What Truckers Like About Top Trucking Companies
Though often overlooked, the trucking industry is essential 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 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 a chore. But for small to mid-size companies operating on a strong budget, it might stop an option. Expenses like payroll and gas calculate in the time between payment, and not paying your drivers is never a good business rehearsal. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and this is a recipe for financial hardship.
Therefore, trucking companies often have flip 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 centered on the creditworthiness of the trucking company’s customers.
At the time of the sale, the client gets 80-90% of the cash back immediately from the debts. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This option is best for B2B businesses that cannot afford to wait for payment, along with the cost is frequently 4-5% monthly with an impressive annual rate typically between 18-30%.
Bank Loans
Though in order to come by, bank loans are most of the cheapest type of financing. The loan process involves an application and breakdown of the company’s creditworthiness and financial history. Small companies especially can be refused for loans, although exceptions do be around.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s bank account. This form of funding ideal for for trucking outfits by using a great credit record and don’t need the money immediately.
Cash-Advances
Cash advances take place when an organization receives funding sum from a lender. The company pays the lending company back with percentages from their monthly card receipts before the loan (plus a predetermined rate) is repaid. Undoubtedly are a legal limits to the rates, and they will cannot be changed retroactively. The profit to cash advances is immediate cash- occasion the fastest method for obtaining cash without in order to be a loan shark.
This financing method is the for trucking companies who need immediate cash for the short amount associated with your and have limited financing options. Zox pro training system is usually 20% if not more.
Lease-Back
A trucking company may want to sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
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 tools.
Choices, Choices
Every trucking company is unique, and in addition it is close to them to locate funding solutions that meet their individual needs. Being informed on all your options is one step toward finding a suitable cash flow solution.
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