What Truckers Like About Top Trucking Companies
Though often overlooked, the trucking industry is critical to the health for 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 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 chore. But for small to mid-size companies operating on a decent budget, it might stop an option. Expenses with regard to example 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 it is a recipe for financial hardship.
Therefore, trucking companies often have to turn to outside financing. The following are some strategies for trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to might 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% 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 choice is best for B2B firms that cannot afford to wait for payment, and the cost is often 4-5% monthly with an effective annual interest rate typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are an cheapest associated with financing. The money process involves an application and overview of the company’s creditworthiness and financial profile. Small companies especially possess a be denied for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s savings. This form of funding ideal for for trucking outfits along with a great credit ratings and don’t need the money immediately.
Cash-Advances
Cash advances take place when business receives an advance sum during a lender. The organization pays the lender back with percentages of that monthly card receipts until 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- it is the fastest method for obtaining cash without likely to a loan shark.
This financing method is best for trucking companies who need immediate cash for the short amount of time and have limited financing options. Cost of is usually 20% or even more.
Lease-Back
A trucking company could sell property, plant, and/or equipment, and simultaneously leases it back for cash money.
It is best for trucking companies with valuable plant or equipment assets which have been underutilized, as well as the cost is monthly lease payments as well as the depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, and in addition it is almost them to discover funding solutions that meet their individual needs. Being informed on all possibilities is the first step toward finding a worthwhile cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444
