advances is immediate cash- the time the fastest method for obtaining cash without in order to a loan shark.
This financing method is best for trucking companies who require immediate cash for the short amount of this time and have limited financing options. Zox pro training system is usually 20% and up.
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It ideal for for trucking companies with valuable plant or equipment assets usually are underutilized, and also the cost is monthly lease payments plus the depreciation and tax burdens of gadget.
Every trucking company is unique, that’s why it is up to them to search out funding solutions that meet their individual needs. Being informed on all the choices is the first step toward finding a sufficient cash flow solution.
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