Though often overlooked, the trucking industry is quite crucial to the health of the US economy. Consider it: without http://www.hiringtruckdrivers.com delivering things, inter-state commerce would grind to a screeching, tire-burning halt.
Distinctive Challenges
Despite the importance of trucking companies, what sort of process is structured often leaves them in a shaky financial position. Truck companies send accounts for services rendered, and then often wait 30-90 days for payment on the accounts receivables.
For a larger company with large cash reserves, waiting to be paid would not be an issue. But for small to mid-size companies operating on a tight budget, it could maybe not be an option. Bills including gas and payroll mount up within the time between cost, and not paying your http://www.hiringtruckdrivers.com is never a good business practice. Enhance that rising fuel prices, delays because of traffic congestion, driver shortages and new regulations, and it's a formula for economic hardship.
For that reason, trucking companies usually have to turn to external money. Listed below are some options for trucking companies to consider:
Asset-Based Financing
Also known as factoring, this options identifies the method where businesses offer their accounts receivables to a factoring company. Approval for factoring is based on the creditworthiness of the trucking company's customers.
At the time of the sale, the customer gets 80-90% of the cash back instantly from the invoices. The remaining of the total amount comes after customer settlement, less a percentage charge that usually varies from 1-5%.
This option is better for B2B companies that can't afford to wait for payment, and the cost is generally 4-5% monthly using an effective annual interest typically between 18-30%.
Bank Loans
Although difficult to come by, bank loans in many cases are the least expensive type of financing. The loan process involves a software and overview of the company's credit-worthiness and financial history. Little companies particularly are generally rejected for loans, even though exceptions do occur.
After approval, finance payment typically takes about 30-90 days to reach a trucking company's bank account. This kind of money is most beneficial for trucking clothes with an excellent credit history and don't need the money immediately.
Cash-Advances
When a company receives an advance sum from a lender Income improvements occur. The company pays the lender straight back with proportions of the monthly card receipts before the loan (plus a predetermined price) is repaid. There are appropriate limits to the rates, and they can not be changed retroactively. The benefit to cash advances is fast cash- it is the fastest way for getting cash without going to that loan shark.
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This financing technique is best for trucking companies who need immediate cash for a short timeframe and have limited financing options. The cost is normally 20%.
Lease-Back
A trucking company might want to sell property, plant, and/or equipment, and simultaneously leases it right back for cash.
It is best for trucking companies with valuable plant or equipment assets that are underutilized, and the cost is monthly lease payments plus the depreciation and tax problems of equipment.
Choices, Choices
Every trucking company is exclusive, and it's up to them to locate financing alternatives that meet their specific needs. Being informed on all the options is the first step toward getting a suitable cash flow solution.
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