Though often overlooked, the trucking industry is truly essential to the health belonging to 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 from 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 chore. But for small to mid-size companies operating on a good budget, it might ‘t be an option. Expenses like payroll and gas sum up in the time between payment, and not paying your drivers is never a good business approach. 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 options for 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% for this 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 are best for B2B companies that cannot afford to wait for payment, and the cost is 4-5% monthly with annual pace typically between 18-30%.
Though in order to find come by, bank loans are an cheapest type of financing. The loan process involves an application and overview of the company’s creditworthiness and financial profile. Small companies especially tend to be rejected for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s bank account. This form of funding greatest for for trucking outfits along with a great credit history and don’t require the money immediately.
Cash advances take place when an organization receives an advance sum from our lender. The company pays the lending company back with percentages of that monthly card receipts just before loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, and they cannot be changed retroactively. The benefit 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 need immediate cash for a much smaller amount of one’s time and have limited financing options. Zox pro training system is usually 20% if not more.
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for resources.
It ideal for trucking companies with valuable plant or equipment assets which have been underutilized, as well as the cost is monthly lease payments plus the depreciation and tax burdens of machines.
Every trucking company is unique, and in addition it is almost 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.
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