What Truckers Like About Top Trucking Companies
Though often overlooked, the trucking industry is really 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 in the 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 problem. But for small to mid-size companies operating on a strict budget, it might stop being an option. Expenses regarding payroll and gas add up 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 is a recipe for financial hardship.
Therefore, trucking companies often have flip to outside a mortgage. The following are some options for 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 draws on on the creditworthiness of the trucking company’s customers.
At the use of the sale, customer gets 80-90% belonging to the cash back immediately from the debts. The remainder of the balance comes after customer repayment, less a portion 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 usually 4-5% monthly with an effective annual price typically between 18-30%.
Bank Loans
Though in order to come by, bank loans are these cheapest form of financing. Mortgage process involves an application and breakdown of the company’s creditworthiness and financial history. Small companies especially can be thrown to the wolves for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s savings. This form of funding is best for trucking outfits using a great credit ratings and have no need for the money immediately.
Cash-Advances
Cash advances take place when an organization receives a loan sum from a lender. The organization pays financial institution back with percentages of their monthly card receipts prior to loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and so they 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 ideal for trucking companies who need immediate cash for any amount of this time and have limited financing options. Costly is usually 20% if not more.
Lease-Back
A trucking company may wish to sell property, plant, and/or equipment, and simultaneously leases it back for moola.
It is best for trucking companies with valuable plant or equipment assets which might be underutilized, and the cost is monthly lease payments not to mention the depreciation and tax burdens of machines.
Choices, Choices
Every trucking company is unique, however it is up to them to search out funding solutions that meet their individual needs. Being informed on all options is begin step toward finding the right cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444
