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.
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 good budget, it might stop an option. Expenses such as payroll and gas come 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 it is a recipe for financial hardship.
Therefore, trucking companies often have to show to outside backing. The following are some strategies to trucking companies to consider:
Also known as factoring, this options refers to the process by which businesses sell their accounts receivables to a factoring company. Approval for factoring is 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 receipts. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This choices best for B2B firms that cannot afford to wait for payment, and also the cost is usually 4-5% monthly with a powerful annual interest rate typically between 18-30%.
Though hard to come by, bank loans are these cheapest way of financing. The money process involves an application and athleanx workout review the company’s creditworthiness and financial track record. Small companies especially possess a be denied for loans, although exceptions do be available.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s bank account. This form of funding is best for trucking outfits along with a great credit record and have no need for the money immediately.
Cash advances take place when a small business receives funding sum during a lender. Business pays financial institution back with percentages from their monthly card receipts prior to loan (plus a predetermined rate) is repaid. There are legal limits to the rates, which cannot be changed retroactively. The help cash advances is immediate cash- can be the fastest method for obtaining cash without in order to be a loan shark.
This financing method is better for trucking companies who need immediate cash for a short amount of time and have limited financing options. The cost is usually 20% if not more.
A trucking company may wish to 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 which might be underutilized, along with the cost is monthly lease payments additionally, the depreciation and tax burdens of resources.
Every trucking company is unique, however it is close to them to locate 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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